As the 340B program has grown, the lack of safeguards has transformed it into an opaque system that often rewards revenue‑seeking over patient care. The Health Resources and Services Administration’s (HRSA) consideration of a rebate model pilot marks an important step toward addressing longstanding transparency and accountability challenges in the 340B program, issues that have only intensified as the program has rapidly grown and become more intertwined with other federal health care programs.
PhRMA emphasized support for a rebate model in a letter responding to HRSA’s request for information, explaining how the rebate model promotes rapid verification of 340B eligibility and adds long overdue transparency without disrupting patient access or safety‑net providers.
Four things to know about a rebate model:
- A rebate model adds transparency that the 340B program lacks today. A rebate model acts as a claims-level verification system, confirming eligibility before hospitals and clinics receive the 340B price. Simply put, you would not pay a contractor until the work is completed as promised; hospitals and clinics should receive the 340B price after confirming the prescription is eligible.
- A rebate model provides a way to prevent illegal duplicate discounts. Federal watchdogs have repeatedly raised concerns about the lack of processes to prevent claiming more than one discount despite Federal law prohibiting such double dipping. A rebate model pilot would help crack down on fraud and abuse that drive higher costs for patients, taxpayers and employers.
- Unlike proposed alternatives, a rebate model builds compliance into the payment process. Other approaches are inherently retrospective and either rely on voluntary compliance or would require significant government resources for data verification and enforcement. A rebate model, by contrast, builds compliance into the system by making it a prerequisite for receiving the 340B price.
- A rebate model protects patient access and safety‑net providers. The 2025 rebate model pilot would have required manufacturers to pay rebates within 10 days, well sooner than the standard wholesaler payment deadline. Therefore, complaints that a rebate model would disrupt hospital and clinic cash flow are overblown. Research shows a rebate model does not add additional financial burden compared to existing inventory systems. Patient access would remain unchanged, since prescriptions would be dispensed or administered exactly as they are today, with hospitals claiming the 340B price after a patient has received their medicine.
What PhRMA is saying:
- On Improving Program Integrity: “A rebate model is a commonsense, workable solution to longstanding program integrity failures that have worsened as the 340B program has grown and become increasingly interconnected with other health care programs, including, most recently, the Inflation Reduction Act (IRA).”
- On Increasing Accountability: “A rebate model could address core structural weaknesses in the program by serving as a rapid verification system to confirm [340B] eligibility using claims‑level data.”
- On Improving Stakeholder Value: “PhRMA’s members have long sought, and urgently need, a rebate model in the 340B program to ensure that key program stakeholders—taxpayers, employers, federal health care programs, and innovative pharmaceutical manufacturers—are no longer obligated to shoulder the ever increasing costs of rampant 340B program violations.”
The bottom line: A rebate model offers a straightforward, scalable solution to modernize the 340B program. By introducing rapid verification and stronger incentives for compliance, it addresses longstanding program integrity challenges while preserving support for true safety-net providers and the patients they serve.
Elise Shutzer
Elise Shutzer currently serves as Vice President of Public Affairs at PhRMA, leading issue communications for key topics including cost and access, hospitals, as well as strategic insights which oversees polling and message research activities. Shutzer is a seasoned leader with extensive experience in public policy advocacy, grassroots and public affairs. She most recently served as the Global Corporate Issue Head for Sustainability and Circularity at ExxonMobil leading advocacy campaigns on plastic waste, the circular economy and other environmental issues. Previously, Shutzer ran the energy and environmental grassroots and coalition development program at The Pew Charitable Trusts, and she spent over a decade at the Dewey Square Group, a prominent public affairs and communications firm.
Elise Shutzer