The 340B program helps hospitals afford medicine for vulnerable patients – but a new government plan to change how it works has set off a major fight. Here’s what it all means.
The Health Resources and Services Administration (HRSA) on Friday unveiled a revised plan to overhaul how a major drug discount programme operates, reigniting a long-running legal battle between hospitals and drug manufacturers (1✔ ✔Trusted Source
HRSA Announces Revised 340B Rebate Model Pilot Program to Strengthen Care in Rural and Medically Underserved Communities
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The updated 340B rebate model, scheduled to take effect on 1 January 2027, marks HRSA’s second attempt to implement the controversial policy after its first effort ended up in federal court.
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What Is the 340B Program?
The 340B programme is a US federal initiative that requires drug manufacturers to sell medicines at discounted prices to hospitals and clinics serving low-income, uninsured, or underinsured patients.
These include rural hospitals, safety-net clinics, and HIV/AIDS treatment centres. The programme was created more than three decades ago to help these healthcare providers stretch limited budgets and continue caring for vulnerable communities.
Here’s what surprises many people: The 340B programme is not funded by taxpayers. It is not a government subsidy. Instead, federal law requires drug manufacturers to provide these discounts directly as a condition for having their medicines covered under other federal healthcare programmes.
The program has grown enormously since it began. The number of qualifying providers has jumped by over 600% since 2000, and total spending has increased to roughly $100 billion as of 2025.
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How Does 340B Work Right Now?
Currently, the discount is given upfront. Hospitals pay the discounted price at the time of purchase. The process is straightforward, with no rebates to claim or additional paperwork.
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What’s New in 340B Rebate Model
This is the government’s second attempt at making this change. The first try, launched in 2025, was blocked by a judge after hospitals sued — and the administration eventually scrapped it. Now it’s back, revised, and covering more ground than before (up from 10 drugs and 8 manufacturers to 25 drugs and 13 manufacturers).
The government now wants to change that to a rebate model instead. Under this new approach, hospitals would pay the full price first, then have to submit detailed purchase data and wait to be paid back the discount afterward — potentially days or weeks later.
The revised pilot is set to launch 1 January 2027, with drug manufacturers required to submit their participation plans by 24 August 2026.
Is Ozempic Covered Under 340B?
Yes. Under the newly proposed rebate pilot, 25 drugs from 13 manufacturers would be affected, and Ozempic and Eliquis are both on that list. These are drugs also covered under Medicare’s separate drug price negotiation program, which is part of why they were selected for this pilot specifically.
How Would This Rebate Process Work?
Hospitals would have up to 45 days after dispensing a drug to submit the claims data needed to trigger a rebate. Manufacturers, in turn, would be required to pay out that rebate within 10 days of receiving complete, correct data.
Manufacturers must also build and pay for their own secure IT systems to collect this data — HRSA has been explicit that hospitals shouldn’t bear that particular cost.
There’s also a built-in complaint mechanism: if a hospital believes a manufacturer is wrongly denying rebates, HRSA says it will investigate, and could remove a manufacturer from the pilot entirely if a pattern of unjustified denials turns up.
Debate Grows Over Public Feedback on 340B Rebate Plan
Hospital advocacy group has alleged that many public comments supporting the rebate plan weren’t genuine.
They claim that over half were part of a coordinated, template-based campaign designed to look like organic public support. If accurate, that would mean real public opinion was far more lopsided against the plan than the raw numbers suggested.
Drug Companies Support the Change
Their argument: hospitals have been claiming discounts they aren’t entitled to, and a rebate system — where hospitals have to prove every purchase first and would crack down on this kind of abuse.
Hospitals strongly oppose it
Their concerns include:
- Paying full price upfront creates real cash-flow strain, especially for hospitals already operating on thin margins
- The extra paperwork and data-reporting burden could cost hundreds of millions of dollars — HRSA estimates around $523 million total, but hospital groups say it could exceed a billion
- Drug companies could potentially delay or unfairly deny rebate payments, leaving hospitals out of pocket
The HRSA has largely sided with drug manufacturers, arguing the current $100 billion program has grown too large and complex without enough oversight.
The pushback to the new model is about who takes on financial risk in a massive drug-discount system: drug companies wanting more control and oversight, versus hospitals worried about cash-flow strain and added bureaucracy.
Reference:
- HRSA Announces Revised 340B Rebate Model Pilot Program to Strengthen Care in Rural and Medically Underserved Communities – (https://www.hrsa.gov/about/news/press-releases/revised-340b-program-2026)
Source-Medindia