The 340B Program in 2026: Congress, Courts, and Rebates

Recorded August 12, 2026

Lesley Pink  
Hello and welcome to the Strategic Dose: Driving Your Pharmacy Mission. I’m Lesley Pink, your host. Today, we’ll be talking about 340B policy, which is in one of its most active policy periods in a decade.

Legislation, litigation, and manufacturer policy changes are all moving at once. We’ll be talking with Amanda Smith, counsel at K&L Gates, and Abel Haile, vice president, health system strategy and commercial analytics at VytlOne.

Welcome to the podcast, Amanda and Abel.

Let’s start this conversation with Congress. There’s been more legislative activity on 340B this year than we’ve seen in a long time. Amanda, can you tell us what’s going on?

Amanda Smith  
Yeah, absolutely. We haven’t seen real 340B legislation in about 16 years. The last time the 340B statute was opened was in 2010 with the Affordable Care Act. And since then, obviously, the world of pharmacy has changed. The world of 340B has changed. And so over the past several years, you’ve seen different groups of members of Congress really looking at the 340B program and considering whether or not there’s areas where there could be improvements to how 340B currently operates. What improvements mean is very different, whether you’re a pharmaceutical manufacturer or a covered entity. But both stakeholders have been approaching Congress with increasing frequency and asking for some of these things that they would see as improvements to the statute.

You’ve had, again, a number of bills introduced in both chambers. You’ve had working groups, you’ve had reports come out. And so all of that activity is really looking at what different stakeholders are asking for-whether or not those different asks could be pieced together in a way that eventually leads to any sort of 340B change.

Abel Haile  
one thing that’s worth noting and just kind of calling it upfront is with 340B, with all the noise that we consistently hear about potential changes, is that we are seeing bipartisan support from the program itself or for the program itself,
whether that’s the Senate Gang of Six that’s got bipartisan members within the group. Chairman Cassidy on the Republican side, Representative Matsui on the Democratic side, both have reform vehicles. I just want to emphasize this because it’s important to note that it’s not about ending the program. What we’re seeing is the debate on how 340B should work, not whether or not it should exist.

As Amanda had mentioned, there have been a couple of bills introduced. What I’m hearing from health system partners or where their focus is as it relates to this is really around the patient definition. That’s a big driver and will have big implications should anything come to fruition. Contract pharmacy protection laws, whether a rebate model does get statutorily blessed, and any sort of reporting as it relates to transparency on how the program is used, which we’re seeing some already happen at the state level, but being enacted at a federal level would definitely be a big thing to monitor or that health systems are monitoring.

It’s important to say that even though there are these new laws being proposed, I think something so comprehensive, especially during an election year, is unlikely to get past this year, especially in the form that it’s at. But it does give us insight on what Congress is thinking.

Lesley Pink  
And Abel, one thing you had mentioned is the 340B patient. That’s a thread that keeps coming up in almost every one of these proposals. And why is that?

Abel Haile  
Yeah, I think it’s important to understand that the 340B statute as it exists today doesn’t clearly define what a patient is. And the framework that covered entities work from today’s layered sets of sources, whether it’s the ‘96 definition,
HRSA FAQs, what we’re hearing coming out of audits is how covered entities define a patient withstanding a clear definition. And that’s how claims qualify around this.

It will have implications to covered entities. Small definition shifts will have big financial implications. Tightening something as it relates to the patient definition, whether that’s referrals being allowed or removed or the time period for how long a patient is considered a patient, would have material changes and impacts
340B programs.

Amanda Smith 
I would just like to add to that this is a central legal question to how 340B, the very basis of how 340B works, that 340B drugs can only be used for patients of the covered entity, which is an undefined term. A lot of the push and pull you see is, should Congress define what the term patient is?

You now have some manufacturers asking courts to define what patient is. Does the agency have the authority to define what patient is? And who in the first instance gets to decide, if this is or is not a patient of the covered entity? Because if it’s not a patient of the covered entity, then it’s not supposed to have a 340B drug go to that individual. And so at the very basic understanding of 340B, I think any of these disputes could be traced back to what is a patient of a covered entity for purposes of a 340B statute.

Lesley Pink  
And while this debate is going on, manufacturers aren’t waiting. What are covered entities seeing on the ground?

Abel Haile  

I think it might be helpful to frame really the arc of the manufacturer restriction policies that we’ve seen come to fruition since 2020. It started with manufacturers first limiting which pharmacies could receive 340B drugs.

Then it’s since expanded to data submission for contract pharmacy claims in order to get those 340B savings. And then in-house pharmacy dispenses. So not just contract pharmacies, but pharmacies owned and operated by the health systems also having to share data. And then more recently now, we’re seeing expansion into the hospital or physician-administered space where administered drugs on the medical benefits side are being required to submit. And it’s worth noting that it’s very much a copycat league. And what I mean by that is when we see one manufacturer roll out a new policy, there is a fast follow with other manufacturers adopting a similar policy.

The next inflection point is coming this November, where there’s one manufacturer who’s set to begin requiring service level data, which goes beyond the dispensing and administration records, which is a meaningful expansion for covered entities. This means yet another data set from a different disparate data source will need to be provided, and that does create constraints and burden, and it is burdensome on the covered entities because 340B third-party applications today are built around dispensing data, administration data. This creates another complexity in an already evolving world of 340B.

Amanda Smith  
You have two kind of aspects to this. You have the operational of all these disagreements about patient definition happen on the ground. How do you operationalize what to do with your 340B program based on x manufacturer wants to see you do this, and another manufacturer wants to see you do another thing? And from the policies and procedures or how I actually implement my 340B program, that’s obviously a really huge consideration. But that’s also leading to a lot of increased litigation in the 340B space, which is a very funny thing to say, because I think we’ve been living in a world of 340B litigation for six plus years at this point. But you’re starting to see where litigation was maybe focused on state contract pharmacy laws or on the rebate model. You’re starting to see an evolution into people considering how to bring patient definition into federal court given that there’s limitations and that the Supreme Court has determined there’s no private cause of action under 340B.

While you have all these disputes between manufacturers and covered entities, and that the legal pathway can sometimes be challenging, you also have this operational pathway to consider while, trying to figure out what the 340B patient definition environment is going to look like in,two weeks, two months, two years.

Abel Haile  

That’s a good point, Amanda, and just to layer in on that, that’s actually a space where we’re investing a lot here at VytlOne in developing an AI-powered solution, VytlAIQ, that does give covered entities the ability to have configurable settings around the patient definition and other moving mechanisms because it is
ever evolving. So as guidance evolves or as health systems own policy tightens, the eligibility framework allows covered entities to adapt without heavy engineering. And it feels in the world that we live in today that there’s so much uncertainty and so many moving parts that we continuously hear that from our covered entity partners.

Lesley Pink  
Amanda, you mentioned the rebate model, which as of July 31st is officially back on the table. HRSA just released a revised pilot. What did they actually do?

Amanda Smith  
Yeah, great question. I think many people remember that the first time HRSA attempted to move forward with the rebate model, that the First Circuit Court of Appeals told them that they were not allowed to move forward with it. That decision was based on the way that HRSA went about implementing the rebate model.
Ultimately, that court found that HRSA didn’t really take notice and comment or consider how this would impact covered entities as it moved forward with the rebate model and that HRSA needed to be more thoughtful if it were going to look at a rebate model. And so HRSA accepted comments. They went through a longer period of addressing why they want to move forward with the rebate model and recently re-released a rebate model.

Under the rebate model, if it moves forward, which HRSA is planning to do, but, there could be litigation against it, effective January 1, 2027, providers will have to basically access certain drugs through a rebate instead of upfront discounted drugs. And that a lot of, providers have a lot of concerns with this. The specific drugs are ones that have been selected for Medicare negotiation. And under that law that allows Medicare negotiation, the drug companies are protected against the same unit of drug being subject to a negotiated price and a 340B price. But the current mechanism isn’t working well, I think, from both perspectives of trying to identify when a 340B price is due or when a 340B price is not due. And I’ve heard a lot of complaints about how it may be Abel even more so about how the Medicare-negotiated deduplication is currently working.

So HRSA is positioning this rebate model pilot as an alternative to how it’s currently working to try to streamline those processes. But from the covered entity perspective you have a lot more upfront costs because you’re not getting the 340B discount at the point of sale. So you’re having to buy at a much higher price and float that cost while you wait for a rebate. And there’s, I think, distrust between manufacturers and covered entities. And from the covered entity perspective, there’s distrust that the manufacturers will just not give them the rebates they’re due. So that if it moves forward, I think you’ll certainly see, again, litigation. But that will be to be determined about whether or not the rebate model actually functions as it’s intended and whether manufacturers and covered entities are able to work together in order for this to function as intended. But I think that both sides are very skeptical of each other on it.

And then from the manufacturer perspective, those selected for Medicare negotiation are the only ones that are allowed into this pilot. And so everybody else doesn’t have the option to really look at moving 340B to a rebate. And manufacturers would say, well, that’s not fair. Why does this company get to do this and I’m not able to?

This is January 1, 2027 effective date. You still have concerns on both sides from both stakeholders, particularly the covered entities who really are worried about what the rebate model is going to do for, their finances as well as how they work and interact with drug companies. And that I expect we’ll probably see litigation, but I guess we’ll have to chat in 2027 to see if that expectation comes true.

Abel Haile  
Yeah, I think that was summarized really well, hit on a lot of the similar items that I was going to bring up as it relates to the cash flow implications that this has for the covered entities under the proposed rebate model, which does have a 10-day turnaround time, but that’s still working capital, an exposure that health systems are going to have to face with the upfront WAC payment when they were used to getting that 340B price at point of sale.

The operational constraint also is around the health systems needing to submit claims data through whatever platform that the manufacturers choose to use and is approved by HRSA. Under the prior version, it was Beacon and likely will be the mechanism used again. But that’s still unknown. It just means a new integration workflow, new reconciliation process, new dispute paths and submission paths that covered entities weren’t used to or have had in their best lives. It’s also worth noting that this reality does create new operational muscles that covered entities didn’t have before. They’re going to need to identify claims in scope, submit them in the right format on the right cadence, and then have to reconcile what comes back against what’s expected. And this is definitely a concern that we’re hearing in the industry and solutions that we’re working on with our health system partners to address in preparation of January go live.

It’s unknown what litigation will bring, but it’s important for covered entities to prepare as if January 1st will be when the rebate model comes to fruition.

Lesley Pink 
Again, this is developing fast. As of our recording on August 12th, the pilot is still scheduled to launch on January 1st, but the hospital associations have signaled that they’re weighing legal options, so listeners should check on the current status. Amanda, Abel, what should we keep an eye on as 2026 winds down?

Amanda Smith  
That we’ve talked a lot about Congress and about the disputes between drug companies and covered entities. But what we haven’t quite addressed in what I think at least as 2026 winds down and we move into 2027, one of the marquee topics is going to be is 340B reimbursement, specifically for the outpatient prospective payment system or OPPS.

A few years ago, CMS attempted to reduce reimbursement for 340B claims, Medicare Part B as in boy, so those are your provider-administered claims for people paid
under the OPPS system. That’s going to be mostly your larger hospitals, your academic medical centers. And ultimately, CMS lost. And what the Supreme Court told CMS when that rule was vacated was, hey, you can’t reduce reimbursement in this way. You were supposed to do a statistically valid survey if you were going to try to change reimbursement for 340B providers.

Over this year, we’ve seen CMS do that survey to be determined whether the survey is valid and meets the statutory requirements, but that, so CMS has proposed to again try to cut 340B reimbursement for those OPPS drugs. That assuming it’s finalized as proposed, come January 1, 2027, you’re going to see significant reduced reimbursement for 340B providers for original Medicare, so Medicare reimbursed through CMS. But there’s also going to be the issue with Medicare Advantage plans.

The last time around, Medicare Advantage plans largely followed CMS and then refused largely to make providers whole once it was determined that CMS’s payments were unlawful. It wasn’t a valid payment. And so those are going to be big issues that are going to continue to fire up in 2027. Again, probably there’s going to be litigation related to this, maybe arbitration if it’s Medicare Advantage. And it’s just one of those things that we’ve been here before, but it’s a little different this time. I think that’s going to be one of the biggest, if not the biggest issue, in 2027 for 340B from my perspective.

Abel Haile 
Yeah, that’s spot on and one of the main topics that I hear often come up in client conversations as well. The first is really watch that November service date requirement. It’s a clear signal of where manufactured data demands are heading. It’s going to really test whether covered entities, data infrastructures can keep up with the pace. It’ll be interesting to see which other manufacturers follow that policy change.

And then the second is keeping an eye on the states and at the state level. We are seeing contract pharmacy laws get, or contract pharmacy protection laws get enacted. As recently as this week in my home state of Illinois, we saw the governor sign in contract pharmacy protection laws. But one of the things that interests me is also the prescription drug affordability boards, or the PDABs. They’re gaining traction. We’ve got PDABs in Colorado, Maryland, and Washington. In other states moving towards state-level upper payment limits, the prescription drug affordability boards operate in order to limit the reimbursement that pharmacies may receive for particular drugs, very similar to how the IRA is limiting the reimbursement for covered drugs. This creates, again, real interaction or intersection between 340B pricing, and it’s another layer of complexities for covered entities to plan around. Should they be in that state or should their states be considering PDABs? And it’s also interesting to see this as more and more of the 340B story seems to be written really kind of outside of the federal legislative and DC perspective and more on the state side than we were used to in the past.

Lesley Pink  
Thank you, Amanda and Abel, for joining us for the August episode of The Strategic Dose. Please join us for the next podcast this fall. And remember that you can find us on Apple Podcasts, Spotify, and YouTube.

Abel Haile  
Thank you.