D.C. Circuit Rules Drugmakers Need HHS Approval for 340B Rebate Models
The U.S. Court of Appeals for the D.C. Circuit ruled July 21, 2026, that pharmaceutical manufacturers cannot implement 340B rebate models without prior approval from the HHS secretary. The decision upheld lower court rulings against Novartis, Johnson & Johnson Health Care Systems, Bristol Myers Squibb, and Eli Lilly. The ruling reinforces federal authority over 340B program administration and blocks manufacturer attempts to unilaterally restructure drug discount delivery mechanisms. For Medicaid managed care organizations with provider networks that include 340B-eligible entities, the decision preserves existing 340B purchasing pathways and prevents disruption to contract pharmacy arrangements that affect covered entity participation and pharmacy network stability.