Hospital group rebukes 340B rebate pilot program

The American Hospital Association sharply criticized a 340B rebate model pilot program from the Health Resources and Services Administration, an agency of HSS, warning the model threatens to undermine three decades of success under the existing 340B drug pricing program. 

In an Aug. 27 letter addressed to Thomas Engels, administrator of the HRSA, the AHA outlined serious concerns about the agency’s decision to shift from upfront discounts to a rebate model for select Medicare Part D drugs. 

The association also urged the agency to abandon the pilot, calling the model a “solution in search of a problem” that could harm safety-net hospitals. “There is no sound reason for HRSA to make such a profound change,” the letter stated. “We are confident that what it calls a ‘test’ will ultimately fail.” 

With applications due Sept. 15 and approvals expected Oct. 15, the AHA said it would work to minimize harm during the one-year period. However, the association demanded clear guardrails, strict enforcement mechanisms and a neutral, third-party platform to prevent the administrative and financial burdens for hospitals associated with the model. 

One of the key concerns the AHA expressed is that hospitals will face increased costs under the rebate model. As a result, the association called on the HRSA to require drug companies to cover all administrative and operational costs associated with the rebate model and to ensure that any non-compliance is met with enforceable penalties. 

In addition, the AHA urged the agency to implement a centralized, neutral data platform to help reduce complexity and mitigate conflicts of interest posed by vendor arrangements. 

The AHA also dismissed drugmakers’ claims that the rebate model is needed to comply with the Inflation Reduction Act, emphasizing there are alternatives that would preserve upfront discounts without violating federal law. 

“Before piloting the rebate model, HRSA must balance these adverse impacts on providers and their patients against the unavoidable costs of fundamentally changing the 340B program to appease drug companies,” the letter said. “When doing so, the scales will surely tip firmly in favor of maintaining an upfront discount model.”

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