The 340B Rebate Controversy: What Providers Need to Know About Drugmaker Pushback

The 340B Drug Pricing Program has long served as a critical lifeline for safety-net hospitals and health systems, allowing you to stretch limited resources and expand access to vulnerable populations.

But today, that foundation is under threat. The American Hospital Association (AHA) is sounding the alarm, calling for a federal investigation into what it describes as coordinated efforts by major pharmaceutical companies to replace traditional 340B discounts with rebate models.

For providers like you, the implications of this shift reach far beyond policy; they strike at the heart of your practice finances, patient access, and the sustainability of care for underserved communities.

What’s Really Happening

At the center of this controversy are five major manufacturers: Johnson & Johnson, Eli Lilly, Bristol Myers Squibb, Sanofi, and Novartis.

Each has announced plans to move away from upfront 340B discounts, requiring hospitals and providers to pay full price for drugs and then seek reimbursement through rebate submissions.

The AHA argues this is not a coincidence but a coordinated campaign. Johnson & Johnson first engaged regulators in mid-2024, rolling out its rebate model that August despite clear warnings from the Health Resources and Services Administration (HRSA) that the move was likely illegal.

In the months that followed, four other drugmakers introduced nearly identical proposals. The timing and uniformity, according to the AHA, suggest collusion that the Federal Trade Commission and the Department of Justice should investigate.

The Bigger Picture

This controversy is unfolding against the backdrop of explosive program growth. In 2023, 340B drug purchases reached $66.3 billion, up 50% from just two years earlier.

That expansion has intensified scrutiny, with critics questioning whether discounts are consistently reaching patients. Pharmaceutical companies, emboldened by political headwinds, are leveraging this scrutiny to challenge the program’s core design.

Meanwhile, the legal landscape remains unsettled. In May 2025, a federal judge temporarily halted implementation of manufacturer rebate plans, but the ruling left open the possibility of such models in the future.

At the same time, the Trump administration has floated proposals to shift oversight of the 340B program to the Centers for Medicare & Medicaid Services (CMS), an agency more familiar with rebate structures, and to test pilot rebate models.

For providers like you, this means one thing: uncertainty.

Why This Matters for Your Practice

The proposed rebate shift has the potential to disrupt your practice on multiple levels, from financial stability to patient access and day-to-day operations.

Financial Strain

For hospitals and specialty practices already operating on razor-thin margins, paying full price upfront poses an enormous cash flow challenge.

For specialty practices, upfront 340B savings often make it possible to absorb the high costs of biologics and infused therapies; under a rebate model, those dollars could be locked up in limbo, creating financial strain that directly impacts patient care.

Threats to Patient Access

The ripple effect is direct and personal: patients.

If your specialty practice must shoulder full drug costs before rebates arrive, difficult choices may follow: fewer infusion slots, longer wait times, or restricted therapy options, all of which ultimately hurt the patients 340B was created to serve.

Added Administrative Burden

Rebate systems add complexity. Instead of straightforward discounts, your staff must manage submissions, track payments, resolve denials, and carry the financial risk of delayed or disputed rebates. Every additional hour spent on rebate paperwork is time and resources diverted from patient care.

What We at Altus Biologics Recommend

At Altus Biologics, we recognize the vital importance of the 340B program to your ability to provide patient care. While the future is unsettled, you are not powerless. Here’s how you can stay prepared:

1. Stay Informed

Follow updates from the AHA, HRSA, and your state hospital associations.

Regulatory and legal developments are evolving rapidly, and real-time awareness will enable you to respond strategically and effectively.

2. Assess Your Financial Exposure

Run models of your 340B spending under both discount and rebate scenarios.

Understanding your exposure to upfront costs will help you advocate effectively and prepare contingency plans.

3. Engage in Advocacy

Support collective advocacy through associations and consider contacting your congressional representatives directly.

The AHA’s push for federal investigation is just the beginning; consistent provider voices are critical to protecting the program.

4. Prepare for Multiple Outcomes

While we all hope the traditional discount model prevails, prudent planning means exploring alternatives.

This might involve adjusting service delivery, pursuing partnerships, or seeking supplemental funding to ensure patient care isn’t compromised.

Moving Forward Together

The 340B rebate controversy is more than a technical dispute about payment models; it’s a test of national priorities.

Do we support safety-net providers in delivering care to those most in need, or do we allow financial restructuring to undermine decades of progress?

As healthcare providers, you stand at the forefront of this debate. Many patients rely on 340B savings for access to life-changing medications, and the stakes could not be higher.

At Altus Biologics, we remain committed to standing with you. By staying informed, advocating forcefully, and preparing for every scenario, we can work together to defend the 340B mission and preserve care for the communities that need it most.

Your voice matters, and your patients are counting on it.