Update: 340B Rebate Model Pilot Paused by Court Order
The United States District Court for the District of Maine issued a preliminary injunction in American Hospital Association, Maine Hospital Association, and Four Safety-Net Health Systems v. United States Department of Health and Human Services, et al., Case No. 2:25-cv-00600-LEW on December 29, 2025, that pauses implementation of the 340B Rebate Model Pilot pending further order. Plaintiffs filed the suit alleging that the 340B Rebate Model Pilot Program’s implementation violated the Administrative Procedure Act (the “APA”) by failing to provide adequate notice, meaningful comment response, and reasoned explanation for the significant policy change from upfront discounts to a rebate system.
- Likelihood of Success on APA Claims: The court determined that plaintiffs have a substantial likelihood of prevailing on their argument that the federal defendants failed to satisfy basic APA requirements. Specifically, the court found that HHS did not provide meaningful responses to significant public comments and did not adequately justify the shift from traditional upfront 340B discounts to a rebate model.
- Irreparable Harm: The court concluded that hospitals and health systems would suffer irreparable harm absent an injunction. The pilot program’s requirement to switch from upfront discounts to a rebate process would disrupt cash flow and impose administrative burdens before the program’s legality is resolved.
- Balance of Equities and Public Interest: The balance of hardships favored the plaintiffs because delaying the pilot preserves the current 340B operating model while the merits of the APA challenge are litigated. The court also found that temporarily halting implementation serves the public interest in ensuring that significant changes to federal healthcare policy adhere to statutory procedural requirements.
- Injunctive Relief Ordered: The court granted a preliminary injunction
preventing HHS and its components (including HRSA) from implementing or enforcing the 340B Rebate Model Pilot Program pending resolution of the litigation on the merits. As a result, the pilot may not go into effect statewide or nationwide until further order of the court.
At this stage, we cannot predict whether the appellate court will grant HRSA’s request to “stay” the injunction (a request that was just made of the court of appeals this morning) but, as of this moment, the pilot program is effectively on hold.
While the situation continues to evolve, our commitment to supporting 340B covered entities remains constant. We are monitoring developments closely and will share updates as additional formal guidance becomes available.
Customers should continue operating under current 340B program requirements unless and until formal direction is issued by HRSA or the courts. Our team remains available to answer questions and support planning discussions.
Have questions? Schedule time to talk to an expert at The Craneware Group