Proposed 340B Rebate Changes Put Already-Strapped Hospitals at Risk

July 29, 2025

Changes to the 340B payment model would reduce access to care and jeopardize hospitals’ financial well-being if imposed, according to a new survey.

340B Health recently released the survey finding, which indicate that 340B hospitals would struggle to maintain current levels of uncompensated care if drugmakers’ proposed rebate plan changes to the federal drug pricing program go into effect.

In 2024, five drug manufacturers—Bristol Myers Squibb, Eli Lilly, Johnson & Johnson, Novartis, and Sanofi—announced plans to replace upfront 340B discounts with rebates for some or all of their covered drugs. This means hospitals would be forced to purchase 340B drugs at wholesale rates, which are considerably higher than 340B discounted rates and then wait for manufacturers to approve and issue rebates.

With the rebate model, hospitals would be forced to “float” millions of dollars to pharmaceutical companies and many worry that the rebates won’t be issued for the expected amount, or at all, impacting payroll and other expenses.

Here are some key takeaways:

• Big money:  The average annual float per 340B hospital is estimated at $72.2 million for Disproportionate Share Hospitals and $1.7 million for Critical Access Hospitals.
• Jobs at risk:  Rebate models threaten hospital payroll and financing abilities and could force layoffs even if hospitals receive every rebate they are owed. According to the survey, 27 percent of hospitals anticipate that waiting even one month for rebates could prevent them from making payroll and force layoffs.
• Not hopeful:  Nearly all survey respondents expect Sanofi to deny at least some legitimate claims, with 87 percent expressing extreme concern.
• Hurting, not helping:  Implementing the rebate model is expected to cost hospitals administrative expenditures on staffing, internal resource reallocation, and outsourcing to external vendors.
• Reduced Access to Care:  The harm to patients would be even more severe if all manufacturers adopted rebate models. According to the study, 92 percent of hospitals would reduce the provision of discounted and/or free drugs at their pharmacy locations and 93 percent would face challenges maintaining current levels of uncompensated care.
• On standby:  As of July 2025, drugmakers have not yet implemented rebate models, as federal courts continue to review the rebate issue in litigation on filed by pharmaceutical companies against the government.

Congress enacted the 340B Drug Pricing Program in 1992 to reduce the amount that eligible health care organizations have to pay for outpatient drugs prescribed to patients. In exchange for providing discounted drugs to 340B participants, pharmaceutical manufacturers may participate in the Medicare Part B and Medicaid programs. Covered organizations under 340B serve low-income, rural, and other vulnerable patient populations.

Read the report online.