340B drug program faces HHS criticism and AHA lawsuit

The U.S. Department of Health and Human Services (HHS) and the American Hospital Association (AHA) are engaged in a dispute over the 340B drug pricing program. HHS economists have released an internal analysis arguing that the program, originally designed to help safety-net hospitals, now incentivizes the overuse of expensive drugs and encourages hospital consolidation through the expansion of affiliated outpatient sites.

Simultaneously, the AHA has filed a federal lawsuit to block a pilot program that seeks to transition the 340B model from upfront discounts to an after-the-fact rebate system. This expanded pilot, scheduled for January 1, 2027, would target 25 of the most expensive drugs covered under Medicare. The AHA argues that the government has failed to account for the significant administrative and operational costs hospitals will face by having to pay full market prices upfront while waiting for reimbursements.