Hospital Groups Secure Injunction of 340B Rebate Pilot Program in Federal Lawsuit

January 7, 2026

A federal court halted implementation of the controversial 340B Drug Pricing Program rebate model in late December as part of a lawsuit filed by the American Hospital Association and other healthcare organizations.

The ruling, issued by a U.S. District Court judge in Maine, requires the Health Resources & Services Administration to pause its newly proposed rebate model, which was to take effect on January 1. The plaintiffs, having secured an injunction, are expected to seek an order requiring HRSA to permanently discontinue implementation of the model.


The Arizona Medical Association is actively advocating for the discontinuation of the model, which poses a significant threat to local hospitals, physicians, and the patients they serve.


HRSA Reimagines 340B Program & Process


The program was designed to "test run" a model that replaces up-front drug discounts for safety-net hospitals with post-purchase rebates for at least one year. The pilot would require participating hospitals to submit a report to drugmakers within a 45-day window of the drug being dispensed.


The drugmaker would then be responsible for issuing a rebate payment within 10 days of receiving the report. The logistics of the process would largely be left to participating pharmaceutical companies, posing another concern for hospitals and healthcare professionals.


340B Program Background and Proposed Changes


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 that care for many uninsured and low-income patients.

The program allows 340B hospitals to stretch federal resources in order to reduce the price of outpatient pharmaceuticals for patients and expand health services to the communities they serve. Hospitals often use 340B savings to offer free vaccines, provide services in mental health clinics, and implement medication management and community health programs.

The plaintiffs argue that, despite significant oversight from the HRSA and the program’s proven record of expanding access to vital patient care, critics want to drastically reduce the benefits that eligible hospitals and their patients receive by transitioning the program to rebate model.


Proposed "Rebate Model" Draws Sharp Criticism


The rebate model, announced in July 2025, was received with fierce opposition from the healthcare community, including the American Hospital Association, 340B Health, and other advocates. According to its opponents, the proposed model signifies a major "sea change" for hospitals, especially Federally Qualified Health Centers and sites operating on razor-thin financial margins, without appropriate stakeholder insight or logistical support.


Financial Impact on Safety-Net Hospitals


The legal challenge centers on concerns about overwhelming financial and administrative burdens the new program would place on 340B hospitals. Many of these facilities report operating on minimal profit margins while serving as critical healthcare access points in their communities, with some functioning as the sole care provider in their service areas.

According to AHA President and CEO Rick Pollack, the government acknowledged the program would fundamentally shift how the 340B program has functioned for more than three decades. The lawsuit contends that, despite the government's awareness, appropriate administrative procedures warranted by such a significant change were not followed.


Drugmakers Argue Program Extended Beyond Intent


Annual spending on drugs through the 340B program grew from $6.6 billion in 2010 to $43.9 billion in 2021, according to a nonpartisan analysis. Drugmakers point to this increase as evidence that the program has grown beyond federal lawmakers' original intent.


Hospitals & Stakeholders Voice Opposition


More than 1,000 340B hospitals and other stakeholders submitted concerns about the program during the development process. Many highlighted substantial costs and community impact associated with administering the rebate model. The plaintiffs assert HHS disregarded these documented concerns.



Sources: HFMA, American Hospital Association, HHS, and Fierce Healthcare

ADHS Issues Standing Orders for Flu, COVID-19 Vaccine Access

By Admin User • September 18, 2026
Statewide orders keep pharmacists and physicians authorized to vaccinate Arizonans amid uncertainty over the next ACIP meeting. Statewide Orders Cover the 2026-27 Flu & COVID Season The Arizona Department of Health Services has issued statewide standing orders supporting access to the 2026-27 influenza and COVID-19 vaccines approved by the U.S. Food and Drug Administration. Arizonans seeking a flu or COVID-19 vaccine should contact their physician or pharmacy to confirm availability. Why the Orders Were Issued Arizona pharmacists may administer vaccines recommended by the Advisory Committee on Immunization Practices, vaccines recommended by the Centers for Disease Control and Prevention for international travel, or vaccines authorized under a prescription, including a physician-issued public health standing order. With the timing of the next ACIP meeting uncertain, ADHS worked with the Arizona Board of Pharmacy to issue statewide standing orders for the flu and COVID-19 vaccines, which function as a prescription allowing pharmacists and physicians across Arizona to administer them to anyone who wants one. ADHS Medical Advisor Weighs In "Vaccines are one of the most important tools we have to protect our communities. The Influenza and COVID-19 vaccines have been proven safe and effective at preventing severe illness, hospitalization, and death. Vaccines help us limit the spread of disease, reduce pressure on our healthcare system and reduce costs," said Dr. Richard Carmona, ADHS public health medical advisor and the 17th U.S. Surgeon General. "We have issued these standing orders to ensure safe and timely access to the vaccines in alignment with scientific and evidence-based guidance." What Arizonans Should Know The standing orders do not require every pharmacy to offer vaccinations, and they do not guarantee insurance coverage for administration. Coverage and out-of-pocket costs vary by plan, so Arizonans should check with their insurance provider before scheduling an appointment. 

Arizona Asks Supreme Court to Halt Prison Health Care Takeover

By Admin User • September 18, 2026
State attorneys seek an emergency stay after lower courts reject bids to delay receivership of the prison health care system. State Makes a Last-Ditch Appeal Attorneys for the Arizona Department of Corrections, Rehabilitation and Reentry asked the U.S. Supreme Court this week to delay a court-ordered receivership of the state's prison health care system. The request comes after both a federal district court and the 9th U.S. Circuit Court of Appeals declined to pause the takeover. In the recent application, former U.S. Solicitor General Paul Clement, a representative of the department, argued that the state deserves more time to make its case before surrendering control of its operations, including oversight of its employees and health care budget. Roots of the Case The dispute began in 2012 when inmates sued the department, alleging the prison system's inadequate medical, mental health, and dental care amounted to cruel and unusual punishment under the Eighth Amendment. The case went through years of litigation and a failed settlement agreement. In 2023, U.S. District Judge Roslyn Silver ruled that the health care system was "grossly inadequate." The court ordered the prison healthcare system to comply with more than 150 "quality indicators," but according to court-appointed monitors, the department failed to comply with 131 of the measures. In light of this finding, Silver named Annette Chambers-Smith, former director of the Ohio Department of Rehabilitation and Correction, to take over as receiver effective Oct. 19. Arguments on Both Sides Clement argues receivership should be the last resort and that Silver moved to it too quickly. He asserts that the department has made measurable progress, including growing its health care staffing by more than 50%, expanding substance-use treatment access, and adopting a new care model. Corene Kendrick, deputy director of the American Civil Liberties Union National Prison Project, which represents the roughly 25,000 people incarcerated in Arizona prisons, called the department's request a "Hail Mary" and said Silver had given the department years of opportunities to comply before ordering receivership. What Happens Next The Supreme Court has not yet set a deadline for the plaintiffs to respond to the stay request. Separately, the 9th Circuit is now reviewing the merits of the receivership order itself. The department filed its opening brief on Sept. 15, and the plaintiffs' response is due Oct. 15. Information in this article was sourced from the Arizona Mirror .