From Becker’s Hospital Review
Several recent policy proposals are placing new pressures on the 340B drug pricing program, a decades-old federal initiative many hospitals and health systems depend on to offset the costs of care for uninsured and underinsured patients.
In the past few months, HHS has issued two 340B-related proposals that hospitals say would create new administrative hurdles, strain already thin margins at safety-net hospitals and limit patient access to affordable medications.
Three notable shifts to watch:
1. Rebate pilot program
In August, the Health Resources and Services Administration shared plans to launch a pilot program in January 2026 that would allow drugmakers to replace upfront discounts for drugs purchased through 340B with post-sale rebates. Hospital and pharmacy leaders argue the change would fundamentally alter how the program operates, creating cash flow challenges and increasing the likelihood of denied claims.
Industry groups warn the model would significantly burden safety-net hospitals. An analysis by 340B Health estimates that if the rebate model were expanded, disproportionate-share hospitals would each face an average of more than $72 million in upfront costs while they wait for rebates from drugmakers. A bipartisan group of 162 lawmakers has urged HHS to pause the pilot, citing concerns about the fast-tracked timeline and potential legal overreach.
Some systems recently told Becker’s they are already preparing for the shift by running financial forecasts and ensuring as many prescriptions as possible are captured through system-owned pharmacies. The strategy is meant to reduce reliance on contract pharmacies, where drugmakers have increasingly restricted eligibility for 340B savings. By building specialty pharmacies, hospital leaders anticipate retaining more of those savings within their systems.
2. CMS accelerates $7.8B clawback plan
In July, CMS proposed an accelerated plan to recover $7.8 billion tied to outpatient 340B reimbursement cuts the Supreme Court deemed unlawful in 2022. The cuts, imposed by CMS between 2018 and 2022, reduced Medicare payments for certain outpatient drugs purchased through 340B. After the court ordered hospitals to be repaid, CMS said it would offset the cost of those repayments by reducing future payments for non-drug items and services.
Initially, CMS proposed spreading the cuts over nearly two decades through a 0.5% annual reduction. The new plan would speed that up, increasing the cut to 2% per year so the agency can recoup the full amount by 2031 instead of 2041.
Hospitals claim the accelerated clawback would disrupt long-term budget plans and worsen financial instability. Grand Rapids and Southfield, Mich.-based Corewell Health, for example, told CMS it has already lost tens of millions of dollars due to prior 340B payment policies and warned the accelerated reduction would create “undue and unnecessary further disruptions to hospital operations.”
3. Courts strike down drugmaker restrictions
Hospitals navigating 340B challenges have seen a modicum of relief from a series of recent court rulings. In several cases, judges have upheld state laws designed to protect discounts for medications dispensed at contract pharmacies.
On Sept. 23, the U.S. District Court for the District of Maine denied preliminary injunctions filed by AbbVie and Novartis that sought to block the state from enforcing a new law aimed at protecting 340B discounts for drugs dispensed at contract pharmacies. The law is intended to ensure hospitals that partner with third-party pharmacies can continue participating in the program.
Federal appellate courts have also rejected drug manufacturers’ challenges to similar laws in Arkansas and Mississippi, signaling growing judicial support for state-level protections.
Meanwhile, momentum is building in state legislatures. Lawmakers in Colorado, Nebraska, Utah and other states have introduced bills aimed at safeguarding hospitals’ ability to use contract pharmacies and maintain access to 340B savings.
