The 340B Drug Pricing Program allows eligible healthcare providers, known as covered entities, to purchase certain outpatient drugs at reduced prices from pharmaceutical manufacturers. These savings can help covered entities extend services, improve access to care, and support their missions, particularly in rural and underserved communities.
While the program’s purpose has remained consistent since its creation in 1992, its operational and regulatory environment continues to change. One of the most significant developments took effect on January 1, 2026: the 340B Rebate Model Pilot Program.
This article provides a high-level overview of what is changing, what remains the same, and common questions rural hospitals and federally qualified health centers are asking as they prepare.
What Changed on January 1, 2026
At the start of 2026, the Health Resources and Services Administration (HRSA) implemented a 340B Rebate Model Pilot Program for a defined subset of drugs and participating manufacturers. Under the pilot, covered entities will purchase certain 340B-eligible drugs at standard acquisition cost and then seek reimbursement through a rebate process.
This represents a shift from the traditional front-end pricing model, in which the 340B discount is applied at the time of purchase. The pilot is limited in scope and duration and is intended to test whether a rebate-based structure can function alongside the existing 340B framework.
It is important to note that the underlying statute governing 340B has not changed. The pilot program operates within existing law and does not alter covered entity eligibility or core compliance requirements.
What Is Not Changing
Several foundational aspects of the 340B program remain in place:
- Covered entities must still meet eligibility requirements under Section 340B of the Public Health Service Act.
- The definition of a 340B patient continues to apply, including requirements related to provider relationships, medical records, and scope of services.
- Prohibitions on diversion and duplicate discounts remain fully enforceable.
- HRSA audits and manufacturer audits will continue.
In other words, while the purchasing and reimbursement mechanics may differ for certain drugs under the pilot, compliance obligations remain unchanged.
Frequently Asked Questions from Rural Hospitals and FQHCs
Who is required to participate in the rebate model pilot?
Participation is limited. Not all manufacturers, drugs, or covered entities will be included. Covered entities should confirm whether any of their drugs or manufacturers are participating and understand how that affects their purchasing processes.
Will covered entities need to front the cost of drugs included in the pilot?
For drugs subject to the rebate model, covered entities will initially pay the standard price and later seek reimbursement. The timing and mechanics of rebate payments will be governed by pilot program requirements and associated guidance.
Does this affect contract pharmacy arrangements?
Possibly. Covered entities using contract pharmacies or third-party administrators should review whether existing agreements address rebate-based purchasing, data reporting responsibilities, and reimbursement workflows.
Will participation affect audit risk?
The pilot introduces new reporting and data requirements, which may become part of audit reviews. Maintaining accurate documentation, clear policies, and consistent tracking remains essential.
Could a covered entity opt out of 340B entirely?
Covered entities always retain discretion regarding program participation. However, decisions about participation should be made carefully, considering financial, operational, and mission-based factors.
How does this interact with other regulatory changes?
The pilot coincides with broader healthcare developments, including evolving Medicaid requirements, electronic quality measure reporting, and rural health transformation initiatives. Covered entities may need to consider these changes collectively rather than in isolation.
Areas That Require Further Guidance
Because the rebate model pilot is new, some questions cannot yet be answered definitively, including: how reimbursement timelines will function in practice, how disputes may be resolved, and how data systems will integrate across manufacturers, TPAs, and covered entities. Additional HRSA guidance is expected, and covered entities should monitor developments closely.
How Legal Counsel Can Support Covered Entities
Given the complexity of the 340B program, proactive legal review can help organizations understand their options and responsibilities as regulatory frameworks evolve. For instance, healthcare counsel can assist rural hospitals and FQHCs by:
- Assessing how the rebate model applies to their specific operations
- Reviewing and updating contracts with pharmacies, TPAs, and vendors
- Advising on compliance strategies and internal controls
- Preparing for audits under evolving program structures
- Supporting strategic decision-making related to 340B participation
Final Thoughts
The January 1, 2026 implementation of the 340B Rebate Model Pilot Program marks an important development in the ongoing evolution of the 340B program. While many details remain subject to clarification, covered entities can work with their legal team to better understand how the pilot may affect their operations and compliance obligations.