The $81 billion discount program is a week from its verdict

For thirty years, the 340B program has run on one rule: a manufacturer that wants Medicaid and Medicare to cover its drugs must also sell them at a discount to hospitals and clinics that serve the poor and uninsured — and must do it at the register, not after a claim is filed.▸ That rule, created by the Veterans Health Care Act of 1992, now moves $81.4 billion a year. In 2026, for the first time since the program began, HRSA is testing whether to break the "at the register" part.

The mechanics are simple: a manufacturer sets a "ceiling price" — the statutory maximum it can charge a 340B covered entity — and the entity pays that price at the point of sale.▸ In 2024, per HRSA's own count restated directly in a Federal Register notice, roughly 14,000 covered entities bought $81.4 billion of covered outpatient drugs this way from about 800 participating manufacturers — up 23% from $66.3 billion in 2023. Growth has run hot for over a decade: CBO found 340B purchases climbed from $6.6 billion in 2010 to $43.9 billion in 2021, a 19%-a-year average — nearly five times the growth rate of brand-name drug spending market-wide over the same years.

Disproportionate-share hospitals — the large safety-net hospitals that treat an outsized share of Medicaid and uninsured patients — took 78% of the total, about $64.1 billion.▸ Community and migrant health centers, the clinics built specifically to serve low-income patients regardless of insurance, took a comparatively small $4.7 billion.

Drug manufacturers have their own complaint about the upfront model: since 2023, Medicare has separately negotiated "maximum fair prices" on a growing list of drugs under the Inflation Reduction Act, and a nonduplication rule means manufacturers don't have to offer that negotiated price to a 340B entity if the 340B ceiling price is already lower.▸ Manufacturers argued a rebate — pay full price, then get the difference back — would make it easier to police that boundary and catch duplicate discounts. On August 1, 2025, HRSA opened a voluntary rebate model pilot application and, after 1,243 public comments, approved nine manufacturers to participate starting January 1, 2026.

Covered entities sued to stop it.▸ On December 29, 2025, the U.S. District Court for the District of Maine, in American Hospital Association et al. v. Kennedy et al., No. 25-cv-600, ordered HRSA to pause the pilot for every manufacturer it had approved; in February 2026 the same court vacated the underlying notice and manufacturer approvals outright for failing to follow the Administrative Procedure Act. HRSA didn't drop the idea — it went back to the drawing board. A revised pilot, this time covering 11 manufacturers with negotiated Medicare prices for 2026 and 2027, is now moving through a new Paperwork Reduction Act information collection — and it puts a number on what the switch would actually cost in labor.

The imbalance is HRSA's own math, not an outside critic's. Under the rebate model, each of the 11 participating manufacturers would spend an estimated 352 hours a year filing pilot plans and monthly purchase reports.▸ The 15,249 covered entities on the other side of the transaction — because they'd now have to extract, format, and submit claims-level data to manufacturers every week just to get the rebate they used to receive automatically — would collectively spend an estimated 3,964,740 hours a year doing it, according to HRSA's burden table. That's over 11,000 hours of new paperwork for covered entities for every hour asked of a manufacturer. HRSA's notice also confirms the pilot would convert the discount from something a safety-net clinic receives at the register into something it has to advance the cash for and then claim back — the "cash-flow impacts" the agency itself lists as an open question in the underlying rulemaking. Public comments on this specific burden estimate are due July 15, 2026.

Dollar figures for 2010 and 2021 are CBO estimates in 2021 dollars; 2023 and 2024 figures are nominal HRSA purchase totals and are not on the same price basis, so the four years are not a single inflation-adjusted series. The entity-type breakdown for 2024 is a residual calculation for "all other covered entities" (total minus the three itemized categories), not an HRSA-published line item.