Summer has arrived, and for the 340B world, it kicks off what promises to be a long, heated fight over rebates. As promised, the Department of Health and Human Services has submitted guidance on the issue to the Office of Management and Budget for review after a federal judge in May ruled that drugmakers need the agency’s approval to operate a 340B rebate model.
What exactly the proposed guidance says isn’t public. But recall that U.S. District Judge Dabney Friedrich ruled the statute does not prohibit the use of rebates to issue discounts under the program. Three manufacturers are appealing her decision, while the nonprofit 340B Health is asking the appellate court to rule that rebates are “categorically prohibited under the statute.”
The HHS guidance has triggered a flurry of lobbying from stakeholder groups to try and influence the Trump administration. What we’re hearing is that HHS may allow for a single version of a rebate model — meaning no variation between manufacturers, and each drugmaker would still have to get permission from the agency beforehand.
Regardless, a big question is whether the rebate guidance will follow normal procedure for proposed regulations. OMB has up to 90 days to review the proposal, during which time the contents are kept under wraps. Normally, it would then publish notice in the Federal Register announcing the proposed change and allow for a period of public comment. That would give affected stakeholders (including manufacturers) time to digest the proposal and outline some key operational concerns to HHS before the regulation is made final.
As most would agree, these are hardly normal times we’re living in where the federal government is concerned. And recall that the Trump administration has proposed moving the federal Office of Pharmacy Affairs, which oversees the 340B program, from under HRSA to the Centers for Medicare and Medicaid Services. So plenty of ambiguity remains.
The emperor’s new clothes?
Big Pharma spends lots of time (and money) complaining about duplicate discount non-compliance in 340B — in fact, it’s part of why they’re pursuing rebates. But a new report calls that narrative into question.
The American Hospital Association investigated five years worth of federal audit data on both 340B hospitals and drug companies. Its report found that while the rates of duplicate discounts and diversions among 340B hospitals declined by a combined 62.1% between the fiscal years 2018 and 2022, “drug company audits reveal a consistent pattern of noncompliance.”
Specifically, the report found that 60% of the 30 audits of drugmakers during that period had at least one adverse finding, and that 93% of them had to issue repayments to covered entities.
Coincidentally, HRSA has identified overcharges to 340B entities in the first three manufacturer audits conducted in fiscal 2025 — including from SpecGx, which announced refunds spanning a whopping 32 years, from the end of 2024 all the way back to the inception of 340B in 1992, for its Methadose opioid addiction medication.
“Policymakers should reject the baseless claims made by drug companies of widespread program abuse by 340B hospitals and urge HRSA to increase their audits of drug companies,” the AHA report says. “Greater oversight of these drug companies is necessary to ensure the continued success of the 340B program for the millions of vulnerable patients and communities nationwide who rely on it.”
Hear, hear!
Mixed bag in the states
There’s still plenty of activity at the state level, and it’s a mix of good — 20 states now have contract pharmacy access laws — and not so great.
We’ll start with Indiana, a state that has swung decidedly anti-340B with the election of Mike Braun, a former U.S. senator and dependable program critic, as governor. He recently signed a two-year budget bill that would give the state broad latitude to restrict 340B discounts under Indiana’s managed care Medicaid program.
According to 340B Report, a late amendment to the budget bill allows the state’s Medicaid program to determine whether eligible drugs prescribed to enrollees should qualify for 340B discounts or be subject to Medicaid rebates retained by the state. The state could also issue reimbursements to Medicaid MCO organizations at the 340B price, eliminating any savings. The law could face legal challenges, since the federal Medicaid law permits the use of 340B drugs in managed care programs.
Braun in May signed legislation requiring annual reporting from 340B hospitals, and he earlier ordered an investigation into whether hospitals were complying with eligibility requirements.
In other state news:
- Vermont Phil Scott signed a law protecting contract pharmacy access and requiring annual reporting. Controversially, it also caps the price of certain hospital-administered outpatient drugs at 120% of their average sales price starting in 2026 in a move that appears to affect only the University of Vermont Health Network because of how it exempts other hospital types.
- Oregon and Maine both enacted new contract pharmacy access laws, making it 20 states that now prohibit manufacturers from restricting access to 340B pricing. Maine’s new law also adds new reporting requirements to an existing mandate.
- Lawmakers in Rhode Island sent Daniel McKee legislation that would preserve contract pharmacy access, prohibit PBM and insurers from discriminating against covered entities, and require annual reporting.
MFP and 340B
CMS in June issued a “user guide” for the platform that will facilitate claims data and payments between dispensing entities, plan sponsors and drug manufacturers under the Medicare Drug Price Negotiation Program. But covered entities say it does little to clear up the many complications between the maximum fair price and 340B ceiling price. Pharmacy entities I’ve spoken with tell me they have no idea how many facets of the program will work, how they’ll be made whole and what it will mean for things like cash plans or determining 340B pricing.
The first 10 drugs subject to negotiated discounts go into effect Jan. 1, 2026.
Cassidy report
The top health policy aide to Sen. Bill Cassidy, R-La. and the Chair of the Senate HELP Committee, appeared on a webinar in June to highlight his boss’ recent report wrapping up a lengthy investigation into 340B and trumpet recommended reforms.
Many stakeholders have wondered why Cassidy has failed to draft legislation or hold hearings to publicize his findings and build support for the reforms he champions. But Cassidy is in a tight spot: Four members of the HELP Committee are in the bipartisan 340B “gang of six” workgroup, and a former member of that group, Sen. John Thune, is now the GOP Senate majority leader, with the power to dictate what comes to the floor for a vote. So it seems Cassidy may be facing Quixotic odds.
Contract pharmacy restrictions
Lastly, both Sandoz and Liquidia added new drugs to their existing contract pharmacy restrictions, while Novartis clarified its definition of ‘in-house pharmacy.”
Keep focused on our important safety net mission, keep educating yourself to continue to continue advocating, and as always, reach out to us if we can help!
If you’d like to continue this conversation, please contact me at [email protected].