AMGA Opposes 340B Rebate Model Pilot Program, Warns of Threats to Safety-Net Providers and Patient Care

Alexandria, VA – AMGA today announced strong opposition to the U.S. Department of Health and Human Services’ (HHS) proposed 340B Rebate Model Pilot Program, cautioning that the plan would undermine the 340B Drug Pricing Program and jeopardize access to care for millions of vulnerable patients.

The 340B Program allows safety-net providers to purchase outpatient drugs at significantly reduced prices, enabling them to reinvest savings into vital services and expand access to care for underserved communities. The proposed shift from upfront discounts to a post-sale rebate model, announced July 31, would upend this proven structure and destabilize hospitals and clinics across the country.

“AMGA members depend on the 340B Program to stretch scarce resources and support the patients who need care most,” said AMGA President and CEO Jerry Penso, MD, MBA. “Requiring providers to purchase drugs at full wholesale acquisition cost and wait for delayed rebates will drain limited operating funds, increase administrative burdens, and ultimately reduce access to care in underserved communities.”

AMGA outlined several major concerns with the rebate pilot:

• Severe financial strain – Upfront drug costs at wholesale acquisition price would cause significant cash flow disruptions, forcing providers to divert funds from patient care.
• Increased operational complexity – New reporting, claims, and compliance requirements would burden already overstretched staff and systems.
• Expanded manufacturer control – Shifting authority over payment terms and data requirements to manufacturers erodes statutory protections.
• Insufficient safeguards – Lack of clear enforcement mechanisms leaves providers exposed to financial risk and delayed payments.
• Threats to the safety net – Delayed savings undermine the program’s purpose, disproportionately harming low-income, rural, and underserved communities.

“Safety-net providers operate on razor-thin margins. The rebate pilot would destabilize these institutions, directly threatening access to affordable medications for patients,” Penso added. “HHS should withdraw the proposal and strengthen the existing upfront discount model that has successfully supported providers and patients for decades.”

The letter is available on AMGA’s website. 

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About AMGA

AMGA is a trade association leading the transformation of healthcare in America. Representing multispecialty medical groups and integrated systems of care, we advocate, educate, innovate, and empower our members to deliver the next level of high performance health. AMGA is the national voice promoting awareness of our members’ recognized excellence in the delivery of coordinated, high-quality, high-value care. More than 175,000 physicians practice in our member organizations, delivering care to one in three Americans.