Trump’s HHS to Provide Additional Guidance on Drug Rebate Model

The Trump administration plans to supply more guidance in response to proposals from drug manufacturers that seek to discount medicines through a rebate system, the US said days after arguing before a federal judge on the government’s position.

The US Department of Health and Human Services said in a notice filed Friday in the US District Court for the District of Columbia that the “large-scale implementation of rebate models to effectuate the 340B ceiling price would be a significant change for the 340B Program and its stakeholders.”

“Because the implications are not straightforward, the Department of Health and Human Services continues to carefully evaluate its options alongside ongoing efforts to address 340B program integrity matters and keeping in mind the approaching effective date of certain Inflation Reduction Act requirements,” the Department of Justice wrote for HHS.

The HHS expects to be in a position to provide guidance for stakeholders in 30 days, according to the notice.

The move comes after a federal judge on April 29 heard challenges from four drugmakers over the Health Resources and Services Administration’s rejection of a discount medicine rebate plan for providers under the 340B Drug Pricing Program.

Sanofi SA, Novartis AG, Bristol Myers Squibb Co., Eli Lilly & Co., and health tech company Kalderos Inc. sought to convince Judge Dabney L. Friedrich that HRSA acted unlawfully when it rejected proposals from drugmakers to discount medicines through a rebate model rather than up front to covered entities under 340B.

Drugmakers under 340B are required to discount drugs for covered entities, which are qualifying hospitals, clinics, and providers that treat a disproportionate number of low-income and uninsured patients. The covered entities currently purchase drugs at a steep discount, but under the drugmakers’ proposal, providers would buy medicines at commercial price and then submit data to receive a cash rebate.

Friedrich said to drug manufacturers that the rebate model would be a “significant, substantial change that has potentially devastating consequences.” But she also pressed the government on how covered entities would be affected and the difference they would have to pay if they don’t get discounts up front.

She questioned if HRSA addressed “transparency issues that have plagued the program,” and how quickly they can complete the process for their decision on a rebate model.

The cases are Sanofi-Aventus US LLC v. HHS, D.D.C., No. 24-3496; Bristol Myers Squibb Company v. Johnson, D.D.C., No. 1:24-cv-03337; Eli Lilly & Co., v. Kennedy, D.D.C., No. 1:24-cv-03220; Novartis Pharmaceuticals Corp. v. Kennedy, D.D.C., No. 1:25-cv-00117; Kalderos Inc. v. United States of America, D.D.C., No. 1:21-cv-02608.