Has your health system prepared for HRSA’s forthcoming 340B Rebate Model Pilot Program, scheduled to begin January 1, 2026? We have. At the bottom of this post, you’ll find a detailed overview of exactly how our 340B team has prepared to help the 340B health systems we serve — including a short-term loan program we’ll be offering to help reduce their working capital exposure.
Although the rebate program will cover only the drugs listed below, it’s been estimated that annual 340B reimbursements for these drugs alone range from $6.3 billion to $12.5 billion. With some 2700 hospitals participating in 340B, that averages-out to an annual cash-flow burden of more than $2.340B million to nearly $4.67 million per hospital. Which means (strictly calculating on the average numbers) that in any given month, your health system’s cash flow could be down by as much as $388,888 — while you wait for replenishment from drug manufacturers you hope will honor the pilot program’s reimbursement period. A period which, according to reports, could be anywhere from ten to 30 days from the time of pharmacy / CE data submission.
Drugs & Manufacturers in HRSA’s Model Pilot Program:
In late October, HRSA published updated information on its website about the Pilot Program — which will include the following drug manufacturers and products:
Boehringer Ingelheim ||| Jardiance
Bristol Meyers Squibb ||| Eliquis
Jansen Pharmaceuticals ||| Xarelto
Merck Sharp & Dohme ||| Januvia
Novo Nordisk ||| NovoLog, NovoLog FlexPen, NovoLog PenFill, Fiasp, Fiasp FlexTouch, Fiasp PenFill
Why this program undermines the 340B law as written
Section 340B of the Public Health Service Act has always required manufacturers to offer covered entities a price no higher than the 340B ceiling price at the time of purchase.
HRSA’s rebate model flips the order on its head: Under the Pilot Program, 340B hospitals will be forced pay, up front, Wholesale Acquisition Cost / WAC (which is often double or triple the 340B ceiling) or — at best — Group Purchasing Organization / GPO prices (which are still significantly higher than 340B discounts). Then, and only then (ten to 30 days later at best,) will they hope to receive their lawfully-entitled 340B-replenishment rebates — and even then, that assumes manufacturers accept their 340B documentation and claims.
How does this program undermine the 340B law’s intent?
1) Again, the law requires upfront discounts — not post-sale rebates
Under the Rebate Pilot Program, patients and hospitals lose the immediate benefits Congress mandated — replacing them with unnecessary, and wholly-unintended, cash-flow strains and administrative burdens.
2) Congress intended to preserve hospital resources for patient care
As we reported in the article What Drugs Are Not Eligible For 340B Savings?, The 340B drug pricing program was created by Congress as a means of filling the often-massive revenue gaps inherent to their business models. For many of the health systems we serve, 340B savings and revenue literally means the difference between solvency and closure.
Just as importantly, every health system we serve uses its 340B revenue to further its mission in the community — including support of its community’s most vulnerable patients; many of whom lack the financial resources to pay for the care they receive.
To learn how two health systems we serve use 340B savings to support their missions, Click Here.
With upfront discounts, hospitals are able to capture savings immediately and use them to fund uncompensated health care, pharmacy services and other forms of patient support. HRSA’s 340B rebate model delays and dilutes those savings, forcing hospitals to a) finance the costs of prescriptions they’ve historically counted-on to finance their missions — while, at the same time b) navigating 340B claim rejections, long after they’ve been submitted, and c) managing reconciliations. That directly undermines 340B health systems’ ability to stretch their limited resources in real time.
3) It shifts risk from manufacturers to hospitals
With the 340B law, Congress deliberately placed the compliance and pricing obligations on drug manufacturers. Under HRSA’s 340B rebate model, the burden shifts to hospitals — who must prove eligibility, reconcile data and chase payments. Again, that reverses the 340B law’s intent: Congress made manufacturers responsible for providing a statutory ceiling price at the point of sale.
4) It sets a precedent for even broader erosion of the 340B program
Even though HRSA frames this pilot as “narrow” (only for drugs selected by the Centers for Medicare & Medicaid Services / CMS), critics warn that once a rebate model is normalized, manufacturers will argue that all 340B discounts should move to rebate-based systems.
That would effectively rewrite the statute’s discount mechanism without congressional action — which is both executive branch overreach and a fundamental undermining of congressional intent.
5) It weakens drug manufacturer accountability and transparency
In the upfront model, the ceiling price is straightforward: It’s baked into every 340B purchase.
In HRSA’s rebate model, manufacturers control the flow of 340B rebate dollars. Based on their historical resistance to the 340B program, we can predict with 100% certainty that they’ll use the rebate model to deny 340B claims, delay 340B payments, and create opaque processes for adjudicating submissions. Once again, that contradicts Congress’s intent that 340B discounts be clear, enforceable and accessible at the time of purchase.
In summary
The original 340B law guarantees an upfront price benefit. HRSA’s rebate pilot forces hospitals to pay retail first and fight for repayment later. That’s why so many 340B advocates (including the American Hospital Association, 340B Health and countless safety-net hospital systems) view it as an absolute undermining of congressional intent: It rewrites the statutory bargain, weakens hospital cash flow, and hands leverage back to drug manufacturers — the very entities Congress sought to restrain.
What led to HRSA’s 340B Rebate Model Pilot Program?
The concept for the 340B Rebate Model Pilot Program was proposed by HRSA as a formal pilot mechanism to allow manufacturers to shift certain 340B discounts into post-sale rebates under controlled conditions.
(Source: Baker Donelson – HRSA Announces 340B Rebate Pilot Program).
The proposal is part of HRSA’s effort to “test the viability” of a rebate model, particularly in light of the new Medicare Drug Price Negotiation / Inflation Reduction Act framework.
(Source: America’s Essential Hospitals – HRSA Proposes Limited 340B Rebate Model Pilot Program)
The 340B rebate pilot program is limited in scope (only for “selected drugs” subject to Medicare negotiation), to allow HRSA to evaluate the mechanics, burden, and potential risks before any broader adoption. HRSA frames this as a “measured approach” to understanding the merits and challenges of a rebate model from different 340B stakeholder perspectives, while preserving flexibility for future expansion or modification.
(Source: HRSA – HRSA Announces Application Process for the 340B Rebate Model Pilot Program and Request for Public Comment)
Whose side is HRSA on: 340B hospitals and patients or the manufacturers?
It’s worth noting that several manufacturers — including Eli Lilly and Johnson & Johnson — have previously proposed shifting the 340B program from upfront discounts to rebate models, and have litigated HRSA’s resistance to unilaterally doing so. But HRSA claims the current pilot is its own structured proposal, not one directly initiated by manufacturers or Congress
(Source: MONDAQ – HRSA Launches And Seeks Comments On 340B Rebate Model Pilot Program)
What this filing is
It’s HRSA’s request to extend approval for the data it needs to run and evaluate the new 340B Rebate Model Pilot Program. It covers the applications from drug manufacturers, the data that manufacturers must report, and the claims-data that covered 340B entities (including hospitals) must submit to manufacturers in order to get paid 340B rebates.
Rebates are scheduled to start January 1, 2026, though the federal government shutdown may delay the start date. The proposed duration for the Pilot Program is “at least one year” — the clear implication that it could easily last longer; yet another horrifying prospect for financially-struggling 340B health systems; which, in truth, describes nearly all 340B health systems.
(Source: Federal Register – Agency Information Collection Activities…OMB Number 0906-0111-Extension, and 340B Program Notice: Application Process for the 340B Rebate Model Pilot Program)
Again, for pilot drugs, covered 340B entities will buy their prescriptions at commercial / WAC prices up-front, then seek retrospective rebates from manufacturers for the difference between WAC and 340B prices. All non-pilot drugs not already under manufacturer 340B restrictions will continue to be available at normal up-front 340B discounts.
(Source: 340B Health – 340B Health Responds To HRSA 340B Rebate Pilot Program)
HRSA says the pilot will help it evaluate rebate models, including issues like deduplication with IRA “maximum fair price” (MFP) and overall fairness / feasibility for 340B stakeholders.
What it means for 340B hospitals (covered entities)
1) Cash-flow & working-capital depletion
Since cash-flow risks will be shifted from manufacturers to providers for those NDCs, 340B entities will need to plan for float, and for the potential payment delays & denials that are common to rebate processes.
2) New data, documentation, and claims workflows
340B health systems, already over-burdened by 340B-submission complexities — not to mention the additional roadblocks imposed by manufacturer restrictions and industry-friendly resources like 340B ESP — will now need to add the capability to assemble and transmit rebate claims (patient / claim linkage that proves 340B eligibility for pilot drugs) to each participating manufacturer; rebate claims that must also be aligned with the fields HRSA expects manufacturers to collect & report.
In short, health systems’ IT departments and 340B administrators can expect to add new layers of complexity to their work across split-billing, pharmacy, revenue-cycle and contract-pharmacy partners.
(Source: Federal Register Public Inspection)
3) Administrative cost uptick (potentially significant)
340B hospitals and health systems have warned HRSA that administering a rebate model (on top of “normal” 340B operations for all other drugs) could cost anywhere from $150,000 to $500,000+ per hospital, especially if payments lag or are disputed — which is far higher than HRSA’s initial burden estimates. Your budget and staffing plans for 2026 should reflect this.
(Source: American Hospital Association)
4) The scope is narrow—but operationally significant
The pilot only covers the 2026 CMS-selected drugs, but it includes important physician / clinic-administered drugs, not just retail dispensing. Which means providers in oncology, rheumatology, and infusion lines will be dealt further barriers to easily dispensing 340B prescriptions to patients in need.
(Source: HRSA)
5) IRA “MFP” / 340B deduplication is a focus
HRSA claims that a key aim of the pilot program is to evaluate how duplicative discounts can be avoided when an MFP and 340B could both apply. They further claim that the pilot is a way to test workable solutions. Some commentators have noted that HRSA says rebates shouldn’t be denied solely for diversion or duplicate-discount compliance concerns; however, you should further strengthen your duplicate-discount controls, because HRSA will be collecting data for surveillance and evaluation.
(Source: Forvis Mazars)
Practical next steps for 340B hospitals
1) Map your potential exposure under the pilot program
Mine your 340B data for all 340B prescriptions written for the 2026 CMS-selected drugs in your inpatient discharge pharmacies, your OP clinics / infusion, and your contract pharmacies.
Ideally, you’re already using customized 340B software which can do this automatically. If not, refer to the following articles for more information:
Empower Your Health System’s 340B Program With Analytics
Optimize 340B Program Savings & Compliance With Data Mining
2) Develop detailed cash-flow modeling
Quantify the impact of the WAC-first, rebate-later model for the selected drugs. Then set DSO (Days Sales Outstanding) targets — specific, measurable goals for your health system’s accounts receivable collection period — while projecting the cash reserves you’ll need for the inevitable lags in payments and payment denials.
NOTE: You may also be interested in the following podcast from 340B Health: Episode 120: Project How Medicare Price Caps Will Affect Your 340B Hospital – 340B Health
3) Stand up a rebate claims pipeline
Update your split-billing and pharmacy systems to ensure that they can export claim files with manufacturer-required fields. Assign ownership for each component of the process (rev cycle vs. pharmacy finance).
4) Implement reliable contracting & tracking
Keep an exhaustive and actively-updated list of participating manufacturers / NDCs and their rebate timelines / support portals. Monitor all ACH remits against submissions.
5) Reinforce your existing governance and compliance program
Despite HRSA’s emphasis that the pilot program is not intended to deny rebates purely for duplicate-discount / diversion concerns, you should maintain even stricter 340B eligibility controls and Medicaid / contract-pharmacy dedupe logic.
6) Document, to the last penny, your pilot program costs
In addition to any finance charges and administrative time you, your providers, your pharmacies and your 340B team incur while drug companies hold your money in their accounts, you should track your IT spend tied to the pilot — all of which can be used to inform HRSA’s year-end evaluation of its pilot program, not to mention your own negotiations.
What VytlOne is doing to prepare the 340B health systems we serve
340B health systems with on-campus pharmacies should expect a preliminary financial impact assessment for those pharmacies. Which is why we’ve taken the following preparatory steps:
- Assembled cross-functional team of experts across operations, 340B, finance, and technology.
- Assessing financial and operational impacts for each pharmacy.
We’ll also be offering a new service, 340Bridge.
340Bridge is a market-competitive, short-term loan designed to meet this moment by reducing health systems’ working capital exposure due to the 340B discount-to-rebate changes.
Additional support we’ll be offering
- Assessing pharmacy workflow and dispense platforms (e.g., GuardianRx) to support updated workflows and reporting requirements.
- Coordinating with the 340B program’s many stakeholders — including wholesalers, 340B TPAs and Beacon — to streamline communications and processes.
- Determining the best approach to register, submit data, and reconcile payments for 340B Rebate (i.e., Beacon) and Medicare’s Maximum Fair Price (MFP) Rebate.
VytlOne is here to help.
To learn how VytlOne can help your health system succeed in an ever-changing 340B environment, contact Howard Hall. howard.hall@VytlOne.com | 214.808.2700
