Authored by: Peggy Tighe, Principal, Greg Doggett, Counsel, and Moksha Visanagiri, Law Clerk
Powers’ Drug Pricing and 340B Program Practice Group
On October 1, 2026, HRSA announced that it had approved several manufacturers’ applications to participate in the agency’s 340B Rebate Model Pilot Program (Rebate Pilot) beginning January 1, 2027. On October 9, 2026, the American Hospital Association (AHA) and individual hospitals filed a lawsuit in federal court to stop the Rebate Pilot from taking effect. On the same day the lawsuit was filed, a bipartisan group of U.S. House members – U.S. Reps. Rob Bresnahan (R-PA), Debbie Dingell (D-MI), Tracy Mann (R-KS), and Lois Frankel (D-FL) – introduced legislation to establish a two-year moratorium on 340B rebates, the 340B Rebate Model Delay Act.
HRSA Approves Manufacturers’ Applications for Rebate Pilot
Consistent with HRSA’s notice that it was launching the Rebate Pilot, the agency limited the Rebate Pilot to drugs subject to Medicare maximum fair prices for 2026 and 2027. HRSA approved drugmaker applications for 18 of the 20 drugs eligible for Rebate Pilot participation. The exceptions are Bausch’s Xifaxan following Bausch’s exit from the 340B program; Calquence, which AstraZeneca declined to include; and Ozempic/Wegovy/Rybelsus, for which Novo Nordisk did not submit an application.
340B Rebate Model Pilot Program |
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| Manufacturer | Drugs Included | Drugs Not Included |
| AbbVie, Inc. | Imbruvica, Linzess, Vraylar | – |
| Amgen, Inc. | Enbrel, Otezla, Otezla XR | – |
| Astellas Pharma US, Inc. | Xtandi | – |
| AstraZeneca Pharmaceuticals LP | Farxiga | Calquence |
| Bristol Meyers Squibb Company | Eliquis, Pomalyst | – |
| Boehringer Ingelheim Pharmaceuticals, Inc. | Jardiance, Ofev, Tradjenta | – |
| GlaxoSmithKline (GSK) | Breo Ellipta, Trelegy Ellipta | – |
| Merck Sharp & Dohme LLC | Januvia, Janumet, Janumet XR | – |
| Pfizer Inc. | Ibrance | – |
| Teva Pharmaceuticals | Austedo, Austedo XR | – |
| Novo Nordisk | – | Ozempic/Wegovy/Rybelsus |
| Bausch Health | – | Xifaxan |
Hospitals’ Lawsuit to Stop Rebate Pilot
The lawsuit filed by AHA, the Maine Hospital Association, and four individual hospitals seeks to both temporarily and permanently block the Rebate Pilot. In 2025, an AHA lawsuit successfully thwarted HRSA’s first attempt at a Rebate Pilot. The new lawsuit brings seven Administrative Procedure Act counts against HHS and HRSA, alleging that the new Rebate Pilot and the approval of manufacturers’ applications are arbitrary and capricious.
In AHA’s complaint, the group argues HRSA used the wrong legal standard, weighing “program integrity” against hospitals’ interests instead of picking the mechanism “most effective and most efficient from the standpoint of” covered entities, as Congress instructed. AHA also argues HRSA badly understated the costs, never quantified the benefits, and brushed aside cheaper alternatives such as a neutral data clearinghouse. Further, AHA alleges HRSA dismissed hospitals’ 33 years of reliance on upfront 340B discounts; ignored the strain from federal Medicaid cuts, broken rebate vendor platforms, and the lack of any dispute process; and reached a result it had decided on before taking comments. AHA asks the court to declare the approvals unlawful, set aside the Rebate Pilot, and permanently enjoin the Rebate Pilot before its January 1 start date.
It will be more challenging for the plaintiffs to stop the new Rebate Pilot. Unlike the previous Rebate Pilot, HRSA requested stakeholder input before announcing the new Rebate Pilot. Additionally, in the notice announcing the new Rebate Pilot, the agency responded to stakeholder input and provided a rationale for its decision to establish a Rebate Pilot. However, these steps by the agency do not guarantee the Rebate Pilot will withstand legal challenge.
Two-Year Moratorium on 340B Rebates: Bill Introduced, Included in Democrats’ Policy Agenda
U.S. Reps. Rob Bresnahan (R-Pa.), Debbie Dingell (D-Mich.), Tracy Mann (R-Kan.), and Lois Frankel (D-Fla.) introduced the bipartisan 340B Rebate Model Delay Act, which would postpone implementation of the Rebate Pilot for two years and give Congress additional time to evaluate the Rebate Pilot. Many associations representing covered entities endorsed the bill, including Ryan White Clinics for 340B Access and 340B Health. While the chance of any 340B-related legislation getting enacted before the end of the year remains extremely low, the bill demonstrates strong congressional concerns about 340B rebates.
Notably, on September 1, 2026, a House Democratic health care working group, sent an 84-page memorandum to Leader Jeffries entitled, “Democratic Healthcare Action for the First 100 Hours, First 100 Days, and First Year of the 120th Congress.” The document includes a section entitled: “Stop Trump’s attacks on safety-net hospitals and community health centers.” The authors note that it will seek to “block the Administration’s 340B rebate model from forcing cash-strapped providers to front millions of dollars for discounted medicines they already rely on to serve vulnerable patients.”
Powers will continue to monitor developments regarding the rebate model. Please contact Powers’ drug pricing team, or your lead Powers attorney, if you have any questions.
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About Powers Law
Powers Pyles Sutter & Verville PC (“Powers”) is a Washington, D.C.-based law firm with national practices in healthcare, education, government relations, Indian tribal governments, and nonprofit law. Powers attorneys and professionals are nationally known for their extensive expertise in their practice areas and their commitment to client service. For more information, visit www.PowersLaw.com.