Background

On July 31, the Health Resources and Services Administration (HRSA) announced a 340B Rebate Model Pilot Program for prescription drugs subject to Medicare drug price negotiation in 2026. The program is voluntary for manufacturers, and participation is subject to HRSA’s review and approval of manufacturers’ implementation plans. Manufacturers interested in participating in the pilot must submit a plan by September 15, 2025; the pilot goes into effect on January 1, 2026.

Several manufacturers have attempted to implement 340B rebate models in the past year to address duplicate discount concerns. Following interventions by HRSA, however, these efforts have been paused and at least four manufacturers have challenged HRSA’s actions in court.

Meanwhile, a new potential vulnerability for duplicate discounting has arisen: 340B discounts on medicines subject to negotiated Maximum Fair Prices (MFPs). With the first set of MFPs set to take effect in January 2026, HRSA’s announcement of this pilot program is a significant development for all 340B stakeholders.

Program Scope and Requirements

The pilot program is limited to 340B claims for the following drugs:

• Eliquis
• Jardiance
• Xarelto
• Januvia
• Farxiga
• Entresto
• Enbrel
• Imbruvica
• Stelara
• Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill

In the 340B rebate model, covered entities will purchase drugs at a higher initial price rather than receiving a 340B discount upfront. They will then submit claims to the manufacturer to verify program eligibility, and the manufacturer will issue a rebate equal to the difference between the initial price and the 340B price. Under the pilot program, manufacturers are required to:

• Cover all IT and data submission costs
• Send rebate payments to covered entities within 10 days of claim submission
• Continue using existing distribution channels with pre-rebate pricing
• Provide at least 60 days’ advance notice to covered entities and other stakeholders before implementation of a rebate model.
• Ensure that their IT platforms protect patient privacy and limit data collection to what is necessary for providing 340B rebates

Covered entities have 45 days from dispensing to submit claims, and rebates cannot be denied for diversion or duplicate discount reasons other than MFP duplication. Any manufacturer denial must be supported with clear documentation.

Opportunities and Risks for Manufacturers

The 340B Rebate Model Pilot Program introduces a new way of administering rebates, creating new operational and financial complexities for stakeholders. The rebate model also provides manufacturers the opportunity to identify duplicate discounts in other markets and target potential audits.

While the program aims to enhance transparency and access, it raises questions for stakeholders in the near term:

• How could minimal parameters in the guidance and limited direction on compliance and reporting lead to uncertainty in implementation across hospitals and clinics?
• How will HRSA evaluate the success of the manufacturers’ rebate model and how will that impact the possibility of broader adoption?
• How might the 10-day processing window create operational challenges for manufacturers and increase the risk of noncompliance or penalties? How could delays in receiving mandated rebates within the 10-day turnaround heighten financial risks for hospitals (and specifically safety-net providers) or threaten their ability to maintain operations and dispense discounted drugs?
• How accurately will the model identify duplicate discounts and will findings influence contracting or distribution strategies?

Rebate Model May Have Limited Impact on Other 340B Issues

340B stakeholders have been discussing a range of issues and reforms beyond duplicate discounts that may not be addressed by the model. For example, overall 340B program growth, including contract pharmacy use, has been of interest at both the federal and state levels. As a result of growth, manufacturers have implemented restrictions on delivering 340B discounted medicines to contract pharmacies. Implementation of a limited or even a broader rebate model (e.g., beyond drugs subject to an MFP in 2026) may not result in manufacturers revisiting decisions to restrict delivery to contract pharmacies.

Manufacturers and Provider Considerations

As manufacturers prepare for pilot implementation, they will need to consider their internal and/or vendor capacity to process claims within the timelines outlined in the rule. They will also need to consider their covered entity-facing communication strategy, including technical and education support. Manufacturers may also model financial scenarios to anticipate rebate liability and consider implications of their existing or planned contracting/distribution strategies.

Providers should have a clear understanding of mandatory data reporting elements and will need to establish documentation protocols to reduce the risk of disputes. There may be some providers and manufacturers that consider participating in or supporting the development of shared claims-clearing infrastructure, which could reduce administrative friction, improve reconciliation processes, and limit exposure to duplicate discount disputes.

To learn more about the 340B rebate model and how Avalere Health can analyze stakeholder impacts, connect with us.