Vol. 1 · No. 16
Drugmakers and PhRMA move to join the defense of HRSA’s 340B rebate pilot
AbbVie, Bristol Myers Squibb, Boehringer Ingelheim and PhRMA asked the federal court in Maine to let them defend the revised rebate pilot that hospitals sued to stop. Hospital groups endorsed a House bill that would delay the pilot through 2028. Six health systems put dollar figures on the proposed OPPS cut. The pilot starts Jan. 1, 2027, 75 days from this edition.
- Drugmakers moved to intervene in AHA v. Kennedy on Oct. 14, and PhRMA followed Oct. 15. Responses are due Oct. 21.
- Hospital groups backed H.R. 10770, which would require upfront 340B discounts through Dec. 31, 2028. The AHA wrote its sponsors Oct. 15.
- Six health systems priced the proposed OPPS cut at $7 million to $109 million a year each in comment letters.
- Duplicate discounts anchor the manufacturers’ case, with company loss claims and a $5.2 billion 2027 industry estimate.
- The pilot’s operating terms set the work plan: 45 days to submit claims, 10 days for manufacturers to pay or deny, 21 products.
Drugmakers want a seat in the 340B rebate case. Plan for January as if they get one.
Hospitals won the first rebate fight after the government stopped defending its pilot. The second fight has manufacturers with billions at stake asking to join the defense, and 75 days remain before the pilot’s start date.
On Oct. 14, five days after the American Hospital Association went back to federal court in Maine, AbbVie, its Pharmacyclics unit, Bristol Myers Squibb and Boehringer Ingelheim asked Chief Judge Lance Walker to let them defend HRSA’s revised 340B rebate pilot. PhRMA filed its own motion the next day. The court gave the hospitals until Oct. 21 to respond and allowed no reply.
The trade press covered the filings as procedure. I read them as the most important development in the case so far. They change who sits across the table from hospitals.
Recall how round one ended. Judge Walker preliminarily enjoined the 2025 pilot on Dec. 29, 2025, and the First Circuit denied the government a stay. Then the government gave up. On Feb. 10, 2026, the court granted a joint motion and vacated the pilot and every manufacturer approval under it. The drugmakers watched as amici, not parties. The court had denied their bids to intervene, and when the First Circuit reached their appeal on Sept. 25, 2026, it dismissed it as moot and wiped the denial off the books without ruling on the merits.
The new motions build on that history. Both argue the government is an inadequate representative of the companies’ interests, and PhRMA points straight at the consent to vacatur, a deal it was not a party to. The companies also put numbers on the table. In declarations described in their motion, BMS says it has already lost at least $40 million to duplicate discounts, AbbVie projects $35.8 million in losses in 2027 without the pilot, and Boehringer reports losses of about $3 million a week. A declaration filed with PhRMA’s motion cites a Berkeley Research Group estimate of $5.2 billion in duplicate 340B and Medicare negotiated-price discounts in 2027 alone. No court has tested those figures. They still tell you how hard these parties plan to fight.
Hospital advocates treat round one as proof the pilot has a fatal flaw. I read the record differently. The hospitals won an injunction because the court found HRSA had likely failed to weigh their costs and reliance interests, and they won vacatur because the defendant stopped defending. Round two lacks both conditions.
HRSA rebuilt the record. It estimated hospital claims-data costs at about $537 million a year, according to the AHA’s complaint. The hospitals now argue the true cost exceeds $1 billion for 340B hospitals alone. That makes the case a dispute over the size of a cost the agency did weigh. Courts give agencies more room on that kind of question than on a cost the agency ignored.
Support the lawsuit and the delay bill. Budget for neither.
Intervention raises the stakes further. If Judge Walker lets the drugmakers in, they become parties. They brief the merits, object to any settlement between hospitals and HRSA, and carry a loss to the First Circuit on their own. The quick exit that ended round one would disappear.
The strongest answer to my argument deserves a fair hearing. Judge Walker denied intervention once, and the First Circuit’s order changed the procedural record, not his view of the motion. A temporary restraining order before Jan. 1 remains on the table. Congress offers a second route: H.R. 10770, the 340B Rebate Model Delay Act, would require upfront discounts from Jan. 1, 2027, through Dec. 31, 2028, and its backers plan to push it into the year-end package. Both routes deserve your support. A finance team that plans around either one takes a bet it does not control.
Three moves follow for a covered entity executive.
Build the pilot workflow now. HRSA’s published terms give covered entities 45 calendar days from dispense to submit claims data and give manufacturers 10 calendar days to pay or deny a rebate. Under HRSA guidance, as summarized in a Mintz analysis, pilot drugs bought through a WAC-only or GPO account do not qualify for a rebate. Lock down purchasing, including automated reorders, and run a test cycle before December.
Price the float and show it to your board. Trinity Health told HRSA, in comments the AHA complaint cites, that its cost for the 25 contemplated drugs would rise from about $26 million to $671 million a year. Run the same math on your own book: pilot-drug volume, times the gap between WAC and ceiling price, times days outstanding. Then ask your wholesaler about payment terms. Commenters cited in the complaint reported wholesaler terms of 5 to 7 days.
Take your number to your representative. America’s Essential Hospitals has asked members to recruit cosponsors for H.R. 10770. A float figure with your hospital’s name on it carries more weight in a lame-duck negotiation than any association talking point.
Hospitals control none of the three outcomes in play: a ruling, a statute, or a Jan. 1 start. They do control whether their pharmacy works on Jan. 2 if the pilot goes live.
Douglas McCormack, Founder of Acumen Partners and Chair of MedMatrix Rx, is a health policy attorney, startup CEO, and investor in early-stage health care ventures.
Drugmakers and PhRMA move to join AHA’s rebate suit
What happenedAbbVie, Pharmacyclics, Bristol Myers Squibb and Boehringer Ingelheim moved on Oct. 14 to intervene as defendants in American Hospital Association v. Kennedy, No. 1:26-cv-00515-LEW (D. Me.), the suit hospitals filed Oct. 9 to stop HRSA’s revised 340B rebate pilot (motion). PhRMA filed its own motion Oct. 15. Both seek intervention as of right, or permissive intervention in the alternative. The court set Oct. 21 for responses and allowed no replies (docket entry). The core dispute is cost: HRSA estimated about $537 million a year, and the hospitals say true costs exceed $1 billion (Healthcare Dive, Oct. 12). The hospitals’ motion for a temporary restraining order remained undecided as of Oct. 16, 2026, per the Georgetown tracker.
Why it mattersThe court denied similar motions in round one and let the companies take part only as amici, then vacated the 2025 pilot on Feb. 10, 2026, after the government joined the hospitals in asking for it. The First Circuit later dismissed the manufacturers’ appeal as moot and vacated the old denial on Sept. 25, 2026, without reaching the merits. The companies now argue HRSA bears none of their financial risk and settled once without them. Party status would let them brief the merits, object to any settlement and appeal on their own.
- Do not plan around a repeat of round one’s consent vacatur. With manufacturers in the case, a negotiated exit gets harder.
- Watch Oct. 21. The hospitals’ response will show how hard they plan to fight intervention.
- Keep pilot readiness work on schedule while the TRO motion stays pending.
Hospital groups back a two-year delay of the pilot
What happenedThe AHA endorsed H.R. 10770, the 340B Rebate Model Delay Act, in an Oct. 15 letter to sponsors Reps. Rob Bresnahan (R-Pa.) and Debbie Dingell (D-Mich.). Bresnahan, Dingell, Tracey Mann (R-Kan.) and Lois Frankel (D-Fla.) introduced the bill Oct. 9 (America’s Essential Hospitals, Oct. 14). It would require upfront 340B discounts from Jan. 1, 2027, through Dec. 31, 2028, and bar federal funds for the pilot or a substantially similar program during that period (Becker’s, Oct. 13). America’s Essential Hospitals endorsed it Oct. 13, and Advocates for Community Health plans to push to attach it to the year-end package in the lame-duck session (Becker’s, Oct. 13).
Why it mattersThe bill gives hospitals a route that does not depend on the Maine court. Congress would need to act in a lame-duck package before Jan. 1. Backers describe the pause as time to weigh broader reform, including the SECURE 340B Act and the SUSTAIN 340B Act.
- Ask your House member to cosponsor, and send a hospital-specific cash-flow figure with the request.
- Treat passage as a hedge. Budget 2027 with the pilot live on Jan. 1.
Six health systems price the proposed OPPS cut
What happenedComment letters on the CY 2027 OPPS proposed rule show estimated annual losses of $109 million each at Henry Ford Health and Trinity Health, $71.8 million at Baptist Health, $49 million at MUSC Health, nearly $45 million at UVA Health and about $7 million at UNC Health Nash. Henry Ford’s and Baptist’s figures include Medicare Advantage losses (Becker’s, Oct. 12). CMS proposed paying for 340B-acquired drugs at average sales price minus 33.4 percent, down from ASP plus 6 percent, a $4.55 billion first-year cut to Original Medicare drug payments, offset by an 8.44 percent increase for non-drug services at all hospitals (Becker’s). The rule remained a proposal as of Oct. 17, 2026.
Why it mattersThe OPPS cut and the rebate pilot land on the same date and hit the same drug margin from two sides. The pilot raises upfront acquisition cost. The OPPS rule lowers Part B reimbursement. The letters also give boards a benchmark for their own exposure.
- Model the drug cut and the 8.44 percent uplift as separate lines, weighted by your Part B mix.
- Compare your estimate with the six published figures before your board asks.
Duplicate discounts anchor the manufacturers’ case
What happenedThe intervention motions rest on duplicate 340B and Medicare negotiated-price discounts. In declarations described in their Oct. 14 motion, BMS says it has lost at least $40 million, AbbVie projects $35.8 million in 2027 losses without the pilot, and Boehringer reports about $3 million a week. A declaration filed with PhRMA’s Oct. 15 motion cites a Berkeley Research Group estimate of $5.2 billion in duplicate discounts in 2027.
Why it mattersThe manufacturers’ figures come from their own declarations, and no court has tested them. They frame the case around a problem HRSA says the pilot solves, which strengthens the agency’s rationale on review. The hospitals’ complaint answers that HRSA never established the size of the problem and notes HRSA’s own statement that the 25 eligible drugs make up under 5.5 percent of total 340B sales.
- Know your own duplicate-discount exposure on negotiated-price drugs, with records that show how you prevent it.
- Expect manufacturers to cite duplicate-discount losses in every 340B forum this year, from courts to Congress.
The pilot’s operating terms set a 75-day work plan
What happenedHRSA approved 10 manufacturers on Oct. 1 (AHA News): AbbVie, Amgen, Astellas, AstraZeneca, Bristol Myers Squibb, Boehringer Ingelheim, GSK, Merck, Pfizer and Teva. Their plans cover 21 products (18 drugs) for the pilot’s Jan. 1, 2027 start (HRSA). Covered entities must submit claims data within 45 calendar days of dispense, and manufacturers must pay or deny rebates within 10 calendar days of a completed submission. All 10 plans run through the Beacon platform, manufacturers owed covered entities at least 90 days’ notice, and pilot drugs bought through a WAC-only or GPO account do not qualify for a rebate (Mintz, Oct. 7).
Why it mattersCommenters cited in the hospitals’ complaint reported wholesaler terms of 5 to 7 days, and the complaint says claims often take 30 to 45 days to submit. That gap is the float. Trinity Health told HRSA its cost for the 25 contemplated drugs would rise from about $26 million to $671 million a year.
- Confirm you received every manufacturer notice, and register with Beacon if you have not.
- Audit purchasing accounts for all 21 products, including automated reorders at clinics and pharmacies.
- Model cash needs by manufacturer and talk to your wholesaler about terms before December.
- Responses to the intervention motions, due Oct. 21, then a ruling on intervention. No replies allowed (docket entry).
- A ruling on the hospitals’ TRO motion. Parties asked for argument the weeks of Nov. 16 or 23. No ruling as of Oct. 16 (Georgetown litigation tracker).
- A lame-duck vehicle for H.R. 10770. Backers plan to push the delay into the year-end package (Becker’s, Oct. 13).
- The CY 2027 OPPS final rule, which decides the ASP minus 33.4 percent proposal and its 8.44 percent offset (Becker’s, Oct. 12).
- Manufacturer notices and Beacon onboarding. Notices fell due around Oct. 3 under the 90-day rule (Mintz, Oct. 7).
- COURT FILINGAbbVie, BMS, Boehringer motion to intervene, No. 1:26-cv-00515 (D. Me.)Oct. 14
- COURT FILINGPhRMA motion to intervene, No. 1:26-cv-00515 (D. Me.)Oct. 15
- COURT FILINGDocket entry: responses due Oct. 21Oct. 15
- HEALTHCARE DIVEHospitals sue over revamped 340B rebate pilotOct. 12
- COURT FILINGAHA v. Kennedy complaint (D. Me.)Oct. 9
- FIRST CIRCUITJudgment, No. 25-2237: appeal dismissed as mootSept. 25
- AHAAHA letter supporting H.R. 10770Oct. 15
- BECKER’SNew bill would delay 340B rebate pilot for 2 yearsOct. 13
- BECKER’S6 health systems’ estimated losses from CMS’ proposed 340B cutOct. 12
- HRSA340B Rebate Model Pilot ProgramAccessed Oct. 17
- AHA NEWSHRSA approves 10 drug companies for rebate pilotOct. 1
- MINTZ340B rebate pilot: the clock starts nowOct. 7