For more than a year, major drugmakers have been pushing to replace the 340B program’s longstanding upfront discount structure with post-sale rebate models — drawing resistance from hospitals and federal regulators at every stage. What started as four lawsuits in late 2024 has since expanded into a federal pilot program, a new wave of enforcement actions, and an unresolved legal battle still working through the courts. Here is a timeline of 20 key developments since the lawsuits were filed.
1. Johnson & Johnson announced plans to end upfront discounts for two drugs — blood thinner Xarelto and anti-inflammatory Stelara — sold to disproportionate-share hospitals under the 340B program on Aug. 23, 2024. The new rebate system would require hospitals to buy the drugs at commercial prices, then submit claims data via an online portal to qualify for a rebate.
2. The AHA, ASHP and others condemned the model, arguing it violates the 340B statute and would put financial strain on safety-net hospitals. J&J ceased implementation of its rebate plan Sept. 30 after HRSA warned that drug rebates are illegal under the 340B statute and threatened the drugmaker with fines or loss of Medicaid and Medicare Part B eligibility.
3. On Nov. 12, J&J filed suit against HHS and HRSA, asking a federal judge to declare its rebate plan legal and block enforcement. Two days later, Lilly filed a similar suit over its own rebate model, which would require hospitals to pay full price upfront and receive weekly cash rebates.
4. On Nov. 22, Sanofi notified 340B hospitals it would roll out a credit model requiring hospitals to pay wholesaler acquisition cost and submit claims data to a third-party tool before receiving a credit for the 340B difference. Bristol Myers Squibb also filed against HRSA Nov. 26, requesting its own 340B rebate plan be declared lawful. On Dec. 13, HRSA sent a warning letter to Sanofi urging it to halt its credit model. Sanofi paused implementation and on Dec. 16 filed its own federal suit challenging HRSA’s position.
5. U.S. District Judge Dabney Friedrich of the D.C. District Court denied summary judgment motions from Lilly, Bristol Myers Squibb, Novartis and Sanofi in May 2025, upholding HRSA’s authority to require pre-approval of rebate models. Sanofi received a partial win — the court ordered HRSA to reconsider its denial of Sanofi’s model — but Sanofi still cannot implement it unilaterally.
6. A second federal judge reached the same conclusion in J&J’s separate lawsuit, ruling that HRSA has statutory authority to provide for “discounts, rebates, or both” under the 340B statute. Both BMS and Novartis appealed the May ruling; J&J’s case also remains on appeal. The D.C. Circuit heard oral arguments on the consolidated cases Nov. 17, 2025; a ruling has not been issued.
7. In a significant reversal from its prior position that rebates were categorically prohibited, HRSA announced a voluntary rebate model pilot limited to drugs subject to Medicare’s Maximum Fair Price negotiations under the IRA. The agency approved eight manufacturers for nine drugs — including BMS, AstraZeneca, Novo Nordisk and Janssen — all using the Beacon platform, with a Jan. 1, 2026, launch date.
8. The AHA, Maine Hospital Association and four safety-net hospitals filed suit in U.S. District Court in Maine in December 2025, arguing the pilot violated the Administrative Procedure Act. On Dec. 29, Judge Lance Walker issued a preliminary injunction halting the program days before its Jan. 1 launch, finding the AHA had shown likely success on the merits.
9. On Jan. 7, the 1st U.S. Circuit Court of Appeals declined to lift the injunction. HHS reviewed the administrative record and, on Feb. 5, said further litigation would not alter the likely outcome. HHS agreed to drop its appeal, and on Feb. 10, the Maine court vacated the pilot and remanded it to HRSA to reassess the framework. ASHP Vice President of Government Relations Tom Kraus called the pilot “unworkable and a threat to program integrity.”
10. On Feb. 13, HRSA published an RFI in the Federal Register seeking stakeholder input on whether and how to pursue a rebate-based model. Hospital groups including the AHA and AAMC asked HHS to extend the 30-day comment window, which was ultimately extended to April 20. The AHA used the comment period to urge HRSA to abandon the rebate model entirely, arguing it would cost hospitals more than $1 billion annually. HRSA has not responded publicly.
11. Bristol Myers Squibb and Novartis are appealing the May 2025 district court ruling. J&J’s case also remains on appeal. The underlying legal question — whether and under what conditions HRSA can approve manufacturer rebate models — is not yet resolved at the appellate level.
12. Separate from the rebate litigation, Eli Lilly has also been pushing a parallel enforcement strategy around claims-level data. In January, Lilly expanded its existing contract pharmacy data requirement to include in-house pharmacy dispensing, citing the need to identify duplicate discounts under the IRA, and gave covered entities until Feb. 1 to comply. Novo Nordisk announced a similar in-house claims-data requirement effective April 1. The AHA called that policy illegal as well, urging HRSA to block it before it took effect.
13. On June 1, Lilly sent letters to an initial group of noncompliant hospitals giving them five business days to begin submitting claims-level data or face suspension of 340B pricing. The company said roughly 70% of covered entities purchasing Lilly drugs — about 2,350 organizations — had already complied, generating nearly 800,000 claims records since Jan. 1. Two-thirds of critical access hospitals are among those compliant.
14. The AHA called the policy unlawful and urged HRSA to take enforcement action against Lilly. 340B Health President and CEO Maureen Testoni called it “a huge kick in the face to the nation’s safety-net hospitals.” Lilly has indicated it will extend enforcement to additional covered entities in the weeks ahead.
15. Tampa General (Fla.) Hospital became the first hospital to challenge Lilly’s enforcement push in court, suing Lilly and Lilly USA July 2 in the U.S. District Court for the Middle District of Florida, alleging the drugmaker’s decision to cut off its 340B pricing access violates Florida’s Deceptive and Unfair Trade Practices Act. According to the complaint, Lilly directed wholesaler McKesson to end Tampa General’s 340B discounts June 18 after the hospital missed the five-business-day deadline set in Lilly’s June 1 letter, triggering an overnight price jump on Mounjaro from $750.52 to $1,019.74 per unit, a 35.9% increase. The complaint cites similar spikes on Humalog and Verzenio, and says the price differential now totals roughly $2,058,572 a month above the statutory ceiling price, an estimated $24.7 million annually.
16. The D.C. Circuit ruled July 21 in the consolidated cases brought by Novartis, J&J, Bristol Myers Squibb and Lilly. The court held that drugmakers cannot implement their proposed rebate models without approval from the HHS secretary, affirming the lower court rulings. The 340B statute permits rebate models, the court found, but the secretary must first provide for or approve such a mechanism, and HHS has never authorized one covering the manufacturers’ proposals. The court did not decide whether HHS should ultimately approve the plans, noting the agency’s review remains ongoing.
17. A second hospital took Lilly to court in July. Lebanon, N.H.-based Mary Hitchcock Memorial Hospital, part of Dartmouth Health, sued after refusing to comply with Lilly’s claims-data demands. Lilly had ended the hospital’s 340B discounts in early July. On Oct. 2, the AHA, New Hampshire Hospital Association and 340B Health filed an amicus brief in the U.S. District Court for the District of New Hampshire supporting the hospital’s request for a preliminary injunction, arguing that federal 340B law does not preempt state consumer protection laws.
18. HRSA revised its rebate pilot July 31 in its second attempt at the model. Under the new framework, manufacturers would validate claims before paying rebates, giving HRSA more visibility into individual 340B transactions. Hospital groups pushed back again. The AHA said the agency’s cost analysis understates compliance expenses and cash-flow disruptions, and America’s Essential Hospitals said HRSA overlooked comments detailing the harm the model would cause to patients. Manufacturers had until Aug. 24 to submit rebate plans, with approved plans taking effect Jan. 1, 2027.
19. HRSA approved 10 drugmakers Oct. 1 to participate in the revised pilot: AbbVie, Amgen, Astellas Pharma, AstraZeneca, Bristol Myers Squibb, Boehringer Ingelheim, GlaxoSmithKline, Merck, Pfizer and Teva. The covered drugs include Eliquis, Jardiance, Enbrel, Xtandi, Farxiga, Januvia and Ibrance. Covered entities will keep buying through their 340B wholesaler accounts at wholesale acquisition cost, then submit limited claims data within 45 days of dispense through a manufacturer-funded platform. Manufacturers must pay or deny each rebate within 10 days of a complete submission. They cannot deny rebates over eligibility, diversion or Medicaid duplicate-discount concerns, which must go through separate audit channels.
20. The AHA, Maine Hospital Association and four safety-net hospitals filed suit Oct. 9 in the U.S. District Court for the District of Maine to block the revised pilot, which covers 21 drugs. The suit argues the model could impose more than $1 billion in annual administrative costs, compared with HHS’ estimate of $537 million. It is the same court that blocked the first pilot.
Where things stand
Upfront 340B discounts remain in place for now. The appellate courts have settled the central legal question: drugmakers cannot switch to rebates unilaterally and need HHS approval first. HHS has now granted that approval to 10 manufacturers for a limited set of IRA-negotiated drugs, with rebates set to replace upfront discounts on those drugs Jan. 1, 2027, unless the Maine court intervenes again. That Jan. 1 start date is the same day CMS’ new 340B claims data repository is proposed to become mandatory. Lilly’s broader claims-data enforcement faces separate state-law challenges in Florida and New Hampshire.
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