Federal Policy
HHS Announces Revised 340B Rebate Model Pilot for Medicare Negotiated Drugs Starting January 2027
HHS issued a notice announcing a revised 340B Rebate Model Pilot Program that allows qualifying drug manufacturers to use rebates rather than upfront discounts for certain 340B-eligible drugs. The pilot is limited to drugs included on the CMS Medicare Drug Price Negotiation Selected Drug Lists for 2026 and 2027. Manufacturers must submit participation plans to HRSA by August 24, 2026, with approval decisions by September 24, 2026, and approved models taking effect January 1, 2027. The AHA opposes the pilot, citing concerns about administrative burdens, cash-flow disruptions, and compliance costs for hospitals serving vulnerable populations, and is considering legal options to block implementation.
Why it mattersThe pilot will impose new administrative and financial burdens on 340B covered entities, particularly safety-net hospitals, by shifting from upfront discounts to rebates for Medicare-negotiated drugs, affecting cash flow and potentially reducing resources available for patient care.