Article
What HHS's cancellation of 340B rebate pilot means for covered entities
Dec. 11, 2025 · Updated Feb. 18, 2026 · Authored by Jesse Vo and Mandy Mori
The US Department of Health and Human Services (HHS) is canceling the 340B rebate pilot program. The US District Court of Maine issued a preliminary injunction halting the program on December 29, 2025. After the First Circuit Court of Appeals denied HHS’s request of stay, HHS announced February 5, 2026, the cancellation.
What This Means for Covered Entities
While HHS announced it won’t move forward with the 340B pilot, the underlying compliance and oversight pressures that prompted it remain. Covered entities should reinforce core 340B compliance practices, including documentation, governance, and audit readiness while closely monitoring Disproportionate Share Hospital (DSH) performance, as shifts in Medicaid inpatient days and service line utilization can directly threaten 340B eligibility.
Proactive oversight of payer mix, access points, and high-Medicaid service lines is critical to preserving 340B status and sustaining safety-net funding.
From WAC to 340B Ceiling Price: Understanding the 340B Rebate Pilot
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 Jan. 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: