340B Rebate Pilot Debuts [take two], Aligning Payments with Patient Needs

By: Marcus J. Hopkins, Health Policy Lead Consultant, ADAP Advocacy

On July 31st, 2026, 340B reform denialists opposing efforts to modernize the 340B Drug Pricing Program were served a reality check: reform is coming. Why? The Health Resources and Services Administration (HRSA) announced its revised 340B Rebate Model Pilot Program, providing qualifying pharmaceutical manufacturers with “…a voluntary pathway to provide the 340B ceiling price to covered entities through rebates, rather than upfront discounts” (HRSA, 2026). Proponents of reforming the decades-old program might say, HRSA dropped the proverbial mic.

This pilot model, which represents HRSA’s second attempt, is still significantly limited in scope, covering only the following drugs:

The drugs listed above were selected because they are part of the Medicare Drug Price Negotiation Program (MDPNP), and the rebate pilot requires manufacturers to allow 340B covered entities (CEs) to order the selected drugs under existing distribution mechanisms (e.g., 340B wholesaler accounts with Wholesale Acquisition Cost (WAC) prices loaded).

In the Federal Register notice published about this revised pilot, HRSA took great care to highlight the concerns submitted during the public comment period, of which they received 2,475 comments, including:

• Concerns across covered entity types (e.g., hospitals, Federally Qualified Health Centers, Community Health Centers, et cetera) that a rebate model could increase financial and administrative burdens, with rural providers highlighting cash flow and liquidity concerns, larger hospital systems highlighting operational complexity, and community-based and safety-net providers highlighting patient access concerns;
  
  
• General support for a rebate model among manufacturers, technology vendors, some employer and purchaser coalitions, several patient advocacy groups, and other stakeholders, emphasizing improved transparency, program integrity, and avoidance of duplicative discounts;

Photo Source: ADAP Advocacy

HRSA’s assessments determined that:

• HRSA does not agree that exclusive reliance on an upfront discount model is reasonable or that such reliance forecloses consideration of alternative statutory mechanisms. The 340B statute expressly recognizes the authority to provide the 340B ceiling price via “rebate or discount,” which provides the Secretary, through HRSA, discretion in how best to operationalize the statutory pricing requirement.

• HRSA recognizes the importance of ensuring program integrity and enabling manufacturers to prevent duplicate price concessions across all applicable pricing programs. HRSA believes that a rebate-based approach, authorized by the 340B statute and including the use of standardized claims-level data, will improve the identification and prevention of duplicate discounts.

• HRSA finds that many projections of administrative burden rest on assumptions that do not align with the Pilot's design or accurately reflect the administrative requirements of implementing a rebate approach. The Pilot is structured to enable covered entities, manufacturers, and vendors to operationalize processes and identify implementation challenges on a limited, manageable scale. Given the Pilot’s limited scope and reliance on existing data infrastructure and operational processes, HRSA anticipates that any staffing impacts will generally be modest.

• HRSA recognizes that implementation of a rebate model may require coordination with IT platforms to support the submission and validation of claims data. As an initial matter, the costs of the rebate IT platform must be paid by manufacturers. That is a requirement of participation in this Pilot. HRSA anticipates that these platforms will leverage existing data flows and automation capabilities, thereby minimizing the need for covered entities to develop new systems.

• With respect to other anticipated costs, including vendor fees and training, HRSA notes that participation in the 340B Program has always entailed some level of compliance and operational cost. Covered entities derive significant financial benefit from participation in the Program. Covered entities are expected to maintain compliance as program requirements evolve. As part of its ongoing oversight, HRSA conducts audits and compliance reviews, and provides education and guidance to covered entities based on those efforts. Covered entities routinely update policies, procedures, IT systems, and operational practices to align with program requirements and guidance, and there may be operational costs associated with program participation and ensuring compliance. Overall, HRSA concludes that while a rebate model may introduce incremental or transitional administrative and operational changes, HRSA believes the magnitude of the associated costs is likely to remain low.

• HRSA believes the Pilot is unlikely to result in unstable cash flow for covered entities, contrary to certain commenters’ predictions. HRSA has incorporated several design elements intended to mitigate potential cash-flow impacts on covered entities. First, the Pilot requires prompt rebate payments, within 10 calendar days of submission of a complete claim. This accelerated payment timeline is intended to precede the payment deadlines associated with standard wholesaler payment terms, thereby reducing or eliminating the need for covered entities to “float” the WAC price or finance drug purchases for extended periods.

• In response to commenter concerns regarding rebate denials and dispute resolution, HRSA includes design features within the Pilot to promote transparency, consistency, and accountability in rebate determinations. Specifically, the Pilot requires manufacturers to document and report denied claims, including the basis for each denial and the status of any associated dispute. HRSA intends to use this information to monitor denial patterns and assess whether rebate determinations are applied consistently and appropriately across participating manufacturers and will remove manufacturers from the Pilot where appropriate. In addition, the Pilot will provide a defined pathway for covered entities to challenge denied claims, including specified timeframes for review and response, to facilitate timely resolution of disputes.

• HRSA intends to limit the data collection that manufacturers may impose on covered entities under the Pilot to the minimum necessary to effectuate rebate payments and to support 340B program integrity and nonduplication under the MDPNP. HRSA believes that limiting the required data collection to a narrowly defined set of standardized pharmacy and medical claims data elements substantially reduces the potential burden compared with broader reporting models considered during the development of the Pilot. In response to stakeholder feedback, HRSA declined at this juncture to require additional data elements proposed by manufacturers, including purchasing data, encounter data, invoice-level information, and patient-level clinical information, because HRSA determined that collecting and reconciling such information could create additional operational complexity and systems burden for covered entities acclimating to a new rebate environment.

• As an initial matter, HRSA notes that the data elements required under the Pilot, as set forth in Section VIII.D of this Notice, are limited to standardized pharmacy and medical claims fields such as date of service, NDC-11, quantity dispensed, prescriber ID, service provider ID, 340B ID, RX BIN, RX PCN, and health plan identification information. These data elements do not include direct patient identifiers such as patient names, addresses, dates of birth, Social Security numbers, medical record numbers, or other information that would directly identify individual patients.

• HRSA will require participating manufacturers to submit purchase data reports to the agency. HRSA will continue to assess reporting burden and implementation experience and may refine requirements as appropriate to balance program integrity objectives with administrative feasibility. HRSA agrees that collecting Pilot data is important for evaluating adherence to the rebate framework and the impact of the Pilot. HRSA also agrees that providing aggregate data, which will not contain confidential or proprietary information, to the public is important to provide further transparency into the 340B Program.

• Congress created the 340B Program so covered entities could “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992). The Pilot does not deviate from that statutory purpose. Nor does implementation of a rebate-based model modify the statutory 340B ceiling price, covered entity eligibility requirements, or the legal framework governing patient eligibility under the 340B Program. Rather, the Pilot changes the mechanism and timing by which the 340B price is effectuated, shifting from an upfront discount to a post-dispense rebate that is expressly authorized by the 340B statute. HRSA further notes that the Pilot is structured to mitigate any potential operational or financial disruption to covered entities. HRSA anticipates the Pilot will provide program integrity benefits that ultimately support patient care and stewardship of federal resources (Notice Regarding 340B, 2026).

Ryan White Clinics for 340B Access (RWC-340B), a lobbying organization representing clinics and other HIV/AIDS service providers represented by an inside-the-beltway special interest firm with deep ties to the American Hospital Association, alleges that support for the rebate pilot is overstated, highlighting that 1,170 of the 2,351 publicly posted comments “…were substantially identical submissions tied to an astroturfing campaign intended to mimic genuine grassroots engagement” (Muolo, 2026). HRSA, in its receipt and analysis of the public comments, specifically mentioned that 1,170 comments were “…identical comments as part of a letter campaign” (Notice Regarding 340B, 2026), and took that into account before releasing the revised pilot program.

Photo Source: Realty Leadership

It is worth noting, RWC-340B’s executive committee is composed of representatives from some of the largest recipients of 340B revenues in the HIV/AIDS space, ironically enough, including some organizations whose executives are making $1,268,349…or $744,510…or $633,624…or $466,081, which represents compensation levels considered higher than most patients living with HIV believe are appropriate for an HIV service provider. For the sake of comparison, a majority of clients enrolled in the Ryan White HIV/AIDS Program (RWHAP) are low-income, with roughly 59% living at or below 100% of the Federal Poverty Level (FPL), according to a report by the Kaiser Family Foundation. For the layman reading this blog, it amounts to basically less than $16,000 annually.

Notably absent from this lobbying group's executive committee is any actual patient representation. ADAP Advocacy proudly boasts that over half of its board of directors are patients living with HIV, including 3:4 executive committee members. 

For its part, ADAP Advocacy fully supports the 340B Rebate Model Pilot because it promotes a robust 340B Program modeled after the gold standard among CE's: State AIDS Drug Assistance Programs. Many of these very programs have been actively and successfully implementing a rebate model since the practice was first authorized in 1998. And, by the way, they have been serving more clients since 2000. Arguments supporting this assertion have been clearly articulated in the first policy paper released earlier this year with Legacy Health Endowment, as well as the stand-alone policy paper subsequently released over the summer.

While the rebate model is an excellent first step, ADAP Advocacy contends that it is just that—a good first step. More reforms are desperately needed, including full transparency from every CE type regarding the total dollar amounts of 340B rebate revenues received, how those revenues are spent, and what percentage of annual revenues consists of 340B rebates. Carve-outs equate to transparency opt-outs.

Lately, Congress is awash in 340B-related legislation. Any attempt to stall implementation of holding healthcare organizations accountable for how 340B-related revenues are spent to help low-income patients under a new 340B rebate model, such as the SUSTAIN Act, should be met with caution by patients. At what point did accountability become a luxury? 

Photo Source: ADAP Advocacy

If the purpose of the 340B Program is to extend and expand access to affordable healthcare services for underserved and lower-income populations, then CEs need to be required to “show their work,” as many math teachers have demanded. Those who are opposed to such transparency rarely have patients' best interests in mind and are more than willing to threaten to limit or cease services altogether to avoid transparency requirements being imposed on them.

It’s time for that power to be broken and returned to the patients the 340B Program was intended to serve. ADAP Advocacy gladly can offer referrals! 

Disclaimer: All funders of the ADAP Advocacy Association are publicly listed on our website. 

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association; rather, they provide a neutral platform for the author to promote open, honest discussion of public health-related issues and updates.

References:

[1] Notice Regarding 340B Rebate Model Pilot Program, 91 F.R. 48883 (published August 03, 2026). https://www.federalregister.gov/documents/2026/08/03/2026-15633/notice-regarding-340b-rebate-model-pilot-program

[2] Health Resources and Services Administration. (2026, July 31). HRSA Announces Revised 340B Rebate Model Pilot Program to Strengthen Care in Rural and Medically Underserved Communities. Rockville, MD: United States Department of Health and Human Services: Health Resources and Services Administration: About HRSA: News & Events: Press Releases. https://www.hrsa.gov/about/news/press-releases/revised-340b-program-2026

[3] Muolo, D. (2026, July 31). Revised 340B Rebate Model Pilot Program moves forward, despite provider pushback. New York, NY: Fierce Healthcare: Providers. https://www.fiercehealthcare.com/providers/revised-340b-rebate-model-pilot-program-moves-forward-despite-provider-pushback

Trump Administration Pushes Two New Rebate Models, But Will They Help Patients?

By: Marcus J. Hopkins, Health Policy Lead Consultant, ADAP Advocacy

The Centers for Medicare and Medicaid Services (CMS) has released information about a new proposed mandatory pricing model—the Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model—that would assess the inflation rebate amounts paid for certain medications covered under Medicare Part D using a benchmark derived from international pricing information rather than using current domestic benchmarks (CMS, 2025).

Photo Source: CMS

The GUARD model is one of two pricing models being proposed by the Trump Administration—the other being the Global Benchmark for Efficient Drug Pricing (GLOBE), which would assess inflation rebates for drugs covered under Medicare Part B.

In both models, the Trump Administration plans to use modeling to employ drug “rebate models,” which are payment models ostensibly intended to lower the cost of medications by having drug manufacturers return a percentage of the purchase price to the buyers. These rebates are generally negotiated behind closed doors between payors, including pharmacy benefit managers (PBMs), insurers, and government programs, with drug manufacturers. Once those rebate amounts are set, drug manufacturers remit rebate payments to payors only after the drugs have been purchased and dispensed (SmithRx, 2025).

CMS's GUARD Model would attempt to reduce Medicare drug spending by tying prices to international benchmarks and collecting rebates from manufacturers when prices exceed those. 

Rebates, such as the proposed 340B Drug Pricing Program rebate model, can be an effective means of introducing cost savings into health care systems and indirectly helping patients, because they bring added transparency. In the case of the GUARD Model, they can also disadvantage patients. That is because the rebated price is not known at the time that the patient is dispensed the medication. Accordingly, out-of-pocket costs are calculated based on the higher "list" prices of drugs, forcing patients to pay more in deductibles, coinsurance, and copayments at the pharmacy counter.

In essence, the wider health care system may benefit from a rebate, but the patient may see no reduction in their costs. The 340B rebates differ from GUARD/GLOBE in that 340B rebates are specifically designed to be passed onto the consumer in the form of increased investment in/access to/savings for healthcare services. GUARD/GLOBE rebates are specifically designed to go to payors, with no requirements whatsoever that those revenues be reinvested or savings passed on.

Drug rebate models have been in place in the U.S. since the 1990s, with the creation of the Medicaid Prescription Drug Rebate Program (MDRP) under the Omnibus Reconciliation Act. They are also actively used in at least 31 European countries, including Italy, Portugal, Spain, France, Germany, and the United Kingdom (Vogler et al., 2012).

Photo Source: ADAP Advocacy | iStock

The primary rationale behind these rebate models is that requiring manufacturers to pay rebates to payors incentivizes drug manufacturers to keep drug prices lower. While this might be true in nations where this is a single payor, such as those listed above, rebate models in the U.S. have objectively poorer outcomes.

Recent research from the Leonard D. Schaeffer Institute for Public Policy & Government Service out of the University of Southern California found that, on average, every $1 increase in rebates was associated with $1.17 increase in list prices, particularly for single-source drugs—a Food and Drug Administration (FDA)-approved medication available from only one manufacturer, often lacking a generic equivalent, and specifically the types of drugs that will be evaluated under both the GUARD and GLOBE models being proposed (Sood et al, 2020).

Another study examined rebates for 444 unique branded medications and found that, while drug manufacturers may increase list prices in order to offer larger rebates to payors, consumers—particularly those lacking health insurance coverage—experienced statistically significant increases in out-of-pocket costs for those medications (Yeung et al., 2021).

Decades of research confirm what people living with HIV/AIDS already know: out-of-pocket costs lead to skipped doses, delayed refills, or complete abandonment of prescriptions. 

Public health data from the Centers for Disease Control show that a significant share of people living with HIV/AIDS (PLWHA) report cost-related non-adherence. A 2019 study found that 7% of PLWHA in the U.S. reported non-adherence to prescribed dosing due to cost-related concerns, with another 4% reporting skipping doses, 4% reporting taking less medicine, and 6% reporting delaying medication purchases (Beer et al., 2019).

Sadly, PLWHA facing affordability challenges may delay or abandon medications because they are unable to afford out-of-pocket costs.  These cost-saving behaviors are directly associated with lower rates of viral suppression, poorer health outcomes, and increased strain on the healthcare system.

Research has also demonstrated that very small cost-sharing amounts can have outsized effects. Studies examining HIV prevention and treatment medications have found that prescription abandonment rates rise sharply when out-of-pocket costs increase from $0 to even $10 (Dean et al., 2024). Persistence on therapy drops as costs rise—a finding that should concern everyone.

Photo Source: ADAP Advocacy | iStock

Put simply, when patients pay more, adherence suffers, and people's health suffers.

In order for rebates to truly result in lower costs for consumers, the U.S. would need to do away entirely with our multi-payor healthcare model, which requires different payors (both for-profit and government-based) each have to enter into pricing and rebate negotiations with drug manufacturers to set prices and rebate amounts.

Pressure campaigns are effective only when pressure is applied from all sides. While drug manufacturers are unlikely to abandon a revenue cash cow like the Medicare program, they still have non-Medicare-enrolled consumers onto whom they can push increased drug prices with few to no negative outcomes. Consumers have come to not only accept but also expect medication price inflation, especially when there are few, if any, viable comparable alternative therapies available to them.

What the GUARD and GLOBE programs are intended to do is force manufacturers to provide higher rebates for medications that CMS deems “too expensive.” This, they posit, will result in lower drug costs for seniors and those non-seniors who rely on Medicare for drug coverage. The reality is that those consumers will likely realize few, if any, net savings from these programs, so long as there are multiple payors willing to pay whatever price is needed to move medications to their customers.

Although the GUARD proposal may seem promising to some, it does not require that these rebates be automatically passed on to patients in the form of lower out-of-pocket costs. That central problem needs to be addressed before the proposal is finalized and implemented.

The proposal states that it hopes that lower GUARD prices will benefit patients. The proposal says that "[i]t is possible that in response to the alternative payments]" GUARD creates manufacturers might "reduce their net price" in an effort to reduce the GUARD Model rebate payments. If so, then there might be some chance that patients would benefit from the GUARD prices. 

But the "possibility" that GUARD "might" help patients at the pharmacy counter just is not good enough. ADAP Advocacy plans to submit public comment in response to these proposals that address the patient perspective.

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.

References:

[1] Beer, L., Tie, Y., Weiser, J., & Shouse, R. L. (2019, December 13). Nonadherence to Any Prescribed Medication Due to Costs Among Adults with HIV Infection — United States, 2016–2017. Morbidity and Mortality Weekly Report, 68(49): 1,129-1,133 http://dx.doi.org/10.15585/mmwr.mm6849a1

[2] Centers for Medicare and Medicaid Services. (2025, December 29). GUARD (Guarding U.S. Medicare Against Rising Drug Costs) Model. United States Department of Health and Human Services: Centers for Medicare and Medicaid Services: Priorities: Overview: Innovation Models. https://www.cms.gov/priorities/innovation/innovation-models/guard

[3] Dean, L. T., Nunn, A. S., Chang, H. Y., Bakre, S., Goedel, W. C., Dawit, R., Saberi, P., Chan, P. A., & Doshi, J. A. (2024). Estimating The Impact Of Out-Of-Pocket Cost Changes On Abandonment Of HIV Pre-Exposure Prophylaxis. Health affairs (Project Hope), 43(1), 36–45. https://doi.org/10.1377/hlthaff.2023.00808

[4] SmithRx. (2025, March 21). How Drug Rebates Influence Prescription Costs for Employers. San Francisco, CA: SmithRx. https://smithrx.com/blog/how-drug-rebates-influence-prescription-costs-for-employers

[5] Sood, N., Ribero, R., Ryan, M., & Van Nuys, K. (2020, February 11). The Association Between Drug Rebates and List Prices. Los Angeles, CA: University of Southern California: Leonard D. Schaeffer Institute for Public Policy & Government Service. https://schaeffer.usc.edu/research/the-association-between-drug-rebates-and-list-prices/