HRSA Announces 340B Rebate Model Pilot Program to Shift Drug Pricing to Rebates

What this means for your practice

For telehealth brands, medspas, dental practices, and chiropractic offices, the direct impact of the 340B Rebate Model Pilot Program is generally indirect, as these entities typically do not qualify as 340B covered entities. However, any healthcare business that partners with or refers patients to 340B covered entities (such as certain hospitals and clinics) should be aware of this significant shift in drug pricing methodology. The change from upfront discounts to a rebate system affects the financial operations and cash flow management for drug manufacturers and directly participating covered entities. While not a direct operational change for most of our audience, understanding these underlying shifts in drug pricing frameworks is crucial for strategic planning, especially for those considering partnerships or operating within broader healthcare ecosystems where 340B entities are prevalent. This signals HRSA's continued efforts to refine and enforce drug pricing compliance, which can have ripple effects across the entire pharmaceutical supply chain.

Rockville, MD – The U.S. Department of Health and Human Services (HHS), through its Health Resources and Services Administration (HRSA), Office of Pharmacy Affairs (OPA), has issued a Notice announcing the availability of a revised 340B Rebate Model Pilot Program (Pilot). This initiative marks a significant change in how the 340B Drug Pricing Program will operate for a select group of drugs, transitioning from upfront discounts to a rebate mechanism to ensure covered entities receive the statutory 340B ceiling price.

Overview of the Pilot Program

The 340B Program, established under section 340B of the Public Health Service Act, mandates that pharmaceutical manufacturers participating in Medicare Part B and Medicaid sell drugs at reduced prices to certain healthcare providers, known as “covered entities.” Historically, these reduced prices have been administered through upfront discounts. The new Pilot Program, however, will allow qualifying drug manufacturers to satisfy their 340B pricing obligations through a rebate mechanism for a limited set of drugs.

HRSA's decision to launch this Pilot follows a comprehensive Request for Information (RFI) process. The RFI gathered input from various interested parties regarding the potential use of rebates, including proposed standards and procedures for approving manufacturer rebate plans and assessing their impact on stakeholders. After careful consideration of the feedback and different policy alternatives, HRSA has moved forward with this rebate approach, drawing on established and successful rebate programs as a model.

This Notice is effective immediately upon publication, though HRSA retains the right to issue future revisions or addenda.

Background on the 340B Program

Section 340B of the Public Health Service Act was created under the “Veterans Health Care Act of 1992.” Its primary intent is to enable eligible hospitals and clinics to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” While originally aimed at small hospitals serving low-income populations, the program has expanded to include large academic medical centers and integrated health systems that meet specific criteria.

As of April 1, 2026, the 340B Program encompassed 15,249 covered entities and 49,214 associated sites, with discounted purchases reaching $100 billion in 2025. Participating manufacturers enter into pharmaceutical pricing agreements with HHS, agreeing that the prices charged for covered outpatient drugs to covered entities will not exceed statutorily defined 340B ceiling prices. These ceiling prices are calculated by HRSA based on quarterly pricing reports from manufacturers to the Centers for Medicare & Medicaid Services (CMS).

Key to the 340B Program's integrity are two core prohibitions on covered entities: preventing duplicate discounts (where a drug is subject to both a 340B discount and a separate Medicaid rebate) and preventing diversion (reselling or otherwise transferring 340B-purchased drugs to ineligible individuals).

Impact and Participation

The introduction of a rebate model signifies a strategic shift in how 340B pricing is administered. For manufacturers, it necessitates developing and submitting rebate plans to HRSA. Manufacturers seeking to participate in the 340B Rebate Model Pilot Program must submit their plans to [email protected] by August 24, 2026. The effective date for selected drugs under the Pilot is January 1, 2027, covering initial price applicability periods for years 2026 and 2027.

This change will primarily affect the financial and operational processes of manufacturers and covered entities. While the ultimate goal remains providing drugs at reduced prices, the mechanism for achieving this will now involve post-purchase rebates rather than upfront price reductions for the drugs included in the pilot.

Key Facts

| Detail | Value | |---|---| | Program Name | 340B Rebate Model Pilot Program | | Issuing Agency | Health Resources and Services Administration (HRSA), Department of Health and Human Services (HHS) | | Program Mechanism | Utilizes rebates instead of upfront discounts to effectuate 340B ceiling prices for certain drugs | | Manufacturer Plan Submission Deadline | August 24, 2026 | | Effective Date for Selected Drugs | January 1, 2027 (for initial price applicability year 2026 and 2027) | | Contact Information | Chantelle Britton, Director, Office of Pharmacy Affairs, HRSA; email: [email protected] |

Frequently Asked Questions

What is the 340B Rebate Model Pilot Program?

It is a new program announced by HRSA that provides a rebate mechanism through which qualifying drug manufacturers may effectuate the 340B ceiling price for certain drugs sold to covered entities, replacing upfront discounts with rebates.

Who issued this Notice about the Pilot Program?

The U.S. Department of Health and Human Services (HHS), specifically the Health Resources and Services Administration (HRSA), Office of Pharmacy Affairs (OPA).

What is the primary purpose of the broader 340B Drug Pricing Program?

The 340B Program was established to enable certain hospitals and clinics to 'stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services' by purchasing drugs at reduced prices.

When do manufacturers need to submit their plans to participate in the Pilot?

Eligible manufacturers seeking to participate must submit plans to [email protected] no later than August 24, 2026.

What is the effective date for selected drugs under this new Pilot Program?

For selected drugs, the effective date for an initial price applicability year 2026 and 2027 is January 1, 2027, for manufacturers who submit plans by the deadline.

Source: HHS — Notice: Notice Regarding 340B Rebate Model Pilot Program · 2026-08-03