In a joint motion filed February 5th with the U.S. District Court for the District of Maine, the U.S. Department of Health and Human Services (“HHS”) stated that it would terminate its current 340B Rebate Pilot Program (the “Program”), which we discussed previously on this blog. The Program’s termination follows the filing of a lawsuit by the American Hospital Association, the Maine Hospital Association, and certain health systems (the “Hospitals”) on December 1, 2025. In their lawsuit, the Hospitals alleged that HHS’s Program implementation violated the Administrative Procedure Act (the “APA”) due to the paucity of the administrative record and the failure of HHS to consider the interests of 340B covered entities. In late December, the court granted the Hospitals’ request for a preliminary injunction, concluding that the Hospitals were likely to succeed on their APA claims. This injunction halted HHS from initiating the Program, which was scheduled to go into effect January 1, 2026.
As we discussed in September, the Program was intended to replace the 340B program’s traditional up-front discount structure with post-purchase rebates for a limited set of drugs. 340B covered entities would pay a higher up-front cost for these drugs and then request manufacturer rebates representing the difference between the purchase price and the 340B price for the relevant drugs. Those in support of the Program argued that it would improve program transparency and help curb duplicate discounts. Others, including the Hospitals, argued that the Program would harm 340B covered entities by increasing administrative and financial burdens.
In its preliminary injunction ruling, the court noted that Congress clearly gave HHS the option of initiating a rebate model under the 340B program but that implementation of such a model must be done in accordance with the APA’s requirements. In the joint motion, HHS and the Hospitals acknowledged that HHS may decide to develop a new 340B rebate program, but HHS conceded that any new program proposal will be subject to a new notice and comment period and a 90-day period between approval of drug manufacturer applications and the new program’s effective date.
On February 17th, HHS’s Health Resources and Services Administration (“HRSA”) issued a Request for Information (the “RFI”) concerning the development of a 340B model pilot program. The RFI seeks input from stakeholders, including manufacturers and covered entities, to help it further evaluate the potential benefits and costs of a rebate model. Comments are due by March 19, 2026. Thus, while 340B covered entities may be relieved of having to adapt to HHS’s initial attempt to shift 340B toward a rebate model, this doesn’t appear to be the end of the story, and there is no guarantee that another similar program will not be implemented in the future.