A federal judge granted a temporary restraining order blocking the Department of Health and Human Services from launching its 340B Rebate Model Pilot Program, which was scheduled to begin Jan. 1, 2026.
U.S. District Judge Lance Walker of the District of Maine issued the order Dec. 18 in a case brought by the American Hospital Association, the Maine Hospital Association and four safety-net hospitals. The plaintiffs argued the program violates the Administrative Procedure Act — a federal law that requires agencies to follow certain rulemaking steps such as public notice and comment before implementing new regulations.
Filed Dec. 1, the lawsuit challenges HHS’ plan to replace the longstanding upfront drug discount model with a rebate-based structure. Under the proposed model, covered entities would pay full price for drugs and seek reimbursement afterward — a shift the AHA said would impose significant financial and administrative burdens on safety-net providers. The association warned the change could saddle hospitals with “hundreds of millions” in annual costs and force them to rapidly overhaul billing and data systems.
The AHA said the rule was finalized through a “rushed, opaque process” and warned it could saddle hospitals with “hundreds of millions” in annual costs without benefiting patients. In a Dec. 29 statement, AHA President and CEO Rick Pollack said the ruling prevents “a devastating sea change in a 30-year-old program relied upon by hospitals that serve America’s most vulnerable patients and communities.”
The ruling pauses the program’s implementation while the case proceeds.
