Hospital associations and safety-net health systems have filed a federal lawsuit seeking to block the Health Resources and Services Administration’s (HRSA) proposed 340B Rebate Model Pilot Program, which is scheduled to launch in January 2026. The lawsuit argues that the pilot would fundamentally alter how the 340B Drug Pricing Program operates by replacing upfront manufacturer discounts with a rebate-based system, requiring providers to pay full price for drugs first and seek reimbursement later. Plaintiffs contend the program was introduced without sufficient notice, exceeds HRSA’s statutory authority, and violates federal administrative law.
Hospital groups warn that shifting to a rebate model would create significant cash-flow challenges, increase administrative complexity, and threaten the financial stability of safety-net providers that depend on 340B savings to support care for underserved populations. While pharmaceutical manufacturers have expressed support for the pilot, providers argue it would undermine the intent of the 340B program. A federal judge has temporarily paused the pilot while the legal challenge moves forward, leaving the future of the rebate model uncertain.
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