HRSA announces new 340B Rebate Model Pilot Program

On July 31, 2026, the Health Resources and Services Administration (HRSA) issued a 340B Rebate Model Pilot Program notice, setting forth an alternative to the historic upfront 340B discount model under which eligible “covered entities” can obtain discounted 340B pricing at the time of purchase. Under the notice, certain manufacturers will be able to provide certain drugs at the 340B ceiling price using a post-purchase rebate model. Federal courts blocked HRSA’s previous attempt to implement a rebate model days before its launch on January 1, 2026, because of HRSA’s failure to follow certain procedural requirements of the Administrative Procedure Act (APA). HRSA now asserts that it has redeveloped the rebate model based on stakeholder feedback, the primary APA shortcoming that prevented the earlier rebate model from being implemented.

According to the notice, the new rebate model will start on January 1, 2027, and will apply to drugs selected for the 2026 and 2027 Medicare Drug Price Negotiation Program (MDPNP) cycles. Drug manufacturers that are interested in participating are required to submit their rebate plans to HRSA for approval by August 24, 2026. HRSA expects to release any approvals by September 24, 2026. The notice was not issued in proposed form, nor is there any explicit opportunity for stakeholders to submit comments.

The new rebate model parallels the structure of the prior version proposed in 2025 but includes several key changes. The 2026 rebate model broadens the scope of eligible drugs to include drugs selected for both the 2026 and 2027 MDPNP cycles. Covered entities will be afforded a formal dispute resolution pathway for which HRSA will specify timeframes for review and response prior to the new rebate model pilot effective date, and the 2026 model more clearly articulates that manufacturers will be removed from the model if they are noncompliant with its requirements. The notice also contains detailed discussions on the 340B framework, data privacy considerations and HIPAA compliance, and HRSA’s plan to monitor the pilot and “publish interim periodic summaries” of its findings, with a final evaluation expected to be published by April 30, 2028.

Covered entities will be required to purchase drugs at their wholesale acquisition cost (WAC) and submit claims data to the information technology (IT) platform specified in the manufacturer’s plan within 45 days of dispense. Manufacturers, in turn, must pay all rebates to covered entities within 10 calendar days of completed data submission. Any denied rebate claims must include rationale for disqualification and specific documentation supporting the denial. The pilot will, according to HRSA, serve to provide greater visibility into 340B transactions, permit transaction-level verification, help prevent duplicate discounts, and support nonduplication under the MDPNP.

The notice explores various alternatives to the rebate model that would address HRSA’s program integrity concerns regarding MDPNP deduplication and duplicate discounts, presumably to address APA requirements to do so. HRSA states that it considered and declined to implement use of claim modifiers; a centralized data clearinghouse; more audits and oversight activities; and limiting the pilot design to voluntary participants, certain covered entity types, fewer drugs, or specific dispensing scenarios. The notice explains the following with respect to each:

• Claims modifiers. HRSA states that claims modifiers are a component of the current framework for identifying 340B transactions, but reliance on them alone is inadequate to address program integrity deficiencies that the pilot is theoretically designed to address. HRSA supports its position that claims modifiers are insufficient by citing a 2016 Office of Inspector General report and a 2018 US House of Representatives Committee on Energy and Commerce report, although neither of these sources indicates that claims modifiers are insufficient to prevent duplicate discounts. HRSA also obliquely cites its own Medicaid Exclusion File (MEF) as an example of why modifiers are insufficient. HRSA states that the MEF relies on claim modifiers as its “central mechanism,” although the MEF does not involve claim modifiers, and its “central mechanism” is reporting of National Provider Identifiers. Regardless, HRSA opines that claims modifiers require “voluntary compliance” and do not provide an enforcement mechanism, apparently recognizing that the Centers for Medicare & Medicaid Services (CMS), not HRSA, regulates claim submission requirements and the use of modifiers.
• Clearinghouse. HRSA opted not to use a clearinghouse model, which it claims is “an enhanced claims modifier system operating under a different name.” This reasoning appears to be in stark contrast to the reasoning in current CMS proposals to increase use of a claims clearinghouse to identify 340B claims in connection with the Medicare Inflation Rebate Program. HRSA also noted that a claims clearinghouse would continue to allow for upfront discounts, contrary to HRSA’s decision to implement a rebate model.
• Audits. HRSA rejected the use of more audits and oversight as being “reactive” and constrained by growth in the number of covered entities.
• Limiting covered entity participants. HRSA determined that narrowing the pilot was unnecessary to address burdens on smaller providers and contrary to the pilot’s intent to allow HRSA to evaluate the rebate model.

Ultimately, HRSA determined that none of the proposed alternatives would “adequately serve the program integrity and evaluation objectives that the [p]ilot is intended to advance.” Notably, none of the proposed alternatives identified and discussed in the notice include a different approach to a rebate model than the one that was previously developed. HRSA appears to have considered alternatives to a rebate model generally, but not alternatives to structure a rebate model that is less burdensome than the version it has set forth.

HRSA provides manufacturers until September 24, 2026, to submit their plans for implementation of a rebate model to make their drugs subject to the MDPNP available at the 340B price. The plan requirements have changed from the prior version of the rebate model pilot. Unlike the prior notice, the 2026 notice does not specify a word limit; instead, it requires only that plans “succinctly describe” how they meet the criteria. Manufacturers are required to provide 90 (up from 60) calendar days’ notice to covered entities before implementation and must also identify the IT platform to be used for covered entity data submission. Manufacturers are also now restricted to providing rebates at the unit level only and are prohibited from issuing denials based on eligibility concerns or “perceived lack of WAC purchases,” both of which concerns must instead be raised directly with HRSA or its Office of Pharmacy Affairs (OPA), or addressed through 340B statutory mechanisms.

In terms of data from covered entities, the new pilot allows manufacturers to request certain medical claims data fields in addition to pharmacy claim fields, but does not allow manufacturers to include additional claim fields in their rebate model plans. In further contrast to the 2025 notice requirements, manufacturers must now also submit data definitions for each claim field with their plan for HRSA approval; permit covered entities to resubmit data if a rebate request “is deemed incomplete or missing data”; allow BIN, PCN, and Health Plan fields for uninsured or cash-paying patients to be marked “CASH”; and provide covered entities with instructions for reporting data on wasted or undispensed units.

Manufacturers are also now required to provide HRSA with a copy of their final approved plan for public posting on HRSA’s website; any changes to approved plans must be submitted to OPA for review and approval prior to implementation.

Potential implications

All covered entities should review the notice and determine what actions they will need to take to prepare for the rebate model pilot to become effective on January 1, 2027. Covered entities that do not purchase any of the MDPNP drugs through the 340B program do not need to take any further action, but all other covered entities should assume that they will be subject to rebate models.

The specific implications and challenges that covered entities may face in pivoting from a direct discount program to a rebate model will vary from covered entity to covered entity. For example, some covered entities subject to the rebate mode pilot may not have existing WAC purchase accounts and will need to work with their wholesalers to establish such accounts. Experience with the prior rebate model pilot suggests that several key issues are likely to create challenges for many covered entities:

• Covered entities that did not do so in advance of the prior rebate model pilot should determine how the rebate model requirements function in connection with their state Medicaid billing rules for 340B drugs and, if necessary, contact the state Medicaid program to obtain guidance on any inconsistencies between the two sets of requirements.
• Covered entities should also familiarize (or refamiliarize) themselves with the software platforms that are able to accept and process rebate claims, as the new rebate models are likely to rely on existing software platforms.
• Covered entities should review the claims elements that will be required to be submitted under the rebate model and ensure that they have the ability to submit all the required data fields.

The notice does not include any provisions that would allow for delays or postponements of implementation of rebate models for covered entities that are not prepared to participate in rebate models on the effective date, nor does it require manufacturers to exempt any covered entities from their rebate model.