Update: After this blog was published, HRSA released new guidance on July 31, 2025, proposing a pilot rebate model. The pilot would allow manufacturers to offer 340B rebates for a limited group of drugs under strict conditions.

If you follow the 340B program, you’ve probably heard rumblings about rebate models. They’ve been proposed by several major manufacturers, they’re tied up in court, and they represent a potential shift that could significantly change how 340B savings flow to Covered Entities (CEs).

The bottom line? There’s still a lot of uncertainty. But what we know for sure is that safety net providers are being asked to do more with less, and if rebate models move forward, that challenge could become even steeper.

Here’s what’s on the table, and what it could mean for your organization.

Understanding 340B rebate models

Traditionally, 340B discounts are applied at the point of sale. Covered Entities (CEs) purchase drugs at the discounted 340B price, and are reimbursed at commercial rates, allowing them to realize savings immediately and reinvest them in patient care.

Rebate models, while all vary in their details, shift the timing of 340B savings from upfront to retroactive, between 7-45 days post dispense. Under these proposals, CEs would purchase medications at the full commercial Wholesale Acquisition Cost (WAC) and later submit claims data to manufacturers to receive the 340B discount in the form of a rebate. 

This potential shift carries important operational and financial implications. CEs would need to front significantly more capital to purchase inventory, implement new systems for claims submission and tracking, and manage the risk of denied or delayed rebates due to incomplete or inaccurate data.

The risks multiply when CEs work with multiple contract pharmacies. TPAs often take 30 to 60 days to provide the dispense claims needed to submit for rebates, and contract pharmacies already delay payments to CEs by several days post-reimbursement. In a rebate model, these delays could mean CEs are waiting 60 to 90 days after a dispense to receive rebate funds, creating major cash flow challenges. Multiply this delay across 5 or 10+ contract pharmacies, and the financial risks compound.

Rebate models currently under review by HRSA generally fall into two categories:

  1. Cash Rebate Model
    • Proposed by: Eli Lilly, Bristol-Myers Squibb, Novartis, and Johnson & Johnson
    • Details: Require CEs to purchase drugs at WAC and submit detailed pharmacy claims data through a third-party platform (e.g. Kalderos or Beacon). After review, the manufacturer issues a cash rebate equal to the difference between WAC and the 340B ceiling price. 
    • Timing: Claim must be submitted within 30 to 45 days of dispense; rebates are paid within 7 to 10 days. Missed or incomplete submissions may result in forfeited rebates.
  2. Purchase Credit Model
    • Proposed by: Sanofi
    • Details: An alternative model in which rebates are issued as credits for future drug purchases rather than cash payments. Like the cash rebate model, CEs must purchase medications at WAC and submit both pharmacy and medical encounter data to receive the rebate.
    • Timing: If submitted within 22 days of the WAC order, Sanofi guarantees that the credit will be issued within 30 days of the order, typically before the wholesaler invoice due date.

The two models have a clear tradeoff. While Sanofi’s credit model reduces short-term cash exposure, it introduces added complexity in data submission. Cash rebate models offer quicker reimbursement but impose greater upfront financial strain and leave CEs more vulnerable to lost savings due to submission errors or delays.

Legal and regulatory landscape

Manufacturers have tried to unilaterally roll out rebate models, but so far none have been allowed to move forward. The courts have made it clear that these changes can’t happen without federal approval, and the proposals remain in limbo while HRSA reviews them.

Eli Lilly, Bristol-Myers Squibb, and Novartis each proposed cash rebate models and attempted to implement them without HRSA’s sign-off. In May 2025, a federal court ruled that HRSA has the authority to require pre-approval and blocked the models from going live. Johnson & Johnson filed a similar challenge, and in June, a judge dismissed the case on the same grounds.

Sanofi’s situation is slightly different. Its purchase credit model was also denied by HRSA, but the court found that HRSA didn’t clearly explain why the proposal couldn’t be approved. That decision has been sent back for further review. Sanofi’s model is not approved but could still move forward depending on how HRSA responds.

One additional variable in the mix is the Trump Administration’s FY 2026 budget proposal to move oversight of the 340B program from HRSA to the Centers for Medicare & Medicaid Services (CMS). This shift would be part of a broader reorganization of federal health programs under a new agency called the Administration for a Healthy America (AHA).

If this change happens, it could open the door for rebate models to gain traction. CMS already oversees drug rebate programs for Medicaid and Medicare and tends to take a more aggressive approach to drug pricing, compliance, and audits. A transition to CMS would likely bring new rules, more oversight, and added complexity for safety net providers navigating 340B.

What this means for Covered Entities

If rebate models move forward, Covered Entities will face a new set of financial and operational pressures. The biggest shift is timing. Instead of realizing 340B savings at the time of purchase, providers would need to pay full price upfront and wait for rebates. That gap could strain cash flow, particularly for organizations that don’t have access to large reserves or flexible capital.

For CEs that rely on contract pharmacies, these risks are even greater. Most TPAs are slow to provide the data needed for rebate claims. The longer it takes to get dispense data, the longer it would take to receive rebates, potentially stretching the repayment window to 2 to 3 months. With multiple contract pharmacies in play, the administrative and financial burdens quickly escalate.

There’s also the question of capacity. Submitting claims data quickly, accurately, and through new systems may require additional staff time, new workflows, or third-party support. For clinics, this administrative lift could divert resources away from patient care and other core services.

None of this is guaranteed to happen. But given the momentum behind rebate proposals, and the potential regulatory changes ahead, it’s worth thinking now about how to reduce your exposure.

At Alchemy, we’re preparing for every scenario so our partners don’t have to shoulder these risks alone. We cover the upfront cost of pharmacy inventory, which means our partner clinics never have to tie up capital or wait for delayed reimbursements. This protects your cash flow even if the timing of savings changes.

We also invest in the technology and systems needed to handle new reporting requirements. If rebate models are implemented, we will support the claims submission and validation process, so clinics can stay focused on care instead of chasing data.

And by helping clinics establish and operate their own in-house pharmacy, we minimize the need for complex TPA coordination. With fewer partners and full control over the pharmacy operation, CEs can limit exposure and maintain more predictable access to 340B savings.

No matter how the regulatory landscape evolves, our goal is to ensure CEs still have access to and benefit from the 340B program that underpins America’s healthcare safety net.

Peter Park

Founder & Co-CEO