HHS to drop 340B rebate pilot after court rulings

By Ella Jeffries / February 6, 2026

HHS will drop its 340B rebate model pilot program following two federal court rulings that blocked its implementation.

The pilot, announced in August 2025, was challenged by the American Hospital Association, the Maine Hospital Association and four safety-net health systems, which argued the rebate-based model would have forced 340B hospitals to pay full market prices upfront and seek reimbursement later, replacing the program’s longstanding upfront discount structure. The American Hospital Association said the shift could add hundreds of millions of dollars in annual costs and threaten access to care for rural and underserved patients.

On Dec. 29, the U.S. District Court of Maine issued a preliminary injunction halting the program, and the 1st U.S. Circuit Court of Appeals denied the government’s request for a stay Jan. 7.

In a Feb. 5 filing, HHS said it reviewed the full administrative record and concluded it would not alter the likely outcome of the case. The agency agreed that further litigation would not be “fruitful” and asked the court to vacate the program and remand the matter to the Health Resources and Services Administration.

If HHS pursues a new rebate program, it must issue a new public notice, solicit comments and delay any effective date to at least 90 days after announcing manufacturer approvals.

The American Society of Health-System Pharmacists welcomed the decision. “We thank HHS for recognizing that the proposed 340B rebate pilot was unworkable and a threat to program integrity,” Tom Kraus, ASHP vice president of government relations, said in a Feb. 6 statement.

The American Hospital Association echoed that support. President and CEO Rick Pollack said in a Feb. 5 statement the group appreciated the decision and would work with the administration on drug affordability policies that protect access to care for vulnerable communities.