Health · Healthcare & Policy · 2 days ago
Hospitals sue to block revised federal 340B drug rebate plan
The American Hospital Association, the Maine Hospital Association and four safety-net hospitals have sued the federal government to stop a revised 340B drug plan.
The lawsuit was filed in federal court in Maine on Oct.
9.
The 340B program gives eligible hospitals discounts on certain medicines.
Under the plan, hospitals would pay the market price for selected drugs first and then seek rebates, rather than receive discounts upfront.
The revised plan covers 25 widely used, costly drugs covered by Medicare and is scheduled to begin on Jan.
1, 2027.
The hospitals argue that the government did not properly account for the costs of paying upfront and handling rebate claims; the lawsuit says the plan could add more than $1 billion in annual administrative costs.
A previous, narrower version was temporarily halted by a judge in 2025 and later withdrawn, and the hospitals are now asking the court to block the expanded plan.
The American Hospital Association, the Maine Hospital Association and four safety-net hospitals sued the Trump administration on Oct. 9 to block a revised federal 340B drug rebate plan.
The lawsuit was filed in the U.S. District Court for the District of Maine.
The plaintiffs say the plan could impose more than $1 billion in annual administrative costs on hospitals.
The plan would replace upfront discounts for certain drugs with rebates paid after hospitals purchase them.
The revised plan is set to take effect Jan. 1, 2027, and would cover 25 drugs used under Medicare, compared with 10 in the earlier version.
- Who
- The American Hospital Association, Maine Hospital Association and four safety-net hospitals sued the Trump administration.
- What
- A lawsuit seeking to block a revised federal 340B drug rebate plan.
- When
- Oct. 9, 2026
- Where
- U.S. District Court for the District of Maine
- Why
- The hospitals argue that the government did not adequately account for the costs of paying market prices upfront and seeking rebates later.
Hospital plaintiffs
Trump administration
Hospital costs
Hospital plaintiffs
The plaintiffs argue that the government failed to accurately account for the costs hospitals would face when paying market prices for drugs and then applying for rebates. The lawsuit says the plan could impose more than $1 billion in annual administrative costs.
Trump administration
The administration announced the revised rebate plan, but the articles do not provide its response to the lawsuit or the plaintiffs' cost arguments.
The rebate model
Hospital plaintiffs
The hospitals are seeking to block the plan, which would replace upfront discounts for certain drugs with after-the-fact rebates.
Trump administration
The administration plans to test the rebate model for 25 widely used, costly Medicare drugs beginning Jan. 1, 2027.
granular detail the catastrophic impact
A judge temporarily halted an earlier, narrower version of the rebate plan, and the Health and Human Services Department later withdrew it after losing on appeal.
The agency announced an expanded version of the plan, covering 25 drugs and scheduled to take effect Jan. 1, 2027.
The American Hospital Association, Maine Hospital Association and four safety-net hospitals filed suit to block the revised plan.
- Plaintiffs
- The American Hospital Association, Maine Hospital Association and four safety-net hospitals
- Claimed annual administrative costs
- More than $1 billion
- Drugs in revised plan
- 25
- Drugs in earlier plan
- 10
- Planned start date
- Jan. 1, 2027
- Court
- U.S. District Court for the District of Maine
Sources
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