340B rebate model is set to proceed in 2026 with 9 drugs

A new chapter for the 340B Drug Pricing Program will begin Jan. 1 after the Health Resources and Services Administration (HRSA) formally authorized a rebate model last week.

For 2026, eight approved manufacturers can provide rebates rather than upfront discounts to 340B participating providers dispensing nine drugs:

• Eliquis (Bristol Myers Squibb)
• Enbrel (Amgen)
• Farxiga (AstraZeneca)
• Imbruvica (AbbVie)
• Januvia (Merck)
• Jardiance (Boehringer Ingelheim)
• NovoLog, Fiasp and related products (Novo Nordisk)
• Stelara (Johnson & Johnson)
• Xarelto (Johnson & Johnson)

The list of drugs for the rebate model was based on the set of 10 products that are subject to negotiated prices in Medicare starting next year under the Inflation Reduction Act (IRA).

A 10th drug on the IRA list, Entresto, manufactured by Novartis, was not accepted for inclusion in the rebate model. HRSA did not provide its reasoning for that decision. Novartis had expressed interest in implementing a rebate system.

The approvals were supposed to be in place by Oct. 15 but were delayed amid the ongoing government shutdown. Despite missing the deadline by 15 days, HRSA is maintaining the Jan. 1 start date.

“The feasibility of operationalizing this model across over 42,000 covered entities and over 32,000 contract pharmacy locations in just two months is extremely questionable,” healthcare attorneys with Spencer Fane wrote in an analysis.

How the 340B rebate model will work

Scheduled to last at least one year, the new model is a pilot through which HRSA plans to assess the viability of a rebate approach in 340B. Stakeholder feedback on the model is encouraged.

Instead of receiving 340B discounts after first dispense, providers will have to foot the wholesale acquisition cost (WAC) and then submit clams to receive rebates.

Providers have a 45-day window from the date of drug dispense or administration to put in for a rebate. Manufacturers are expected to pay the rebate within 10 days of claim submission, theoretically limiting negative impacts on providers’ cash flow if the manufacturers and the third-party Beacon processing platform adhere to the time frame.

A possible loophole, however, is that payment will be made within 10 days after “rebate claims have been validated,” according to a Johnson & Johnson fact sheet, and there does not appear to be a guarantee about the time window for the validation process.

If a manufacturer misses the 10-day deadline, HRSA suggests that providers first try to resolve the issue with the company and Beacon. If that effort fails, providers should contact HRSA.

“Covered entities that have 340B dispenses of any of the nine approved products should assess what they will need in terms of operational and financial resources to meet the data submission and other implementation requirements of the program and to buffer for a reduction in 340B revenue attributable to the nine implicated products for any errors, delays or glitches in the rollout of the program,” the Spencer Fane analysis states.

Providers should make sure they are registered for a Beacon account before Jan. 1. Information on the status of rebate payments and any claim issues will be available through the platform.

How the rebate claims process will proceed

HRSA’s rebate model homepage cites the information that will be required for providers to include in their claims. There are a dozen fields to use in pharmacy claims and 14 in medical claims.

“Hospitals now have to manage a whole new set of administrative burdens, requiring more bureaucracy and more paperwork, with no benefit to patients’ ability to access discounted drugs,” America’s Essential Hospitals, which represents safety-net hospitals, said in a written statement.

The fact sheet from Johnson & Johnson explaining the rebate process states that 340B providers “must maintain the integrity of the data provided to third-party payers and not append or alter in any way the data provided within the underlying payer claim.”

When announcing the rebate model in early August, HRSA said it’s prudent to test the approach as a hedge against perceived problems with duplicate discounts. The model specifically is intended to help manufacturers avoid duplicate discounts between 340B and the IRA negotiated prices, allowing the companies to deny the 340B discount if the IRA price is lower.

The companies have said the submitted claim information also will allow them to cut back on discount duplication between 340B and Medicaid. Claims data also can be used to ensure 340B discounts are not provided to an ineligible location (e.g., a nonregistered offsite clinic) and have not already been given to another provider for the same dispense.

In a potential benefit for providers, the new model “allows for 340B rebate payments upon receipt of the 340B claims data and without the need to accumulate up to the package level,” a Beacon FAQ states.

---

Update: A note about contract pharmacies

The rebate model may require providers to juggle claims filing among multiple platforms when dispensing 340B drugs through contract pharmacies. A section of the updated Beacon FAQ (see Question 3) states that the 340B ESP platform remains the place for providers to register contract pharmacies and input other required information.

The Beacon platform will be used to validate contract pharmacy claims for the nine drugs included in the rebate model, but manufacturers may require such claims for other drugs to still be submitted through 340B ESP.

---

Courts may be a factor again

HRSA agreed to implement a rebate model after manufacturers went to court over the past year seeking authorization to do so themselves. The ruling in that case stated that manufacturers did not have a unilateral right to use a rebate model and instead needed to get formal permission from HRSA. The agency has been more open to the prospect of a rebate model during the Trump administration compared with the Biden administration.

Now the legal questions might flip, with provider advocates reportedly considering whether they have options to challenge the basis for the rebate model. And in September, the American Hospital Association wrote to the Department of Justice and the Federal Trade Commission to note that manufacturers appeared to engage in anticompetitive conduct when various companies sought to launch rebate models more or less concurrently.