PhRMA proposes 340B rebate model to modernize drug discount program, citing transparency and eligibility checks

The Pharmaceutical Research and Manufacturers of America (PhRMA) said in a blog post on April 20 that a 340B rebate model could modernize the federal drug discount program by using claims-level verification to improve transparency, reduce duplicate discounts, and strengthen program integrity.

The proposal comes as debate continues over the scope and oversight of the 340B Drug Pricing Program. PhRMA said its approach would preserve savings for eligible covered entities while updating the system to confirm eligibility before discounts are applied.

PhRMA described the rebate model as a program-integrity upgrade rather than a rollback, saying it would use rapid, claims-level verification to confirm eligibility earlier in the process and reduce duplicate discounts.

The 340B program was created to help certain hospitals, clinics, and federal grantees purchase outpatient drugs at reduced prices. Over time, its reach has expanded beyond its original safety-net focus, with the number of covered entity sites more than doubling from 2013 to 2023. Covered entities can also keep the difference when insurer reimbursement exceeds the discounted purchase price, a structure that has drawn increased scrutiny, according to the Government Accountability Office (GAO).

The scale of the program is a key part of ongoing reform debates. 

Covered entities purchased $81.4 billion in outpatient drugs through 340B in 2024, with disproportionate share hospitals accounting for more than $64.1 billion of that total, according to data from the Health Resources and Services Administration. Much of the spending is therefore concentrated in large hospital systems rather than a smaller group of targeted safety-net providers.

Federal oversight agencies say longstanding gaps remain. 

The GAO said in a late 2025 report that the Health Resources and Services Administration had implemented only five of 20 recommended reforms. Outstanding issues include oversight of contract pharmacies, hospital eligibility determinations, and how 340B discounts interact with Medicaid rebates.

PhRMA represents leading biopharmaceutical research companies and says it advocates for policies that support drug development and patient access.