Where the 340B rebates pilot stands now, and what comes next

Modern Healthcare – Friday, January 9, 2026
By Bridget Early

Safety-net providers got a reprieve from a controversial plan to replace discounts with rebates under the 340B Drug Pricing Program, but they aren’t in the clear.

The Health Resources and Services Administration intended to launch a pilot program this month that would allow nine pharmaceutical companies to give 340B providers rebates on 10 prescription drugs, rather than upfront discounts, for at least a year.

340B providers cried foul, and the American Hospital Association sued to block the initiative, which it contends would enrich drugmakers at its members’ expense. Last month, the U.S. District Court for the District of Maine directed HRSA to suspend the program while it considers the case. The U.S. Court of Appeals for the 1st Circuit upheld that preliminary injunction Wednesday.

“The AHA remains pleased that these courts have put on hold this harmful program that would have a devastating effect on America’s most vulnerable patients and communities, and the hospitals that serve them,” President and CEO Rick Pollack said in a news release.

District Judge Lance Walker’s order indicates he believes the AHA has a strong chance of prevailing in court against what he described as a “hastily assembled” policy. HRSA likely violated the Administrative Procedure Act of 1946 when it created the program, he wrote in his order last month.

“The agency’s rollout has involved a rather threadbare administrative record that likely fails to consider and reasonably explain the impact of a rebate model on 340B hospitals, who rely on upfront price concessions to stretch few resources as far as possible to serve rural and poor communities,” Walker wrote. The 1st Circuit concurred with this assessment.

Yet even if the AHA wins the case, the rebates plan could resurface.

Separate court rulings last year affirmed that HRSA has the authority to institute rebates under 340B, so the agency could simply try another approach. “Congress clearly gave defendants that option,” Walker wrote.

HRSA remains committed to the rebates pilot and other actions on 340B, and the pharmaceutical industry aims to do its part to fight back against the lawsuit and against what it views as a bloated program that has grown beyond its original scope. The Health and Human Services Department declined to comment on ongoing litigation.

The drugmakers AbbeVie, AstraZeneca, Boehringer Ingelheim and Novo Nordisk, which signed onto the rebates pilot, and the Pharmaceutical Research and Manufacturers of America petitioned the appeals court to allow them to intervene in the case after the district court rejected their request.

“The rebate model is a commonsense approach to preventing unauthorized duplicate discounts and increasing overall program integrity,” a PhRMA spokesperson wrote in an email.

Walker’s assertion that HRSA is permitted to create rebate programs, along with the other rulings, mean that 340B providers should prepare themselves to lose in the end, said Jeff Wurzburg, a partner at the law firm Norton Rose Fulbright.

Indeed, HRSA could start building a new version of the program and roll it out in compliance with the Administrative Procedure Act at any time, said Greg Fliszar, a shareholder at the law and lobbying firm Baker Donelson, which has hospital clients.

Altogether, this means that providers reliant on 340B discounts face uncertainty in the near and longer terms. Rebates could still come soon, after months of legal and regulatory wrangling, or never.

In yet another wrinkle, a separate lawsuit could open the door to pharmaceutical companies substituting rebates for discounts without HRSA’s OK.

In 2023, drugmakers including Novartis, Johnson & Johnson, Eli Lilly, and Bristol Myers Squibb unilaterally sought to switch to discounts. That triggered court decisions that they could not, but that HRSA could create a framework for the policy.

Novartis and United Therapeutics appealed the case to the U.S. Court of Appeals for the District of Columbia, which could overturn the lower court and breathe new life into 340B rebates, said Mark Ogunsusi, a partner at the law and lobbying firm K&L Gates.

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