On December 29, 2025, a federal judge in the U.S. District Court for the District of Maine issued a preliminary injunction blocking the Department of Health and Human Services (“HHS”) from implementing its 340B Rebate Model Pilot Program, which was scheduled to take effect on January 1, 2026. The pilot would have allowed manufacturers to charge wholesale prices upfront and later issue rebates to covered entities instead of following the traditional upfront discount model. The pilot program has been pushed by drug manufacturers but opposed by hospitals.
The court concluded that HHS’s rollout likely violated the Administrative Procedure Act, finding that the agency failed to adequately consider and document the significant reliance interests of 340B hospitals that have depended on upfront discounts for decades, as well as the financial and operational burdens associated with a rebate-based system such as higher upfront drug costs, administrative expenses, and cash-flow strain. While the court suggested that HHS has the statutory authority to implement a rebate model, it found that HHS likely failed to follow the Administrative Procedure Act in creating the program. As a result, the court enjoined implementation of the nine approved manufacturer applications comprising the pilot as the case winds through the courts.
For questions on how this news may affect your organization, please reach out to:
David Dirr
Partner, DBL Law
Health Care Practice Group
Email: ddirr@dbllaw.com
