HRSA issues notice regarding 340B Rebate Model Pilot Program, limited to drugs subject to a maximum fair price (MFP) for 2026

Background

Under the 340B statute, participating manufacturers are required to enter into an agreement with the Secretary of Health and Human Services under which “the amount required to be paid (taking into account any rebate or discount, as provided by the Secretary) to the manufacturer for covered outpatient drugs” does not exceed the 340B ceiling price. While the text of the statute expressly references effectuating 340B pricing through a “rebate or discount,” it does not mandate one option over the other, nor does the Pharmaceutical Pricing Agreement (PPA) that manufacturers enter into with the Secretary.

Over the past year, several manufacturers engaged with HRSA regarding the implementation of a cash rebate model instead of the upfront discount model for effectuating their 340B pricing obligations. In response, HRSA informed the manufacturers that use of a rebate model requires prior agency approval and that such approval had not been provided. HRSA added that implementation of an unapproved rebate model would result in termination of the manufacturer’s PPA and participation in the 340B Program, and, as a result, suspension of federal payments for their covered outpatient drugs under Medicaid and Medicare Part B. The manufacturers filed separate lawsuits challenging HRSA’s position and several of those challenges are now being heard in a consolidated appeal before the U.S. Court of Appeals for the District of Columbia Circuit.

A 340B rebate model would have implications for effectuation of the MFP under the Medicare Drug Price Negotiation Program (DPNP). By statute, a manufacturer is not required to offer both the MFP and the 340B price on a unit that would otherwise be eligible for both and instead need only offer the lower of the two prices. The Centers for Medicare & Medicaid Services (CMS) has permitted manufacturers to choose between providing the MFP through a discount or a rebate, but has declined to assume responsibility for 340B deduplication. A 340B rebate model could serve as a tool for manufacturers to validate 340B eligibility before paying rebates and thereby support effectuation the MFP-340B nonduplication statutory guarantee.

Which Manufacturers and Drugs Are Eligible for the Pilot Program? HRSA is limiting the Pilot Program to manufacturers with DPNP agreements with CMS in place for IPAY 2026 (i.e., the first year that a negotiated MFP will be implemented), and limited to the 11-digit National Drug Codes (NDC-11s) that appear on the published selected drug list that will be subject to an MFP for that year. All utilization for the listed NDC-11s would be eligible for the Pilot Program regardless of payer. HRSA notes it may open up the Pilot Program to other drugs at a later time after assessing the effectiveness of the Program.

What Are the Application Requirements? Participation in the Pilot Program is voluntary for manufacturers. Those eligible manufacturers that want to participate must submit a rebate model plan to HRSA by September 15, 2025. Plan submissions are limited to 1,000 words and must address the criteria outlined in the Rebate Model Notice. HRSA will notify manufacturers if they are approved to participate by October 15, 2025, with approved rebate model plans taking effect January 1, 2026, for a minimum one-year period.

What Are the Data and Reporting Requirements? Manufacturers may request only the following pharmacy claim fields from covered entities under their rebate plans: date of service, date prescribed, Rx number, fill number, 11-digit NDCs, quantity dispensed, prescriber ID, service provider ID, 340B ID, Rx bank identification number (BIN), and Rx processor control number (PCN). These data elements largely align with the data fields used to effectuate the MFP under the DPNP for IPAY 2026, with certain exceptions (e.g., the BIN and PCN numbers are not required on the DPNP side and the DPNP requires a few additional data fields). Covered entities must be allowed up to 45 calendar days from the date of dispense to submit their data, “with allowances for extenuating circumstances and other exceptions, including adjustments when a 340B status change occurs on a claim.”

Manufacturers must agree to provide the HRSA Office of Pharmacy Affairs (OPA), which is responsible for implementing the 340B Program within HRSA, with periodic reports that “detail data on purchases provided through rebates, information related to claim delays and denials, and other information that may evaluate the effectiveness of the rebate model.” OPA will be releasing instructions on the format and manner of such reports at a later date.

How Will Rebates Be Paid? Manufacturers must ensure that 340B rebates are paid, or denied with documentation in support of the denial, to covered entities within 10 calendar days following the data submission. In contrast, under CMS guidance regarding effectuation of the MFP, manufacturers would have 14 calendar days following receipt of data validating eligibility of the MFP to deduplicate 340B and MFP units and effectuate payment. The Rebate Model Notice states explicitly that a rebate claim may not be denied due to compliance concerns with diversion or Medicaid duplicate discounts. Diversion and Medicaid duplicate discount concerns should instead be raised directly with HRSA/OPA or addressed through 340B statutory mechanisms, such as audits and the Administrative Dispute Resolution (ADR) process. Manufacturers must specify in their plans whether rebates will be paid at the package or unit level.

Notice, Technology, and Other Requirements

A manufacturer’s rebate plan must provide 60 calendar days’ notice to covered entities and other impacted stakeholders before the rebate model is implemented, and “allow covered entities to order the selected drugs under existing distribution mechanisms (e.g., 340B wholesaler accounts with pre-rebate prices loaded) to ensure purchases flow through existing infrastructure.”

Plans must also utilize an Information Technology (IT) platform with the capacity to receive and filter data to identify eligible units and provide real-time reconciliation reports to inform covered entities of the rebate status of submitted claims. The costs of maintaining the IT platform must be borne entirely by the manufacturer, and no administrative or other costs may be passed on to covered entities.

The IT platform should include mechanisms to ensure patient identifying information and rebate data are secure and protected. Further, the platform should limit data collection to the necessary elements for providing 340B rebates (readily reported data listed above).

Specific Topics that HRSA Seeks Comment On

HRSA states that it is seeking comments on all aspects of the Rebate Model Notice and encourages commenters to include supporting data and sources underpinning their factual claims. HRSA also notes that commenters should consider the following specific questions in their comments:

• “Are there any additional flexibilities to maximize efficiency and efficacy for participating manufacturers that should be considered in the pilot design?”
• “Are there any additional safeguards to mitigate adverse, unintended impacts for covered entities that should be considered in the pilot design?”
• “Are there any additional data or reporting elements that should be required to improve implementation and evaluation of the pilot?”
• “Are there any potential implementation issues not yet sufficiently accounted for in the pilot design (e.g., logistical or administrative burdens)?”

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We recommend that you carefully review the Rebate Model Notice to identify all issues relevant to your organization and areas on which you may wish to comment.

Authored by Alice Valder Curran, Maura Calsyn, Samantha D. Marshall, Kathleen Peterson, Mahmud Brifkani, Rianna Modi, Caroline Farrington, and Viraj Paul.