340B program changes in 2026 test compliance, cash flow and margins

Beyond a high-profile legal battle over a rebate pilot, a range of changes are poised to hit the 340B program in 2026, say policy watchers.

The latest development came Jan. 15 when Eli Lilly expanded its requirements for covered entities to submit claims-level data for its own pharmacies, in addition to previously requiring that data for contract pharmacies.

It’s a tack that other manufacturers were likely to follow, said Brian Bell, a principal at Forvis Mazars US. He noted that Lilly was among the first drugmakers to place any restrictions on 340B and many others have since followed suit.

Lilly’s action followed a lower court’s having placed a temporary restraining order on HHS’ launch of a first-of-its-kind rebate pilot in 340B. An appeals court upheld that hold and HHS appeared to waiver on whether it would move forward with the model. In a filing, the department stated that it was reconsidering the model and is working with the hospital advocates who sued it on a path forward.

But the legal obstacles are unlikely to prevent the Trump administration from reissuing a new model that addresses the legal concerns, Bell said.

“They’re going to take another swing at this,” he added.

Rebate concerns

If the court ultimately upholds the rebate model or if CMS reissues a substantially similar model this year, providers could face a range of impacts.

Providers would find the rebate model manageable if manufacturers generally approve all rebate requests in a timely fashion, even with the administrative cost of compliance, said industry advisors.

However, conflicts over whether or not the drug qualifies for a rebate could have a substantial impact on the overall 340B program and the availability of 340B pricing.

If manufacturers use the pilot to heavily restrict 340B drug discounts, the Health Resources and Services Administration retains the authority to discontinue it.

Key elements to track include the percentage of rebates requested that are actually paid and how timely the payments are, advisors say.

Drug cost survey

This year, hospital and health system leaders also need to weigh whether their organizations are going to respond to the coming drug cost survey from CMS. The agency was expected to use that information to reinstitute a cut to Medicare payments for 340B drugs. An attempt to do so during the first Trump administration was struck down by the Supreme Court after justices concluded that CMS conducted an insufficient hospital drug cost survey.

Health systems with which Bell has talked are split on whether they plan to respond to the survey. He urged those responding to do so carefully, so they’re accurately reporting those drug costs.

CMS suggested that it may treat failure to respond to the survey as “a signal that the hospital’s drug acquisition costs are negligible or otherwise may use estimates of the hospital’s drug acquisition costs that are likely to depress the average drug acquisition costs across similar hospitals or even all hospitals, potentially leading to punitive rates in CY 2027,” according to a post by McDermott, Will & Schulte.

State moves

In 2026, more state legislation was expected to focus on 340B. This will include new legislation to bolster contract pharmacies, which hospitals support, and bills to mandate reporting by covered entities, which draw hospital concerns.

Some have asked Bell about not reporting 340B data if their respective states enact a law requiring transparency, including data on total 340B revenue or how it is spent.

“I don’t think that’s an option because as a hospital community, for years we’ve been saying, ‘We’ll tell you what our savings are, we’ll tell you how we’re using our savings, we’re willing to be transparent,’” Bell said. “You can respond to this in a smart way.”

That approach includes showing their 340B savings and how that amount is reduced by all the associated costs.

“Most hospitals are using that savings the way they’re supposed to; they’re expanding services,” he said.

Hospitals in Washington state told him that their initial round of 340B reporting was burdensome, but they expect lower costs with future rounds of reporting since the processes now have been built.

Washington is one of six states that enacted 340B reporting laws.

Federal legislation

The policy watchers said federal 340B legislation remains possible in 2026.

For Bell, “2026 feels like it’s shaping up to be a year where reform could occur, if there’s agreement.”

The main legislation was a draft bill under construction by a bipartisan group of senators. However, that bill appeared to stall in late 2024 and formal legislation was never introduced. Negotiations apparently remain hung up over how to set a stronger definition of eligible patient with respect to 340B discounts and whether to tighten 340B eligibility requirements for off-site clinics.