It’s the second time the HHS has tried to kickstart a 340B rebate program — and the second time hospitals have sued to block it, alleging rebates will threaten their financial viability.

The 340B program was created by Congress in 1992 to allow providers that care for a large number of low-income and uninsured patients to purchase outpatient drugs at steep discounts — usually between 25% and 50% off a medication’s list price — and pocket the savings.

Safety-net hospitals say the program is essential, enabling them to stretch their limited resources while maintaining their financial viability in communities where many patients cannot afford to pay for care.

But drugmakers argue that hospitals are unjustly profiting off the program, and that many use illegal duplicative discounts to inflate their savings. Pharmaceutical companies say snowballing 340B spending is evidence of profiteering in the program: Last year alone, hospitals and outpatient facilities purchased $100 billion worth of 340B drugs, up 23% from the year prior.

Growing criticism of 340B has put more pressure on regulators to curtail the program’s scope.

The Biden administration clashed with drugmakers over proposed rebate plans, defending the program’s upfront discount model. In contrast, the Trump administration has been skeptical of how 340B discounts are paid, slashing program payments and proposing the rebate pilot.

The administration’s past attempts to institute rebates in 340b have not been successful. A judge struck down HRSA’s initial attempt to launch a pilot last year following a lawsuit by the AHA and the Maine Hospital Association .

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