Covered entities are breathing a collective sigh of relief after the Trump administration filed a March 17 motion opposing 340B rebates in federal lawsuits brought by Eli Lilly, Bristol Myers Squibb and Novartis. The rebate lawsuits are three of five pending in federal courts that began under the Biden administration.
In its filing, the first under the new administration, the Department of Health and Human Services said HRSA’s rejection of the proposed rebates “was within its statutory authority.” HHS argues that the statute requires the approval of the agency’s secretary — now Robert F. Kennedy Jr. — before a manufacturer can implement a rebate model for issuing 340B discounts.
It’s a positive sign that the Trump administration understands how detrimental rebates could be for 340B entities.
However, a closer read suggests that rebates may not be off the table entirely. The motion acknowledges that “the Agency has never said that rebates would not be approved under any circumstances.”
“The statute does not prohibit rebate models in the abstract, but it does prohibit instituting rebate models unilaterally,” HHS’s motion reads. Citing the AIDS Drug Assistance Programs in 1998 as precedent, HHS argued the drugmakers could have collaborated with the agency on establishing a rebate model but instead rushed to file lawsuits to “unilaterally impose” them.
HHS has yet to file motions in the related lawsuits filed by Johnson & Johnson and Sanofi. Other than that, the fate of the rebate lawsuits rests with the court.
The administration makes changes
Speaking of RFK Jr. and HHS, the administration announced plans to lay off 10,000 employees as part of a massive restructuring of the sprawling agency. Of note, HRSA is among the sub-agencies to be folded into a new division called the Administration for a Healthy America, which officials say “will improve coordination of health resources for low-income Americans and will focus on areas including primary care, maternal and child health, mental health, environmental health, HIV/AIDS, and workforce development.”
What that means for HRSA and 340B isn’t yet clear. The job cuts, coupled with ongoing early retirements and buyouts, will affect agencies including the Centers for Disease Control and Prevention, the National Institutes of Health and Food and Drug Administration, shrinking overall HHS staffing by roughly 25%.
Meanwhile, Dr. Mehmet Oz, the former television personality, appeared headed for confirmation to lead the Centers for Medicare and Medicaid Services (CMS) after the Senate Finance Committee voted along party lines to advance him to the full Senate.
While 340B never came up during questioning, Oz’s ties to ZorroRx, a health benefits company that works with employers and 340B hospitals, has attracted scrutiny. The Washington Post reported that Oz co-founded the company with his son last year but did not disclose his involvement in financial forms submitted to the Office of Government Ethics as part of his nomination.
340B in Congress
More good news arrived with the announcement of a new pro-340B “Gang of Six” in the U.S. Senate, with Sens. John Hickenlooper (D-Colo.), Tim Kaine (D-Va.) and Markwayne Mullin (R-Okla.) joining existing members Sens. Jerry Moran (R-Kan.), Shelley Moore-Capito (R-W.Va.) and Tammy Baldwin (D-Wis.).
It should be noted this is a voluntary workgroup, not a committee assignment. It’s an encouraging and rare sign of bipartisanship to see new members coming on board with new ideas. Hopefully this group can get the SUSTAIN 340B Act formally introduced after it stalled under the previous work group.
“After making significant progress last year, I am pleased to continue the efforts of the Senate 340B bipartisan working group, and add new members, with the shared goal of strengthening the 340B program to ensure its long-term viability,” Moran said in a statement.
Elsewhere, U.S. Rep. Dusty Johnson (R-S.D.) introduced a bill that would bar the use of 340B discounts in gender-affirming care. It’s a clear nod to groups like Building America’s Future, the dark-money organization that has been targeting lawmakers in red states who are considering 340B contract pharmacy legislation with ads alleging the program is subsidizing undocumented immigration and “gender transitions for kids.”
States on the forefront
There’s more encouraging news from the states.
Wth the governor's non-signature, Utah became the 10th state to enact a law prohibiting drug manufacturers from restricting access to 340B contract pharmacies, while South Dakota recently became the ninth. More are likely to follow. Lawmakers in New Mexico and North Dakota sent contract pharmacy bills to their governors to sign in recent weeks.
Notably, both Dakotas were targeted by Building America’s Future’s pressure campaign — which included parking a truck with an LED billboard alleging 340B subsidized gender transitions for kids outside the Capitol building in Bismarck. Contract pharmacy bills also moved forward in several other states where the dark money group focused its efforts, including Nebraska, Oklahoma and Tennessee.
It’s just one example of how opponents are trying to undermine 340B and shape the conversation using misinformation, as a recent analysis by the newsletter Storyful Rx found. The activity in statehouses suggests that lawmakers on both sides of the aisle are seeing through their dishonesty and shamelessness.
In other state 340B news:
- Kansas state senators have approved contract pharmacy legislation, sending it to the state House, after the state’s attorney general determined the existing law, signed in 2024, was “unenforceable.”
- Virginia Glenn Youngkin signed legislation that expands an existing law prohibiting pharmacy benefit managers from discriminating against covered entity grantees to include 340B hospitals. Youngkin, a Republican, last year vetoed a 340B contract pharmacy access bill following a torrent of opposition from, you guessed it, Building America’s Future.
- The state-level news isn’t all good, however. Idaho lawmakers have approved a 340B reporting bill, making the state the first to send such a bill to the governor’s desk in 2025, according to 340B Report.
Manufacturer updates
Drugmakers have by no means given up their fight.
- AstraZeneca added three specialty cancer drugs to its contract pharmacy restrictions.
- AbbVie added its Elahere cancer medication and Vyalev Parkinson’s medication to its restrictions.
- Pfizer added its COVID treatment Paxlovid.
- Teva added its Selarsdi biosimilar.
Finally, CMS announced all 12 affected drugmakers have agreed to proceed with the second cycle of Medicare Part D price negotiations under the Inflation Reduction Act.
It’s a reminder that in healthcare, as in everything else, the pendulum swings both ways.
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