Judge hits pause on 340B drug rebates pilot program

Modern Healthcare – Monday, December 29, 2025
By Hayley DeSilva

A federal judge ordered a pause on the government’s 340B drug rebates pilot program scheduled to begin Jan. 1.

The American Hospital Association, along with the Maine Hospital Association and four safety-net hospitals, filed suit Dec. 1 to block the program replacing some discounts with rebates under the 340B Drug Pricing Program.

Judge Lance Walker of the U.S. District Court of Maine ruled Monday the program would likely violate the Administrative Procedure Act, which sets standards for how federal agencies create rules. He also determined the program has the potential to harm hospitals.

Walker issued a preliminary injunction on the program, pending further orders.

“It boils down to a simple principle. Defendants cannot fly the plane before they build it,” Walker wrote in his Dec. 29 ruling. “The Agency’s failure to abide basic requirements of the APA, Plaintiffs’ irreparable injury should the program go into effect, as well as the balance of equities weighing in Plaintiffs favor, all counsel against permitting the Rebate Program to take flight on January 1, 2026.”

The judge noted Congress did authorize the federal government to create a rebate model, but regulators had not followed the APA’s requirements in doing so.

Through 340B, safety-net providers pay 25%-50% less for prescription medications. The pilot from the Health Resources and Services Administration would have permitted drugmakers including Bristol Myers Squibb, Boehringer Ingelheim, and Johnson & Johnson to offer rebates instead of discounts for more than a dozen medicines.

“On behalf of our members — including safety-net hospitals serving rural and underserved communities — we are pleased with today’s decision,” the AHA said in a statement Monday. “The court’s decision halts a rule that would have caused a devastating sea change in a 30-year-old program relied upon by hospitals that serve America’s most vulnerable patients and communities.”

The Health and Human Services Department, which houses HRSA, did not immediately respond to a request for comment.

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