Federal Appeals Court Blocks Drugmakers' Unilateral 340B Rebate Models, Preserving Upfront Discounts for Safety-Net Hospitals
核心洞察
A federal appeals court unanimously ruled that pharmaceutical manufacturers cannot unilaterally impose rebate models on the 340B Drug Pricing Program without HHS approval.
The decision reinforces that the HHS Secretary, not drug companies, controls program administration, preserving upfront drug discounts for safety-net hospitals.
Major drugmakers including Novartis, Johnson & Johnson, Eli Lilly, Bristol Myers Squibb (搜索), and Sanofi had sought to replace upfront discounts with post-purchase rebate models.
A federal appeals court has unanimously rejected efforts by major pharmaceutical manufacturers to unilaterally restructure the 340B Drug Pricing Program, dealing a significant blow to drugmakers and preserving billions of dollars in upfront drug discounts for safety-net hospitals and clinics across the United States.
The July 21 decision from the U.S. Court of Appeals for the District of Columbia Circuit held that Section 340B of the Public Health Service Act requires the Department of Health and Human Services' pre-approval for any rebate mechanism, affirming that federal officials — not pharmaceutical companies — control the administration of the program.
"The manufacturers' reading would also counterintuitively let manufacturers, rather than the Secretary, take the lead in administering the 340B Program, rendering the Secretary's role largely reactive," the court explained in its ruling. "Put simply, the statute places the Secretary, not the manufacturers, in the driver's seat of this important program."
Drugmakers' Push for Rebate Models
Since 2024, pharmaceutical companies including Johnson & Johnson, Eli Lilly, Bristol Myers Squibb (搜索), Sanofi, and Novartis have attempted to impose rebate models on 340B providers. Under these proposed models, providers would be required to purchase qualifying drugs at the full wholesale acquisition cost and then wait to receive a rebate from the drug company after submitting claims data.
The 340B program has traditionally provided upfront discounts on covered drugs to help safety-net providers stretch federal resources. However, leading pharmaceutical companies argued that this method has led to illegal duplicate discounts across 340B, Medicaid, and Medicare Part D rebates. The companies contended that a rebate model would improve cash flow and financial transparency as the program continues to grow at an accelerated pace.
Hospital Opposition and Collusion Allegations
Hospitals fiercely opposed these rebate models, arguing they create severe financial and administrative burdens. The American Hospital Association and other provider groups noted that hospitals would have to front enormous sums of cash and expend millions of hours processing complex data to receive reimbursement.
Hospital groups also alleged that the simultaneous rollout of these plans by major drugmakers was collusive, leading them to ask the federal government to investigate.
When drugmakers attempted to implement these changes, the Health Resources and Services Administration, which runs the program, blocked or sanctioned the moves, maintaining that altering the 340B payment structure requires agency review and approval. Drug companies including Bristol Myers Squibb (搜索), Eli Lilly, Novartis, Sanofi, and later Johnson & Johnson subsequently sued the federal government, arguing they could impose rebate models until the HHS disapproves of them.
Hospital Groups Respond
"The AHA is pleased with the Court's decision reaffirming HHS' central role in overseeing the 340B program," said Chad Golder, AHA's general counsel, in an emailed statement. "We were particularly pleased that the Court held that the law 'places the Secretary, not the manufacturers, in the driver's seat of this important program.'"
Golder continued: "With increasing attempts by drug companies to wrest control over the program, the AHA urges HHS to take prompt action to prevent manufacturers from undermining the program and the patients and communities that depend on it."
HHS Pursues Its Own Rebate Pilot
While the court closed the door on drugmakers' unilateral rebate models, the HHS has not locked the door entirely. The HRSA released a request for information in February on implementing a rebate model in the future to address concerns about duplicate discounts.
The agency has since issued a public notice detailing a revised 340B Rebate Model Pilot Program, which aims to launch by January 1, 2027. The HRSA noted that the program has grown from $53.7 billion in 2022 to more than $100 billion, creating "new operational and oversight challenges."
The pilot program would be limited to drugs included on the Medicare Drug Price Negotiation Program selected drug lists for initial price applicability years 2026 and 2027. Under the pilot, manufacturers would be required to provide rebates within 10 calendar days after a covered entity submits the required data, and data collection requirements would be restricted largely to standardized pharmacy and medical claims data.
Hospital groups remain deeply opposed. "The agency's analysis dramatically understates the true costs of this program, ignoring the hundreds of millions of dollars in compliance expenses, cash-flow disruptions, and operational burdens that will inevitably divert scarce resources away from patient care," said Rick Pollack, president and CEO of the AHA.
Maureen Testoni, president and CEO of 340B Health, characterized the revised pilot as "effectively a rerun of the flawed approach HRSA tried to take earlier this year," which was blocked by federal courts for violating administrative law — adding that "it may be again."
Broader Scrutiny of the 340B Program
The 340B program remains under the microscope as drugmakers continue to rein in its expansion, particularly through hospitals' use of contract pharmacies. The Centers for Medicare and Medicaid Services has also targeted 340B hospital payments in proposed rulemaking to slash Medicare reimbursement rates on qualifying drugs and impose greater price transparency. Meanwhile, lawmakers are pushing legislation such as the SUSTAIN 340B Act that would increase program transparency, clarify patient eligibility, and address supply chain friction.