AMGA Opposition Prompts HHS to Scrap 340B Rebate Model

Alexandria, VA – AMGA today celebrated a significant victory for safety-net providers and vulnerable patients following the U.S. Department of Health and Human Services’ (HHS’) decision in a Feb. 5 court filing to withdraw its 340B Rebate Model Pilot Program. The announcement came after federal courts blocked implementation of the program and HHS concluded that further litigation would not be fruitful.

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 The now-withdrawn rebate model, which would have shifted the program from upfront discounts to a post-sale rebate system, threatened to destabilize hospitals and clinics across the country.

“This is a win for patients and the providers who serve them,” said AMGA President and CEO Jerry Penso, MD, MBA. “AMGA’s strong opposition to the rebate model helped protect the 340B Program’s proven structure. Our members depend on immediate access to discounted drugs to stretch scarce resources.”

The withdrawal followed a Dec. 29, 2025, preliminary injunction from the U.S. District Court of Maine and a Jan. 7, 2026, denial of the government’s stay motion by the 1st U.S. Circuit Court of Appeals.

AMGA’s advocacy highlighted critical flaws in the rebate pilot:

• Severe financial strain and cash flow disruptions: Forcing safety-net providers to purchase drugs at wholesale acquisition cost before receiving rebates would drain limited operating funds, delay care, and threaten the viability of hospitals and clinics. 
• Increased complexity and administrative burden: The proposed rebate model would have imposed new reporting, tracking, and claims processes under unrealistic timelines and would divert staff time and resources away from direct patient care.
• Risk of greater manufacturer control over the 340B Program: Allowing manufacturers to dictate payment terms and data requirements would have eroded statutory protections and shifted program governance.
• Insufficient safeguards for providers: Vague enforcement guidelines and rebate requirements would only increase the financial and operational risks for providers.
• Threat to the safety net: Delayed savings from rebates would undermine the 340B Program’s stated intent and ability to support uncompensated care, particularly in low-income, rural, and underserved communities.

HHS has agreed that if it moves forward with any new administrative process for a rebate program, it will issue a new notice and invite public comment, with any effective date set no earlier than 90 days following approval of drug manufacturer applications.

“Safety-net providers operate on razor-thin margins,” Penso added. “We remain committed to working with HHS to strengthen, and not undermine, the existing upfront discount model, which has successfully supported providers and patients.”

The Sept. 25, 2025, letter opposing the model 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.