The 340B Drug Pricing Program has long served as a vital resource for Community Health Centers (CHCs), allowing them to stretch limited federal dollars and provide care to their communities, particularly rural and underserved areas. Under 340B, CHCs purchase medications at a discount, and reinvest those savings into expanded services, staff, and access points for care. The 340B program is a critical and effective way that America supports and ensures access to high-quality care for millions throughout the country’s largest primary care network: Community Health Centers.
New Proposed Policies
Recently, some groups have proposed a “rebate model” that would fundamentally change how the 340B program operates. Under this model, health centers would be required to pay the full price for medications up front and then wait for manufacturers to reimburse the discount later—assuming their claims are approved. This shift would not only violate the intent and statutory framework of the 340B program, which was originally designed to support CHCs, but also create operational and financial barriers that many health centers cannot absorb.
Recognizing the issues, the Health Resources and Services Administration (HRSA) has clearly stated that the rebate model is not authorized under the 340B statute. However, the implementation of the Inflation Reduction Act, which created a new maximum fair price (MFP) for certain drugs in Medicare, has reignited the rebate conversation. The IRA requires that, when a 340B-eligible drug is dispensed to a patient who is eligible for a MFP discount, the manufacturer provides the lower of the two discounted prices. To date, the Centers for Medicare & Medicaid Services (CMS) has directed manufacturers to operate a retrospective reconciliation to meet this requirement. In response, manufacturers have said they need a rebate model for both programs in order to comply. However, manufacturers have the pricing information they need to determine the lower price and offer the correct discount at the point of sale. CMS could require them to do so, which would streamline operations and improve program integrity without the need for the rebate model.
As a community health advocate and CEO of Advocates for Community Health, I cannot state it more plainly that we must protect the integrity of the original 340B discount model and enforce the law as written.
What Rebate Models Get Wrong About Community Health Centers
Unlike for-profit and other hospital entities, CHCs exist to serve everyone, and work to maximize every dollar to ensure that needed services and staff are there when patients in their local communities need care. Rebate proposals would create several challenges for CHCs including:
- Revenue Cycle Disruption
CHCs operate on extremely narrow margins and serve all patients—regardless of insurance status or ability to pay. Delays in receiving 340B discounts under a rebate system would create immediate cash flow problems. These disruptions could impact staffing, equipment purchases, and critical service decisions. As early 2025’s federal funding challenges showed, CHCs cannot afford to wait weeks or months for discounts that should be applied at the time of purchase.
- Operational and Technology Hurdles
Adopting a rebate model would force CHCs to invest in separate, often complex software (also referred to as an “accumulator”), and create operational changes, such as split inventory systems. These changes require additional time, money, and staff—resources that many health centers simply do not have in excess. Instead of focusing on patient care and relying on a proven upfront discount system, CHCs would be burdened with greater administrative complexities and costly workarounds.
- Unmanageable Red Tape and Administrative Burden
Under a proposed rebate structure, each manufacturer may implement a different platform, process, and timeline for issuing rebates. This would result in an inconsistent, fragmented system that significantly increases the administrative burden on CHCs—especially the smaller centers who can least afford to handle it.
- Data Privacy and Compliance Risks
Many rebate model proposals have also included requests for detailed claims data that pharmaceutical manufacturers are not legally entitled to access. Under the current 340B statute, health centers determine patient eligibility and only HRSA has the authority to audit these programs and practices for compliance. Allowing manufacturers to access this data sets a dangerous precedent, undermining patient privacy and violating regulatory boundaries.
It’s worth noting that the pushback against the rebate model isn’t limited to health centers. In 2023, nearly 200 bipartisan members of Congress wrote to the U.S. Department of Health and Human Services expressing their strong opposition to the rebate model. Their message was clear: the 340B program must be preserved in its current form to continue serving communities in need.
While well-intended, the rebate model is not just a bureaucratic change—it’s a fundamental threat to the sustainability of community-based care. For CHCs across the country, particularly those serving rural or low-income communities, the proposed rebate system would increase costs, add administrative complexity, and divert focus from what matters most: patient care.
At present, health centers are facing unprecedented levels of uncertainty and strain, while simultaneously contending with shrinking resources and erosion of the 340B program. The rebate model is not just harmful, it puts the overarching solvency of health centers at risk. Now more than ever, it is vital that we preserve the integrity of the original 340B discount model and enforce the law as written. More than 32 million patients and tens of thousands of communities depend on it.