On July 31, 2025, the U.S. Department of Health and Human Services Health Resources and Service Administration (HRSA) announced the availability of a new 340B Rebate Model Pilot Program (the Rebate Pilot Program). Under this Rebate Pilot Program, instead of receiving discounts on the purchase price for certain drugs, covered entities will receive a post-purchase rebate reflecting the difference between the higher upfront cost and the drug’s 340B price. The stated purpose of the Rebate Pilot Program is to test this rebate model on a select group of drugs in a “methodical and thoughtful approach to ensure a fair and transparent 340B rebate model process for all stakeholders involved.” The program is also intended to help HRSA better understand the merits and shortcomings of a 340B rebate model from various perspectives. Initially the Rebate Pilot Program will be limited to those drugs included on the CMS Medicare Drug Price Negotiation Selected Drug List[1], but may be expanded in the future to include other drugs.
Rebate Pilot Program participation will first be open to manufacturers that have Medicare Drug Price Negotiation Program Agreements with CMS. Any of these manufacturers that wish to participate must submit their participation plans by September 15, 2025, with HRSA Office of Pharmacy Affairs (OPA) approvals issued by October 15, 2025. Manufacturer participation plans must incorporate several elements, including requirements for distribution mechanisms, data security, data reporting and standards for rebate payments and denials. Under the Rebate Pilot Program, covered entities will have 45 days from the dispense date to submit data to the manufacturer for the rebate and manufacturers will be required to pay out approved rebates within ten (10) calendar days of submission.
Implementation of the Rebate Pilot Program is generally seen as a “win” for the pharmaceutical industry, which has long raised concerns over the 340B Program’s traditional discount structure. In support of the Rebate Pilot Program, some argue that the rebate model will improve program transparency and oversight, modernize the program, and help curb duplicate discounts. Conversely, some concerned over the rebate model’s implementation argue that it may harm hospitals by increasing administrative and financial burdens on vulnerable hospitals. The impact of the Rebate Pilot Program and the likelihood that a rebate model will replace the 340B Program’s traditional discount model are yet to be determined. While currently limited in its scope, any expansion of the Rebate Pilot Program to cover additional drugs may represent one of the most significant changes in the 340B Program since its inception.
[1] Medicare Drug Price Negotiation Selected Drug
List, available at https://www.cms.gov/files/zip/
medicare-drug-price-negotiation-selected-drug-
list.zip, last visited September 3, 2025.
