On December 29, 2025, the U.S. District Court for the District of Maine granted the American Hospital Association (AHA) and Maine Hospital Association’s (MHA) preliminary injunction, which sought to block the Department of Health and Human Services (HHS) from implementing the 340B Rebate Model Pilot Program that was initially scheduled to take effect on January 1, 2026.
Key Court Rulings and Procedural Developments
Federal District Court Decision
Notably, the district court did not opine whether the rebate program was impermissible; rather, the court’s decision rested on the conclusion that the program was likely a technical violation of the Administrative Procedure Act (APA) because HRSA failed to:
- compile an adequate contemporaneous administrative record regarding its decision to implement the rebate model
- meaningfully consider decades-long reliance interests in upfront discounts
- sufficiently address compliance and costs to covered entities in terms of upfront costs
The court concluded that these deficiencies, coupled with irreparable harm to safety-net providers and the public interest in preserving access to care, warranted preliminary relief, and, as a result, temporarily prevented HRSA from rolling out the rebate model.
HHS’s Appeal in the Federal District Court
After the court’s decision in favor of AHA and MHA, HHS immediately moved for a stay of the preliminary injunction pending appeal. In other words, HHS asked the district court to permit the rebate program to commence on January 1, 2026 while HHS appeals the decision. On December 30, 2025, the district court denied HHS’s motion.
In light of this decision, HRSA posted on its website that it is pausing the implementation of the 340B Rebate Model Pilot Program for all covered entities. Manufacturers who were previously approved for participation in the rebate program will continue to be required to offer 340B pricing as an upfront discount.
HHS’s Appeals in the Court of Appeals
On January 7, 2026, the Court of Appeals for the First Circuit ruled on HHS’s appeal and denied HHS’s emergent motion for a stay from the court. However, the court noted that it “intends to resolve the appeal without undue delay.”
DOJ Letter
On January 12, 2026, the U.S. Department of Justice issued a letter to the First Circuit stating that AHA and HHS are currently engaged in discussions about returning the pilot program approvals challenged in the litigation back to the agency for reconsideration. The government stated that HHS intends to resolve such proceedings “promptly.” Therefore, HHS (with AHA’s approval) plans to dismiss its appeal.
Practical Implications and Next Steps
Importantly, the status quo remains the same. HRSA’s 340B rebate pilot program will not be implemented for the time being, and covered entities will remain entitled to their upfront 340B discounts for eligible drugs. Manufacturers must continue to honor 340B upfront discounts rather than shift to wholesale pricing with post-sale rebates for the targeted pilot drugs.
Nonetheless, while we await HHS’s dismissal of its appeal and the results of its reconsideration, which may include additional notice-and-comment periods, or other related agency action, covered entities should remain vigilant and prepared for potential changes in 340B pricing models as we await HRSA’s next steps.
How Frier Levitt Can Help
Frier Levitt regularly counsels and advises covered entities and their pharmacy partners on 340B governance, pricing operations, and strategy. We are carefully monitoring this situation for additional updates.
In the meantime, we can assist covered entities in developing workflows and other strategies to remain flexible and respond quickly to any potential changes in the 340B program, especially considering the potential for future rebate programs and pricing mechanism changes.
Frier Levitt provides strategic, industry-focused legal counsel tailored to your needs. Contact our team today to learn how we can help you.
