340B Rebate Pilot Returns to Court: What Covered Entities and Manufacturers Should Watch

The 340B Rebate Model Pilot Program is back in court before its planned January 1, 2027 launch.

The American Hospital Association, Maine Hospital Association and four safety-net hospitals filed suit in the U.S. District Court for the District of Maine on October 9, 2026. They are asking the court to block the revised pilot and issue a temporary restraining order preventing it from taking effect while the case proceeds. www.beckershospitalreview.com

The hospitals argue that HHS and HRSA did not adequately account for the program’s financial and administrative burden. They say the revised model could increase drug-purchasing costs, strain cash flow and divert resources from patient care.

This is the second lawsuit over the rebate model. The first version was scheduled to begin on January 1, 2026. A Maine district court and the appeals court blocked it after raising concerns about the speed of the rollout and the agency’s treatment of public feedback. HRSA later withdrew that version and developed a revised program. www.beckershospitalreview.com

What the revised pilot changes

Under the current 340B model, covered entities generally purchase eligible drugs at or below the 340B ceiling price.

The revised pilot would use a different process for a limited group of drugs. Covered entities would purchase the drugs through their existing distribution arrangements and later seek a rebate equal to the difference between the wholesale acquisition cost and the 340B ceiling price.

HRSA says the pilot will improve transaction-level visibility, allow claims to be checked before rebates are paid and reduce the risk of duplicate discounts. HRSA has approved plans for 10 manufacturers covering 21 drugs. The plans are scheduled to begin January 1, 2027. Drugs outside the approved plans remain under the upfront discount model. www.hrsa.gov

The approved manufacturers include AbbVie, Amgen, Astellas, AstraZeneca, Bristol Myers Squibb, Boehringer Ingelheim, GSK, Merck, Pfizer and Teva. HRSA has posted the specific drugs and plan terms on its program page.

The cost dispute

The hospital plaintiffs say the government underestimated the cost of the new system.

Hospital analyses estimate more than $1 billion in annual administrative costs. HRSA has estimated approximately $537 million across covered entities. The difference involves startup expenses, rebate reconciliation, cash-flow effects, technology systems and ongoing administrative work. www.beckershospitalreview.com

The AHA also says the revised pilot is roughly twice the size of the original proposal and that HHS moved ahead after receiving more than 2,400 comments about the program’s financial and operational effects.

Those claims remain allegations unless the court accepts them.

What covered entities should review

The revised pilot creates specific deadlines.

Covered entities generally must submit claims data within 45 calendar days after dispensing a drug. Manufacturers must pay or deny a completed submission within 10 calendar days. A denial must include supporting documentation. If a submission is incomplete, the 10-day period starts again after the missing information is submitted. www.hrsa.gov

HRSA also says covered entities should use their existing 340B wholesaler accounts for pilot drugs rather than creating separate ordering systems.

Covered entities should review:

• which purchases are covered by an approved plan;

• who collects and submits the required data;

• who corrects incomplete submissions;

• how rebate timing affects cash flow;

• how claims, dispensing and eligibility records will be reconciled.

Contract pharmacies will also need to understand how covered-entity purchasing, dispensing records, claims data and rebate payments fit together. The pilot does not remove existing recordkeeping requirements involving dispensing, eligibility, diversion or duplicate discounts.

What manufacturers should review

Manufacturers must follow their HRSA-approved plans and prepare for questions about data requirements, denials, payment timing and system performance.

HRSA says changes to an approved plan require additional agency review and approval. Manufacturers cannot change the plan without following that process. www.hrsa.gov

Manufacturers should also review their wholesaler arrangements, claims systems, compliance procedures and communications with covered entities.

What happens next

The court could allow the pilot to proceed, require additional procedures or delay implementation.

For now, covered entities and manufacturers should plan for the January 1 date while monitoring the litigation. The case could affect the future use of rebate models in the 340B program and clarify how HRSA’s oversight authority applies to a system that changes when and how covered entities receive the benefit of the discount.

How Lanton, Lanton & Sosa Law can help

Lanton, Lanton & Sosa Law PLLC works with 340B covered entities, pharmacies and manufacturers on the contract and compliance questions that determine how drugs are purchased, reimbursed and delivered to patients. We help clients understand changing 340B requirements, assess the effect on their operations and contracts, and prepare for disputes or implementation issues.

The HRSA 340B Rebate Model Pilot Program page includes the approved manufacturer plans, guidance and frequently asked questions. The Federal Register notices are also available through HRSA.