Big Pharma’s 340B Heist Just Hit a Dead End

The Trump Administration has for now abandoned a stunningly ill-conceived plan to turn the 340B Drug Discount Program into a rebate.

Health and Human Services Secretary Robert F. Kennedy, Jr. pulled the plug on a scheme that would have starved safety-net healthcare providers of essential resources to treat uninsured and underinsured Americans.

It all started as a slap-dash effort to hand control of the 340B Program to the drug industry. A bipartisan Congress created 340B in 1992 as an up-front discount for hospitals and clinics that treat high numbers of poor patients. In return, pharmaceutical companies were allowed to generate fat profits by selling into the lucrative Medicare and Medicaid markets.

While the program has worked as designed for decades, greedy Big Pharma wants it dead. So, the powerful industry sweet talked the Health Resources and Services Agency into creating a back-end rebate model. That noxious end-run was so half-baked that a federal judge shot it down almost immediately as a violation of the Administrative Procedure Act.

Chief U.S. District Judge Lance Walker granted a stay on December 29, 2025, citing, among other things, the damage the rebate model would do to safety-net hospitals in the program.  “Plaintiffs’ showing of economic impact and disruption to services is substantial and, paired with such a strong showing on the merits, sufficient to demonstrate irreparable injury,” he wrote.

The gambit would have left hospitals spending hundreds of millions of dollars while waiting, ever hopeful, for repayment at the whim of pharmaceutical companies. Walker noted that the “administrative record is also silent on the cost of floating the full price of covered drugs until 340B entities receive their rebate.”

And the government ignored the expense hospitals faced administering the new model. “Plaintiffs demonstrate irreparable harm. [American Hospital Association] members alone estimate $400 million in compliance costs, the downstream effect causing them to cut back services and suspend partnerships with drug distributors,” added Walker.

In short, Big Pharma’s money-grabbing swindle was so lacking in merit, that it only took a Trump-appointed federal judge a few days to scrap it. 

Once again, the drug industry has failed to deliver a coup de grace to the 340B Drug Discount Program. It survives because it helps safety-net providers deliver vital healthcare to Americans. It endures because it enjoys staunch bi-partisan support in Congress and in state capitals across the country.