Protect 340B Hospitals from Harmful Pharma Rebate Schemes

Drug companies are putting safety-net hospitals and the communities they serve at risk by attempting to unlawfully replace upfront price discounts with back-end rebates that undermine the 340B drug pricing program. This rebate scheme, if enacted, imposes significant financial and administrative burdens on 340B hospitals that already are stretched thin.

Rebates force hospitals to purchase 340B drugs at the full list price upfront and wait months or longer for drugmakers to decide when — and whether — to rebate the difference between list and 340B prices. This adds unnecessary complexity and costs for hospitals and risks access to vital 340B savings. These safety-net hospitals serve the nation’s most vulnerable populations — patients with low incomes, the uninsured, and those in historically underserved, rural areas of the country. The bottom line: This means fewer resources for patient care and critical services.

Why Rebate Schemes Are Harmful for 340B Hospitals

  1. Upfront Financial Strain: Hospitals must cover the full cost of expensive drugs upfront, creating cash-flow problems and forcing hospitals to divert funds from other essential services.

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  2. Delayed Reimbursements: Rebates are only provided after drug companies decide to validate claims, a process that can take many months, leaving hospitals in financial limbo.

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  3. Unauthorized Drugmaker Control: Rebate schemes usurp the 340B oversight role of the Health Resources & Services Administration (HRSA) and puts drug companies in charge of making determinations about 340B compliance — an authority they do not lawfully possess.

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  4. Increased Administrative Burden: The rebate model adds layers of unnecessary reporting, data submission, and compliance validation that drain hospital resources and increase administrative costs.

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  5. Risk to Patients: Every dollar that hospitals must wait for in rebates is a dollar they cannot use to provide care to low-income and uninsured patients. This harms hospitals’ ability to fund critical services including cancer treatments, behavioral health, HIV/AIDS care, and more.

The Impact on Communities

When 340B hospitals are forced to operate under these rebate schemes, the victims are the patients and communities they serve. Safety-net hospitals provide 77% of Medicaid hospital care and 67% of uncompensated care in the U.S. Without vital 340B savings, many hospitals will be forced to scale back or eliminate programs, leaving patients and communities without access to affordable care.

We Must Hold Pharma Accountable — Stop the Rebate Schemes

Pharma’s rebate schemes are a blatant attempt to avoid legally obligated upfront discounts to pad their bottom lines at the expense of safety-net hospitals and patients. We cannot allow pharmaceutical companies to undermine 340B, which has been a lifeline for vulnerable patients in the U.S. for more than 30 years.

We call on Congress and the Biden administration to ensure drugmakers meet their legal obligations and honor the clear intent of 340B by providing upfront discounts, not delayed rebates that harm hospitals and patients.

Get The Facts
Protecting 340B is critical for the health of America’s people and communities. Closing the gaps in care helps the underserved get the care they need, keeps people at work, and the economy moving.