Alert

The way discounts are handled for nine high-impact drugs will change under the voluntary 340B Rebate Model Pilot program launched by the Health Resources and Services Administration (HRSA). The pilot requires covered entities to purchase these drugs at the wholesale acquisition cost (WAC) and then receive a post-purchase rebate to achieve the 340B ceiling price.

Under the current 340B model, covered entities qualify for the program, set up a 340B account with a wholesaler, and purchase drugs at the discounted 340B price up front. The pilot, scheduled to begin January 1, 2026, represents a significant structural change that will affect operations, billing, compliance, and cash flow—making it essential to prepare now.

This article provides fundamental information to help you plan, including:

• What are 340B covered entities?
• Key considerations
• Which drugs are included in the 340B Rebate Pilot?
• Recommended immediate actions
• Monitoring 340B program qualification
• Strategic implications of the 340B Rebate Pilot
• What this means for your organization

What Are 340B Covered Entities?

Covered entities are healthcare organizations eligible to participate in the 340B Drug Pricing Program, allowing them to purchase outpatient drugs at discounted 340B prices. HRSA defines covered entities to include:

• Disproportionate Share Hospitals (DSH). Hospitals serving a high percentage of low-income or Medicaid patients.
• Federally Qualified Health Centers (FQHCs). Community-based clinics that provide primary care regardless of ability to pay.
• Rural Health Clinics (RHCs). Clinics in rural areas certified to receive Medicare/Medicaid reimbursements.
• Children’s Hospitals. Certain freestanding pediatric hospitals.
• Other HRSA-Designated Entities. Includes Hemophilia Treatment Centers, Ryan White HIV/AIDS Program grantees, and other explicitly listed organizations.

Covered entities must maintain eligibility, comply with program rules, and meet reporting requirements to remain in the 340B program.

Key Considerations

As HRSA refines guidance for this pilot, participating organizations must assess their readiness across financial, operational, and compliance functions. The following considerations highlight critical areas that your covered entity should address to help ensure accurate tracking, timely rebate reconciliation, and coordination with payers and manufacturers.

• Operational impact. Purchases occur at WAC, with rebates applied afterward to reach the 340B ceiling price, requiring robust reconciliation processes. Timely submission of data and rebate tracking will be critical.
• Medicaid and billing. Coordinate with state Medicaid agencies to determine the correct acquisition cost while rebates are pending.
• Manufacturer-specific requirements. Each manufacturer may have slightly different reporting or operational expectations; you should monitor communications closely.
• Internal readiness. Systems and employees must be prepared to track rebate status, manage reconciliations, and address any issues proactively.

Which Drugs Are Included in the 340B Rebate Pilot?

The table below lists the nine drugs included in the Initial Price Applicability Year (IPAY) 2026 that are part of the 340B Rebate Model Pilot, along with the specific actions your organization should enact for each drug. As HRSA issues additional guidance, this table should be updated by the department or team responsible for 340B participation and compliance, as these drugs represent a significant portion of total pharmaceutical spend for many covered entities.

Recommended Immediate Actions

Given the pilot’s departure from the traditional 340B purchasing framework, you should take proactive steps to assess financial exposure, operational readiness, and compliance risk. The following recommended immediate actions outline priority steps to support a smooth transition into the pilot program.

1. Conduct a spend and volume review for the nine pilot drugs across all dispensing sites.
2. Validate IT and operational workflows to ensure proper tracking of rebate submissions and reconciliations.
3. Coordinate with finance and state Medicaid teams on acquisition cost and billing procedures.
4. Monitor HRSA notices and manufacturer communications for plan approvals and implementation details.
5. Establish an escalation protocol for delayed or disputed rebate payments.
6. Review service line spend and utilization patterns to identify where pilot drugs are being dispensed and ensure alignment with operational and financial goals.

Early preparation will help minimize cash flow disruptions, ensure accurate rebate processing, and position your organization to adapt quickly as HRSA and manufacturers release additional implementation details.

Monitoring 340B Program Qualification

You should actively monitor your 340B program qualification to maintain compliance, program eligibility, and rebate capture:

• Eligibility tracking. Confirm entity type (DSH, FQHC, RHC, etc.) and DSH percentages annually.
• Registration and documentation. Maintain accurate HRSA 340B Office of Pharmacy Affairs (OPA) database profiles, including site locations and entity type.
• Compliance. Track patient definitions, prevent duplicate discounts, and maintain contract pharmacy agreements.
• Auditing and self-monitoring. Conduct periodic audits and prepare for HRSA audits.
• Reporting and metrics. Reconcile inventory and claims regularly; track key metrics such as patient volumes and proportion of 340B-eligible drugs dispensed.
• Proactive communication. Maintain open lines with HRSA and state Medicaid agencies to stay aligned on program requirements.

Strategic Implications of the 340B Rebate Pilot

Beyond immediate operational adjustments, the pilot carries important strategic implications for covered entities. The shift to a rebate-based structure will influence cash flow management, contract pharmacy relationships, technology investments, and compliance frameworks. Here are key strategic areas where leadership focus and forward planning will be critical to success under the pilot model.

• Financial planning. Manage cash flow impacts from WAC purchases with delayed rebates.
• Contract pharmacy strategy. Anticipate manufacturer participation limits and evaluate dispensing networks.
• Data and technology investments. Develop robust IT systems to track rebates, reconciliation, and reporting.
• Compliance and risk management. Strengthen internal controls to minimize audit risk.
• Future pilot expansion. Build scalable processes for potential inclusion of additional drugs.
• Stakeholder relations. Engage Medicaid agencies and manufacturers strategically to secure smooth operations.
• Competitive positioning. Efficient pilot management can enhance reputation for compliance and operational excellence.

What This Means for Your Organization

The pilot will require covered entities to rethink traditional purchasing and reimbursement processes. This is not an administrative adjustment but a structural change that impacts finance, pharmacy operations, compliance, and IT systems. Leadership should view this pilot as a stand-alone initiative requiring dedicated oversight, cross-departmental coordination, and clear accountability to ensure readiness and compliance. The following points summarize the key implications and actions your organization should prioritize to prepare effectively:

• Prepare for operational changes in drug purchasing and reconciliation.
• Ensure employees and systems are ready to manage rebate tracking and reporting.
• Coordinate across finance, IT, pharmacy, and Medicaid teams to avoid billing or compliance issues.
• Use the pilot as an opportunity to review and optimize inventory, workflow, and reporting processes.
• Treat this pilot as a new, stand-alone initiative, requiring dedicated attention and separate tracking from other 340B programs.

As the pilot evolves, early engagement and disciplined implementation will be critical to success. Covered entities that establish strong governance, invest in data and technology infrastructure, and maintain proactive communication with manufacturers and payers will be best positioned to navigate the transition smoothly. Treating the pilot as an opportunity to modernize internal processes—rather than a compliance burden—will enable your organization to strengthen financial resilience and reinforce its reputation for operational excellence in a changing regulatory landscape.

Lawsuit Filed

Hospitals have filed a lawsuit asking a federal court to block the new 340B rebate pilot program, arguing that replacing their long-standing upfront drug discounts with post-sale rebates would impose heavy financial and administrative burdens on safety-net providers.

While the litigation proceeds, we believe it remains prudent for covered entities to begin preparing for the potential transition rather than wait for the court’s decision.

We’re Here to Help

For more information on how to navigate the 340B Rebate Model Pilot Program, contact your firm professional.

Additional Resources

• Health Care Consulting Practice
• Provider Reimbursement Enterprise Services