340B Drug Pricing Program's Latest: What Arizona Physicians Need to Know
HHS Starts Over on 340 Rebate Model, Stakeholders Push Back
A coalition of national healthcare organizations recently urged federal regulators to extend the public comment deadline on a reimagined 340B Drug Pricing Program rebate model — a separate initiative from the original pilot that was struck down by federal courts late last year and subsequently scrapped by U.S. Department of Health & Human Services last month.
On February 25, the Health Resources & Services Administration said it will extend the deadline for public comments to April 20, giving key stakeholder an additional month to share insight. The agency also suggested that it may expand the rebate model pilot program to all drugs included in the Inflation Reduction Act’s Medicare Drug Price Negotiation Program through 2027, according to the American Hospital Association.
The Arizona Medical Association is closely monitoring the rulemaking process and actively advocating against proposed rebate models that pose a significant threat to the stability of local hospitals and the patients they serve.
The Bottom Line
The original 340B rebate model pilot, introduced in 2025, was scrapped by the agency after facing a court-ordered injunction and fierce opposition from stakeholders. HHS is now starting fresh with a new rebate model proposal, which is currently posted for public comment through April 20. All healthcare stakeholders potentially impacted by the program are welcome and encouraged to share their insight.
The healthcare community, largely led by the American Hospital Association, has voice concerns about the new concept and advocated for an adjusted comment period timeline.
What's Happened So Far: A Quick Timeline
July 2025 — Health Resources & Services Administration announces original 340B rebate model pilot, replacing up-front drug discounts with post-purchase rebates. More than 1,000 hospitals and stakeholders submit opposition.
Dec. 29, 2025 — A U.S. District Court judge in Maine grants a preliminary injunction, blocking the original pilot from taking effect Jan. 1.
Jan. 7, 2026 — The 1st U.S. Circuit Court of Appeals denies the government's motion to stay the injunction.
Feb. 5, 2026 — HHS agrees to vacate the original pilot entirely, citing an unfavorable administrative record.
Feb. 13, 2026 — HHS issues a request for information on a new, separate 340B rebate model pilot — starting the process over from scratch.
Feb. 19, 2026 — The AHA and six national healthcare organizations urge HRSA to extend the comment deadline on the new RFI.
Feb. 25, 2026 — HRSA announces extension for public comment period, now closing on April 20, 2026.
The New Proposal: What to Know
HHS is not abandoning the rebate model concept. On Feb. 13, the agency issued a request for information signaling its intent to potentially develop a new and separate rebate model pilot program built through a formal rulemaking process.
Key details of the new Request for Information:
- HRSA is soliciting stakeholder input on whether a new rebate model pilot should be implemented and how it might be designed
- The current public comment deadline is April 20
- If a new program moves forward, HHS has committed to issuing formal public notice and setting an effective date no earlier than 90 days following approval of drug manufacturer applications
Why Stakeholders Are Pushing Back
On Feb. 19, the AHA and six national healthcare organizations urged HRSA to extend the comment deadline from March 19 to April 20 , arguing the current timeline is insufficient to respond to dozens of detailed questions about a program that does not yet exist.
"A rebate mechanism would upend more than 30 years of practice using an upfront discount mechanism," the groups wrote in a public statement. "Without an extension, we have serious concerns whether the agency will be able to consider all aspects of the problem."
AHA Vice President of Advocacy & Grassroots Aimee Kuhlman said the AHA welcomes HRSA's effort to gather input but cautioned that "imposing hundreds of millions of dollars in costs on hospitals serving rural and underserved communities is not a sound policy."
Coalition signatories alongside the AHA include:
- America's Essential Hospitals
- American Society of Health-System Pharmacists
- Association of American Medical Colleges
- Catholic Health Association of the United States
- Children's Hospital Association
- 340B Health
340B Program Background
Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to health care organizations serving large numbers of uninsured and low-income patients. Hospitals use 340B savings to offer free vaccines, fund mental health clinics, and implement medication management and community health programs.
Annual drug spending through the 340B program grew from $6.6 billion in 2010 to $43.9 billion in 2021 , according to a nonpartisan analysis. Drugmakers argue the program has grown beyond its original congressional intent. Safety-net hospital advocates counter that the growth reflects the depth of healthcare need in underserved communities — and that a rebate model would divert critical resources away from patient care.
Many 340B-eligible facilities operate on minimal profit margins and serve as the sole healthcare access point in their communities. The financial disruption of a rebate model would be particularly acute for rural hospitals and Federally Qualified Health Centers.
How the Original Pilot Was Blocked and Scrapped
In July 2025, HRSA announced a pilot program that would have replaced the 340B program's traditional up-front drug discounts with a post-purchase rebate model. Under that original proposal, participating hospitals would submit dispensing reports to drug manufacturers within a 45-day window , and manufacturers would issue rebate payments within 10 days of receiving those reports — with logistics largely left to individual pharmaceutical companies.
The proposal drew fierce opposition from more than 1,000 340B hospitals and other stakeholders. The AHA, 340B Health, and others called the shift a major "sea change" that lacked adequate stakeholder input or logistical support.
A U.S. District Court judge in Maine granted a preliminary injunction on Dec. 29, blocking the original pilot from taking effect on Jan. 1. The AHA, the Maine Hospital Association, and four safety-net health systems had filed suit, arguing HHS failed to follow required administrative procedures before implementing such a significant departure from established program practice. On Jan. 7, the 1st U.S. Circuit Court of Appeals denied the government's motion to stay that injunction.
Faced with two adverse rulings, HHS filed a joint motion on Feb. 5 agreeing to vacate the original pilot entirely , acknowledging it did not believe further litigation would be "fruitful" based on the full administrative record.
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