The Health Resources and Services Administration is moving forward with a revised 340B rebate pilot program that would allow qualifying drug manufacturers to provide post-purchase rebates instead of upfront discounts on certain outpatient drugs. This marks the second attempt by the federal government to force hospitals to be paid retrospectively for their 340B drugs, rather than receiving an upfront payment. The pilot is voluntary for drug manufacturers and is scheduled to begin Jan. 1, 2027, running for at least one year. It will apply to drugs selected for the Medicare Drug Price Negotiation Program’s 2026 and 2027 price applicability years, regardless of payer or indication.
Under the current 340B model, eligible safety-net providers generally purchase covered outpatient drugs at a discounted price. The new pilot structure requires providers to purchase participating drugs at the wholesale acquisition cost and then receive a rebate equal to the difference between that amount and the 340B ceiling price. Manufacturers interested in participating must submit their rebate plans to HRSA by Aug. 24, with the agency expected to issue approvals by Sept. 24. Approved plans must give providers at least 90 days’ notice before implementation, and manufacturers must cover the costs of the information technology platforms providers will use to submit claims data.
Covered entities will have at least 45 calendar days after a drug is dispensed to submit information for a rebate. Manufacturers must pay or deny a rebate within 10 calendar days after receiving a complete submission and provide documentation explaining any denial. The agency said the rebate approach will allow transaction-level verification before discounts are provided, improving transparency and helping prevent manufacturers from paying both a 340B discount and another federally required drug-price concession on the same transaction. Manufacturers will not be permitted to deny rebates based on concerns about provider eligibility, drug diversion, or Medicaid duplicate discounts. Such concerns must instead be raised with HRSA or addressed through existing 340B audits and dispute-resolution procedures.
The American Hospital Association criticized the revised program, stating that HRSA’s estimates substantially understate hospitals’ costs. The association said the agency’s analysis dramatically understates the true costs of this program, ignoring the hundreds of millions of dollars in compliance expenses, cash-flow disruptions, and operational burdens that will inevitably divert scarce resources away from patient care. HRSA developed the revised model after receiving more than 2,400 comments from hospitals, health centers, manufacturers, pharmacies, and other stakeholders. The agency contends that staffing effects will generally be modest because many providers already collect the required claims data and use automated systems or third-party administrators.
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HRSA estimated annual claims-reporting costs of approximately $523.3 million across 15,249 covered entities, averaging about $34,320 per entity. The pilot’s products accounted for less than 5.5% of total 340B sales in 2025, meaning the remaining 94.5% of sales are expected to continue under the upfront discount model in 2027. Hospital groups have argued that requiring providers to pay the wholesale price before receiving rebates will disrupt cash flow and create substantial new reporting and administrative costs. The agency said it will monitor rebate requests, payment timing, claim denials, dispute outcomes, and administrative burdens during the pilot, with interim findings made public followed by an evaluation by April 30, 2028.
While the program aims to tighten oversight of the 340B Drug Pricing Program, which has grown from $53.7 billion in 2022 to more than $100 billion in 2025, the shift to retrospective rebates introduces a new layer of financial risk for safety-net providers. The requirement for providers to front the full wholesale acquisition cost before recouping the difference creates a cash-flow gap that could strain the budgets of hospitals and health centers already operating with thin margins. If the administrative costs and compliance burdens prove as high as hospital groups suggest, the pilot could ultimately reduce the amount of money available for patient care, potentially offsetting any gains in transparency or fraud prevention.
Manufacturers and pharmacies expressed concern that the shift to post-purchase rebates might negatively affect rural clinics that rely on the program’s discounted pricing. According to the filing, the new model could force some rural providers to choose between maintaining operations or continuing participation in the 340B program, as they struggle to manage the increased financial strain. The uncertainty surrounding the pilot’s long-term impact has led some industry experts to suggest that the proposed changes might drive a wedge between manufacturers and safety-net providers.
Providers must be careful to submit complete claims data to avoid automatic denial of rebates. The agency noted that any missing information will result in an immediate rejection of the request. This strict process is intended to ensure that rebates are only issued for valid transactions that meet all program requirements.