The 340B drug pricing program allows certain providers known as covered entities, including community health centers, to purchase outpatient medications at a discount. Community health centers utilize the savings generated from the program to provide access to affordable medications and comprehensive services to patients.
How are drug manufacturers trying to change the program?
Since last year, drug manufacturers have been trying to shift the 340B program from an upfront discount program to a post-sales rebate model. Manufacturers are currently required to provide a discount on 340B medications at the point of sale. Under a rebate system, covered entities would be required to purchase medications at the drug manufacturer’s list price. They would then have to submit claims data to manufacturers, and the manufacturer would decide whether or not to provide a rebate.
What would a rebate model mean for health centers?
The rebate model would give drug manufacturers unprecedented control over when and under what circumstances a 340B discount would be provided to covered entities. Health centers would have to pay high prices for drugs without any guarantee that they would receive a rebate on the back end. As safety net providers, health centers operate on thin margins already, and the shift to a rebate model would be untenable for them.
What is the latest on the 340B model litigation?
Drug manufacturers began trying to shift the program to a rebate model in August of 2024. In response, HRSA stated that these actions violate the 340B statute because HRSA would need to approve the new model. After additional pressure from HRSA, some manufacturers backed off from plans to implement a rebate model.¹ However, to date, five drug manufacturers have sued HRSA over the right to implement a rebate model.
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