340B Rebate Model
What the rebate model is
The 340B rebate model is a mechanism through which qualifying drug manufacturers may apply the 340B ceiling price as a rebate, rather than as an upfront discount, for covered entities’ purchases of certain drugs. (HRSA)
Current status of the rebate model
HRSA has approved rebate-model plans from 10 manufacturers. The pilot is scheduled to begin January 1, 2027, and applies to a limited set of selected medicines during their applicable Medicare Drug Price Negotiation Program price-applicability periods.
Why HRSA is considering the rebate model
The 340B program has grown substantially in size and complexity over the past decade and a half; the Health Resources and Services Administration (HRSA) is now considering implementing a rebate model pilot to improve transparency and program integrity through claims-level, transaction-specific verification. (HRSA)
How the rebate model changes the 340B program
A rebate model requires claims-level identification of each transaction, unlike the current upfront discount model, which provides limited visibility into individual 340B transactions. The rebate model allows verification before a rebate payment is issued.
This approach proactively addresses compliance concerns, rather than relying primarily on retrospective reviews, audits and dispute resolution processes. It also supports compliance with statutory non-duplication requirements under the Medicare Drug Price Negotiation Program. The claims-level data is also expected to support better-informed oversight and long-term stewardship of the program. (HRSA)
What the rebate pilot will achieve
- Improve claims-level transparency and accountability through transaction-level verification.
- Strengthen verification of eligible 340B transactions.
- Prevent duplicate discounts, which are prohibited under 340B statute.
- Generate better data to inform oversight and future policymaking.
- Preserve the long-term sustainability of the 340B Program while preserving access to care in rural and medically underserved communities.
(HRSA)
Here’s a breakdown of how the pilot works
| Rebate calculation | Rebates will equal the wholesale acquisition cost (WAC) minus the 340B ceiling price on the date of dispense, paid at the unit level rather than by accumulation of a full package size. |
|---|---|
| Payment timeline | Manufacturers must pay or deny (with documentation) all rebates within 10 calendar days of a completed data submission. If a submission is returned as incomplete, the 10-day clock restarts once all necessary data has been submitted. |
| Claims submission window | Covered entities will submit claims data to the IT platform within 45 calendar days from the date of dispense, with allowances for extenuating circumstances and other exceptions, including 340B-status changes. |
| Transition accommodation | Plans must accommodate up to 2 unreplenished accumulated packages during implementation, with a 15-calendar-day grace period before the Pilot's effective date. Claims are still due within 45 days of dispense. |
| Ceiling price files | Manufacturers must make a quarterly 340B ceiling price file (by 11-digit NDC) available via the IT platform to support Medicaid billing and sliding-fee-scale calculations or cost sharing with patients. |
| Scope | The Pilot will only apply to active, selected drugs for IPAY 2026/2027 on the CMS Selected Drug List, regardless of payer or indication, during each drug's price-applicability period. |
(HRSA)
Frequently asked questions about the rebate model
Will a rebate model significantly increase costs for hospitals and clinics?
No. A rebate model would not reduce reimbursement or increase 340B prices. Hospitals and clinics would still receive the full value of the 340B discount for prescriptions that meet program requirements, just after basic verification, consistent with standard health care payment practices used in other federal programs like Medicare Parts B and D.
Will a rebate model create unnecessary administrative burden for hospitals and clinics?
No. Hospitals and clinics already collect the limited data elements needed for verification today, so the model would introduce minimal new administrative burdens. And based on an analysis by IQVIA, hospitals and clinics’ financing costs are not expected to increase under this approach.
Will hospitals and clinics face cash flow challenges under a rebate model?
No. The pilot is structured to limit cash-flow effects. In most cases, cash flow would remain unchanged or could even improve. Under the pilot, manufacturers are required to pay rebates within 10 days of the submission of a valid, verified claim. Hospitals and clinics typically have 30 days to pay wholesalers. This means hospitals and clinics would generally receive rebate payments before they are required to pay for the inventory.
Is the rebate model different from how hospitals and clinics currently operate?
It would build on existing practices while adding basic verification. Hospitals and clinics often already dispense medicines, receive reimbursement, then restock inventory with 340B-priced products. A rebate model would allow this process to continue but would require hospitals and clinics to provide basic claims-level data to verify 340B eligibility before receiving the benefit of 340B pricing.
Will the rebate model delay or restrict patient access to medicines?
No. Patients will receive their prescriptions exactly as they do today. 340B eligibility is typically determined after dispensing a medicine, and a rebate model would not delay care or change how patients get their medicines.
Is the rebate model designed to limit covered entity participation in the 340B program?
No. The goal is to prevent unauthorized double dipping for qualifying transactions involving a limited set of selected drugs.
Why is verification necessary?
Today’s system enables hospitals and clinics to receive the 340B price upfront without confirming eligibility, which has led to documented cases of double-dipping in the program.
Will a rebate model threaten rural hospitals?
No. Rural hospitals would be paid within 10 days of submitting a claim, and a rebate structure could make it easier for them to claim 340B pricing on a single unit of a medicine rather than waiting until a larger package has been used up and is ready to be replenished. The pilot also includes transition accommodations and is intended to preserve access to care in rural and medically underserved communities.
What problem does a rebate model solve?
It is an efficient way to address the administrative complexity created by the Inflation Reduction Act. A rebate-based rapid verification model would enable the private sector to help address new administrative challenges created by the Inflation Reduction Act (IRA)—reducing federal involvement and saving taxpayer dollars. Without added guardrails, unauthorized duplicate IRA/ 340B discounts are projected to reach $5.2 billion in 2027 alone.
Does this create new administrative burdens for hospitals and clinics?
No. A rebate model relies on data that hospitals and clinics should already be collecting for compliance and claims processing and would mirror standard practices used across:
- Medicare
- Medicaid
- Commercial insurance
Why implement a rebate model now?
The status quo in the 340B program is driving unchecked growth and higher costs, with no evidence of patient benefit. A rebate-based rapid verification model is a practical step toward greater transparency, accountability and modernized oversight while protecting patient access and legitimate safety-net care.
Important data to know about the 340B program
| Data | Source |
|---|---|
| In 2025, 340B covered entities purchased $100 billion in discounted drugs. | HRSA (July 2026) |
| In its current form, the 340B program encourages behaviors, including the prescription of more and higher-priced drugs, the expansion of services, and the integration of hospitals and off-site clinics, that tend to increase federal spending. | Congressional Budget Office (September 2025) |
| In 2022, total 340B program sales reached $53.7 billion when measured at the discounted 340B price. By 2023, covered entities purchased $66.3 billion in covered outpatient drugs under the program, representing approximately 23.4% growth in just 1 year. Comparatively, in 2023, prescription drug spending in the U.S. grew 10.1%. By 2024, covered entities purchased $81.4 billion in covered outpatient drugs under the program, representing approximately 50% growth in just 2 years. | HRSA / Federal Register (August 2026) |
| 340B hospitals billed North Carolina state employees an average price markup of 5.4 times their discounted acquisition costs for oncology drugs and collected an 84.8% higher average price markup than hospitals outside of the program. | State Treasurer of North Carolina (May 2024) |
| Individual 340B hospitals collected as much as $6,026 in average profits per claim by charging up to 12.7 times their 340B acquisition costs for oncology drugs. | State Treasurer of North Carolina (May 2024) |
| Instead of serving vulnerable communities, 340B hospitals pursued higher profits by expanding into wealthier neighborhoods with higher rates of health insurance, where patients could pay more for prescription drugs. | State Treasurer of North Carolina (May 2024) |
| Minnesota’s largest 340B hospitals continued to generate the largest revenue from the 340B program, reportedly generating over $1 billion in net 340B revenue—over 80% of statewide net 340B revenue—whereas Safety Net Federal Grantee clinics, including Federally Qualified Health Centers (FQHCs), their lookalikes, and tribal health centers, generated the least net 340B revenue. | Minnesota Department of Health (February 2026) |
Sources
- HRSA 340B Rebate Model Pilot Program (October 2026)
- HRSA Announcement of Revised Pilot Program (July 2026)
- HRSA 2025 Covered Entity Purchases (July 2026)
- Minnesota Department Of Health 340B Covered Entity Report (February 2026)
- Congressional Budget Office Report on Growth in the 340B Drug Pricing Program (September 2025)
- State Treasurer of North Carolina Report on 340B Hospitals Overcharging State (May 2024)
- HRSA Notice Regarding 340B Rebate Model Pilot Program (August 2026)