Dive Brief:
- The Trump administration is taking another shot at requiring rebates in the 340B drug discount program.
- On Friday, the Health Resources and Services Administration said some discounts in 340B would be given in the form of rebates, instead of upfront savings, starting in 2027. It’s the second time the Trump administration has tried to impose rebates in the program, after another proposed pilot was scrapped earlier this year following losses in court.
- Hospitals railed against the announcement, with the the American Hospital Association, a prominent lobbying group, saying it was “considering all available options” to prevent the pilot program from going into effect.
Dive Insight:
340B drugs subject to the rebate have a “maximum fair price” in 2026 and 2027 via the Inflation Reduction Act, which was created in 2022 and gave Medicare the authority to negotiate the prices paid for certain drugs.
Twenty-five medications are on the list, including Ozempic and Eliquis. None of those included in the new rebate program are top drivers of spending in the 340B program.
In the pilot propsal, regulators argue rebates are necessary to validate discounts as 340B has grown from a “narrow pricing safeguard to a complex, multi-billion-dollar system.”
It’s a similar argument used by drugmakers, who have been asking the federal government to institute rebates in the 340B program for years, saying the program has spiraled out of control.
Originally created over three decades ago to aid providers serving disadvantaged populations, spending in the program has ballooned to $100 billion, aided by an over 600% increase in the amount of qualifying providers since 2000.
Currently, drugmakers are required to give upfront discounts on 340B drugs. But the companies have argued providers abuse the program, such as by submitting duplicative discounts.
In 2024, drugmakers approached the Biden administration with proposals to implement a rebate program, arguing many 340B discounts were invalid, duplicative or being abused by providers. Then, later that year, pharmaceutical companies told the government they intended to carry out their own 340B rebate program.
HRSA responded by arguing drug companies were not allowed to unilaterally impose rebates, prompting Eli Lilly, Bristol Myers Squibb, Sanofi and Novartis to sue the government. The drugmakers ultimately lost their case.
Still, the Trump administration seemed more sympathetic to pharma companies regarding 340B, announcing in August 2025 that it would pilot rebates in the drug discount program.
The announcements sparked a lawsuit from hospitals, which argued imposing rebates would put the burden of discount verification on already cash-strapped providers. The Trump administration ultimately scrapped the pilot after a judge opted to pause the rebate plan.
Hospitals say this latest attempt relies on “flawed approach” that has already been tried, according to a statement from Maureen Testoni, CEO of trade group 340B Health.
“HRSA’s initial attempt was blocked by federal courts that found the program likely violated federal administrative law, and it may be again,” she said.
Rick Pollack, CEO of the AHA, said the Trump administration’s analysis “dramatically underestimates” the true cost of the pilot program, and will ultimately burden hospitals and distract from patient care.
In addition to a pilot program, the Trump administration has attempted to restrict 340B in other ways. Earlier this summer, Medicare proposed cutting spending on 340B drugs by a third, arguing it would save billions of dollars.
