If HHS’ 340B rebate model pilot proceeds as planned, more than 2,700 U.S. hospitals will collectively be saddled with approximately $400 million in operational costs and 11.2 million labor burden hours, according to the American Hospital Association.
The rebate model, slated to go into effect Jan. 1, will allow drug manufacturers that are part of CMS’ first cycle of negotiated drug prices to provide rebates — rather than upfront discounts — for 340B entities. Congress established the 340B program in 1992 to require drugmakers to sell specific outpatient drugs to eligible providers at discounted prices.
The AHA has sent multiple letters to Thomas Engels, administrator of HHS’ Health Resources and Services Administration, regarding concerns about the pilot program. In a Sept. 30 letter, the association said the “HRSA has vastly underestimated the burdens” of the pilot and requested the agency delay implementation.
The HRSA estimated the pilot program will require more than 1.5 million hours of labor to fulfill regulatory compliance. The AHA said operational costs for an individual 340B hospital could range between $150,000 to $500,000, creating a $400 million projected cost for all 340B hospitals.
“A few months is not enough time for HRSA to address all of the challenges associated with a new regime that will, as HRSA itself acknowledges, ‘fundamentally shift how the 340B program has operated for over 30 years,'” the AHA letter said.
In late 2024, several drug manufacturers proposed plans to launch a rebate payment model to the 340B program, which they said would improve transparency and ensure cost savings for patients. A litigatory tug-of-war soon surfaced between drugmakers, the HRSA and 340B hospitals. In early September, a coalition of 162 bipartisan legislators voiced concerns about the 340B pilot program’s design, timeline and potential outcomes.
Hospital participation in the 340B program has tripled since its creation more than 30 years ago; in 2023, the program reached a record $66.3 billion in outpatient drug purchases.
Several health system leaders told Becker’s the pilot could erode benefits of the federal 340B program, with one executive saying, “This is going to be an administrative and an operational nightmare.”
