HRSA Seeks Applicants to Test 340B Rebate Model Pilot Program

On August 1, 2025, the U.S. Department of Health and Human Services (“HHS”) Health Resources and Services Administration (“HRSA”) issued a call for applications for a 340B Rebate Model Pilot Program (the “Pilot Program”).

The announcement of the Pilot Program signifies the intersection of several notable policy issues upon which stakeholders of the pharmaceutical supply chain have focused over the past few years, including drug manufacturer efforts to provide 340B discounts via retrospective rebates as opposed to upfront discounts, and the January 1, 2026, implementation of the maximum fair price (“MFP”) for the first 10 selected drugs negotiated under the Medicare Drug Price Negotiation Program (“MDPNP”).

Background

Section 340B of the Public Health Service Act (“PHSA”) established the 340B program, which requires drug manufacturers that wish to participate with federal payors to enter into agreements with HHS to provide covered entities (certain types of hospitals, health centers, and federal grantees) with outpatient drugs at a significantly reduced price. Specifically, Section 340(a)(1) and (2) of the PHSA mandates that the HHS Secretary enter into agreements with manufacturers of covered outpatient drugs purchased by covered entities, under which “the amount required to be paid (taking into account any rebate or discount, as provided by the Secretary). . .”

Currently, covered entities purchase covered outpatient drugs from manufacturers at the discounted 340B price. However, starting in 2024, certain drug manufacturers sought to impose “rebate models” to provide covered entities the 340B discount in the form of a retroactive rebate instead of an up-front pricing discount. Specifically, under a rebate model, a covered entity purchases a drug at the standard acquisition cost and then submits various claim data elements to receive a post-purchase rebate reflecting the difference between the higher initial price and the 340B discounted price.

Drug manufacturers contend that rebate models would provide greater transparency and cut down on abuse, since manufacturers would be able to track which drugs are sold at a discount and dispute, for example, unlawful duplicate rebates. Covered entities, meanwhile, have argued that rebate models could allow drug manufacturers to deny discounts based on their own determinations of patient eligibility, could be challenging to implement, and would violate the 340B statute.

After at least five manufacturers submitted proposals to implement rebate models in fall 2024 and early 2025, HRSA informed them that implementing a rebate model requires HRSA approval pursuant to authority granted by the 340B statutory language (a statement that is reiterated in the August 1 Pilot Program announcement).

The manufacturers challenged HRSA’s position under the Administrative Procedure Act, contending that HRSA exceeded its authority under the 340B statute by requiring preapproval and by failing to approve their proposals. Two decisions by the U.S. District Court for the District of Columbia on May 15, 2025, and June 27, 2025, largely supported HRSA’s position, finding that HRSA may allow 340B rebate models, and that HRSA may require preapproval of any proposed 340B rebate models before implementation. To date, the challenge to HRSA’s legal authority within these court cases have been appealed to a higher court, which remain pending.

Notably, several manufacturers who are seeking to impose rebate programs to HRSA also happen to be the manufacturers of selected drugs for 2026—the first price applicability year of the MDPNP. Throughout the Centers for Medicare & Medicaid Services (“CMS”)’s guidance-making process to implement the MDPNP for 2026, HHS cited stakeholder concern over effectuating the MFP, issues stakeholders would have identifying and de-duplicating MFP and 340B discounts, and how all these processes would work through the use of a Medicare Transaction Facilitator. Many manufacturers emphasized that retrospective methods, or rebating, would likely be the most effective way for manufacturers to ensure effectuation of the MFP for the 10 selected drugs and to address 340B discounts.

The 340B Rebate Pilot Program

In the announcement of the Pilot Program, HRSA’s Office of Pharmacy (“OPA”) invited drug manufacturers with MDPNP agreements with CMS for initial price applicability year 2026 to apply to participate in the Pilot Program for a minimum of one year to test the model on the selected drugs.

HRSA set forth the “Rebate Model Pilot Program Criteria” that manufacturers’ proposed plans must satisfy for consideration, including general requirements, reporting requirements, rebates, and data requirements. It clarified that for the purposes of the pilot program, a “rebate” is “a reimbursement made from the manufacturer to the covered entity in the amount of the standard acquisition cost (i.e., wholesale acquisition cost) of a covered outpatient drug less the statutory 340B ceiling price….” In addition to requirements relating to reporting and data, plans should generally:

• Include assurances that all costs for data submission through an information technology (IT) platform be borne by the manufacturer (not passed onto the covered entities);
• Allow 60 calendar days’ notice to covered entities and other impacted stakeholders before implementation of a rebate model (with instructions for registering any IT platforms);
• Allow covered entities to order the selected drugs under existing distribution mechanisms;
• Provide a technical assistance/customer service component, with opportunities to engage with the manufacturer in good faith regarding questions or concerns (through the IT platform and also through a point of contact at the manufacturer);
• Ensure that the data is secure and protected through the IT platform and data collected is limited to that necessary for providing 340B rebates;
• Ensure that patient identifying information is protected through the IT platform, consistent with the Health Insurance Portability and Accountability Act.

With respect to rebates, the plan should:

• Specify if the rebates are paid at the package level or unit level;
• Ensure that all rebates are paid to the covered entity (or denied, with documentation in support) within 10 calendar days of data submission);
• Ensure that 340B rebates are not denied based on compliance concerns with diversion or Medicaid duplicate discounts, pursuant to sections 340B(a)(5)(A) and (B) of the Public Health Service Act and should provide for rationale and specific documentation for reasons claims are denied; and
• Ensure that 340B rebates are only paid on sales of drugs selected under the MDPNP, regardless of payer.

Manufacturers must submit plans for participation in the Pilot Program no later than September 15, 2025, as HRSA emphasized that approvals to participate in the Pilot Program would be made quickly—by October 15, 2025—to meet the January 1, 2026, effective date of the MDPNP.

Submitting Public Comment

OPA is seeking public comment on all aspects of the announcement and the Pilot Program, which must be submitted by September 2, 2025, to the Federal eRulemaking Portal: https://www.regulations.gov. HRSA specifies commenters should consider the following four points:

• Are there any additional flexibilities to maximize efficiency and efficacy for participating manufacturers that should be considered in the pilot design?
• Are there any additional safeguards to mitigate adverse, unintended impacts for covered entities that should be considered in the pilot design?
• Are there any additional data or reporting elements that should be required to improve implementation and evaluation of the pilot?
• Are there any potential implementation issues not yet sufficiently accounted for in the pilot?

Additional Considerations

The Pilot Program is currently limited in scope to manufacturers of the first 10 selected drugs of the MDPNP for 2026 and only to the NDC-11s included on the MDPNP drug list. However, stakeholders should consider that, if successful (and assuming the guidance survives any potential legal challenges), HRSA may expand the rebate model to cover more parts of the 340B program.

HRSA specifically noted that manufacturers with MDPNP agreements for initial price applicability years 2027 and beyond could be invited to participate at a later date and that OPA could consider expanding the rebate program to other 340B drugs after considering the effectiveness of the model and stakeholder feedback. As the number of drugs subject to a MFP under the MDPNP will only continue to expand to other high-spend Medicare drugs, the number of drugs for which a rebate model could be used could similarly grow—which could potentially and ultimately upheave the entire 340B program.

Epstein Becker Green Staff Attorney Ann W. Parks contributed to the preparation of this post.