The waiting game on rebates is over. In a regulatory notice, the Department of Health and Human Services said it has approved a 340B rebate model pilot program that is limited to the first 10 drugs subject to the Medicare Drug Price Negotiation Program. The pilot will dovetail with that program’s Jan. 1, 2026 start date.
While none of us want rebates, this is as much of a win as we could ask for, short of ruling out them out completely:
- Manufacturers must allow claims data up to 45 days from the date of dispensation, with certain allowances for exceptions
- Rebates must be issued within 10 days of data submission
- Manufacturers cannot use concerns over diversion or Medicaid duplicate discounts to deny rebates
- Drugmakers had proposed rebates on a much broader set of branded products — in some cases, their entire portfolio
HRSA’s Office of Pharmacy Affairs said it is introducing the pilot program “in a methodical and thoughtful approach to ensure a fair and transparent 340B rebate model process for all stakeholders involved. OPA is also implementing this pilot to better understand the merits and shortcomings of the rebate model from stakeholders’ perspectives, and to inform OPA consideration of any future 340B rebate models consistent with the 340B statute and the Administration’s goals.”
OPA says it invites comments from all stakeholders “but is under no obligation to respond to or act on the comments,” which is odd. Regardless, speak up. The more covered entities that comment, the more we can learn about what this unprecedented new model will mean for providers and the populations they serve.
It’s astounding that nonprofit safety net providers are being ordered to float millions of dollars upfront to some of the most profitable, multibillion-dollar companies in the world, but here we are. And of course, this pilot program raises plenty of new questions, such as how manufacturer restrictions on contract pharmacies will interact with this, if at all.
We’ll have more to say about this as we digest the particulars. Fasten your seatbelts for the ride ahead.
340B dog days
We just concluded a 340B Coalition Summer Conference that many attendees described as somewhat somber. Attendance was lighter — organizers listed it as 1,450, compared to an average of 2,000 — though the 101 exhibits from more than 60 companies was impressive.
Organizers said people may be prioritizing the winter version in sunny San Diego, and that may be partly true. But it was also clear that the prospect of rebates and the massive Medicaid cuts are weighing heavily on safety net providers.
Regarding Medicaid, the president succeeded in getting his so-called “Big Beautiful Bill” through Congress on the narrowest of party-line votes despite the expressed reservations of several Republicans who ended up voting for it. Of chief concern to us here are the nearly $1 trillion in Medicaid cuts through various reconciliation measures that go into effect starting in 2027. The Congressional Budget Office projects they will strip health insurance coverage from 10 million Americans.
Coupled with ending enhanced pandemic-era ACA Marketplace subsidies — premiums will rise by a whopping 75% on average next year, per KFF — the changes will heap a lot of uncompensated care on safety net hospitals. That could accelerate rural hospital closures and jeopardize some hospitals’ 340B eligibility, similar to what we saw during the early days of the pandemic, when many saw a dramatic rise in commercially insured patients.
But letting hospitals lose eligibility seems unlikely to me. Just as the government granted emergency waivers for 340B hospitals affected by changing patient mixes during COVID, Sen. Josh Hawley (R-Mo.), who voted for the legislation despite concerns about its Medicaid cuts, is pushing a bill to double a bridge fund for rural hospitals to $100 billion. Congress has plenty of time to find a fix.
340B legislative activity
In better news, Rep. Doris Matsui (D-Calif.) and Sen. Peter Welch (D-Vt.) reintroduced the 340B PATIENTS Act during the summer conference, which would prohibit manufacturers from restricting access or placing conditions on 340B drugs. While The Craneware Group is proud to endorse it, the bicameral bill lacked a single Republican co-sponsor as of this writing. Realistically, it’s going nowhere in the GOP-controlled House and Senate. Still, we’re grateful to Rep. Matsui and Sen. Welch for their unwavering support of 340B.
In the House, Rep. Earl “Buddy” Carter (R-Ga.), introduced bipartisan PBM reform legislation that would also require reporting from covered entities in states that allow them to bill 340B drugs to Medicaid managed care organizations and are reimbursed above acquisition cost.
Carter, a pharmacist and longtime foe of 340B, is stepping down from his post as chair of the House Energy and Commerce subcommittee on Health, which oversees the program, after announcing a run for an open Senate seat. His replacement is Rep. Morgan Griffith, R-Va., with Rep. Diana Harshbarger (R-Tenn.) as vice chair.
Also of note, Ohio became the 10th state to enact a 340B reporting law, joining Colorado, Hawaii, Idaho, Indiana, Maine, Minnesota, Rhode Island, Vermont and Washington. In addition to requiring the aggregate acquisition cost and reimbursement figures for 340B drugs, Ohio will require all covered entity types to provide detailed information about their patient populations, operating costs, financial assistance policies and use of program benefits.
340B and IRA rebates
Circling back to rebates, a federal appellate court granted a request to consolidate appeals from four drugmakers (Johnson & Johnson, Bristol Myers Squibb, Eli Lilly and Novartis) and drug industry vendor Kalderos. The appeals stem from two lower court rulings that said HHS must pre-approve any 340B rebate scheme. But the court said 340B Health lacked standing in its cross-appeal seeking a ruling that the statute prohibits all forms of 340B rebates.
Now to Inflation Reduction Act Medicare rebates: CMS is proposing to use claims data to identify 340B drugs purchased under Part D. The agency proposes using one of two methodologies to exclude them from calculating price-inflation rebates under the IRA:
- Use existing data to cross-reference National Provider Identifiers (NPIs) for prescribing providers and pharmacies that participate in 340B. CMS would assume a claim involves a 340B drug if the NPIs match.
- Create a new data repository where covered entities can voluntarily report claims-level data for 340B drugs dispensed under Part D, with 2026 considered a “testing period” before potentially becoming mandatory.
Deja Vu All Over Again?
CMS is floating the possibility of accelerating the hospital outpatient payment cuts it’s making to offset the roughly $9 billion lump-sum remedy for the nearly 30% Part B payment reductions the Supreme Court struck down in 2022. The agency wants to shorten the clawback window from 16 years to six by increasing the outpatient prospective payment system cuts from .5% to 2 % annually as part of its budget-neutral policy.
The agency is accepting public comment on the proposed OPPS rule for 60 days. You have until Sept. 15 to let them know what you think.
CMS also intends to conduct a Medicare drug-acquisition cost survey, following up on an executive order from the White House. The agency’s failure to do a survey before instituting Part B payment reductions to 340B hospitals was at the heart of the Supreme Court decision, adding to speculation the Trump administration wants to resuscitate the cuts.
These are challenging times for safety net providers. Keep your chins up, make your voices heard and keep doing the good work.
If you’d like to continue this conversation, please contact me at [email protected].