Navigating the 340B Rebate Model Pilot and IRA Medicare Drug Price Negotiation

What Covered Entities Need to Know  

Starting next year, two major changes will impact how select outpatient prescription drugs are paid for and accessed: the 340B Rebate Model Pilot Program and the first year of Maximum Fair Prices (MFPs) under the Medicare Drug Price Negotiation Program, established by the Inflation Reduction Act (IRA). 

The 340B Rebate Model Pilot Program is designed to reduce potential 340B diversion and duplicate discounts through enhanced oversight—introducing new operational complexities for covered entities participating in the 340B program. 

This article provides actionable insights into how the 340B Rebate Model Pilot and the implementation of MFPs will work, and how Verity is preparing for these changes. 

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What Is the IRA Medicare Drug Price Negotiation Program?  

Signed into law in 2022¹, the Inflation Reduction Act (IRA) granted the Centers for Medicare & Medicaid Services (CMS) the ability to, for the first time ever, negotiate prices directly with manufacturers for certain high-expenditure drugs. Historically, Medicare drug prices were set by the manufacturers, without a federal ceiling or benchmark for what Medicare would be expected to pay.  

The first round of negotiations ended in August 2024 for the first 10 drugs² that were selected for negotiation with their new Maximum Fair Prices (MFPs) announced. Those new prices go into effect for all Part D plans starting January 1, 2026.  

Key Takeaways  

• Negotiated prices: Effective January 1, 2026, the first 10 drugs cannot be priced above their negotiated MFPs in the Medicare Part D market. 

• Drug selection: Drugs were chosen based on expenditures in the Medicare program. Drugs were excluded if they met certain requirements for initial exclusivity or having competition.  

• Why this matters: The goal is to reduce Medicare spending on these drugs. Covered entities, contract pharmacies, and manufacturers will need to consider operational adjustments to remain compliant. The pilot also presents an opportunity to improve data sharing, rebate accuracy and transparency – offering valuable insights.  

What Is the 340B Rebate Model Pilot Program?  

Announced by the U.S. Department of Health and Human Services (HHS) Health Resources and Service Administration (HRSA) on July 31, 2025, the 340B Rebate Model Pilot Program, is also expected to launch January 1, 2026.  

Given that all manufacturers have indicated they plan to participate in the rebate pilot, covered entities will need to purchase the 10 drugs in the pilot at the wholesale acquisition cost (WAC), and submit claims to the manufacturers for a potential rebate using the identified claims platform. By adhering to data standards and data matching, the pilot program aims to identify and remove duplicate claims between 340B and MFP pricing.  

Key Takeaways  

• Rebate-based structure: Instead of covered entities receiving upfront discounts for 340B drugs, covered entities will purchase drugs at the wholesale acquisition cost, and submit claims to the manufacturer for a potential rebate for these selected drugs.  

• Manufacturer payment timing: Participation is voluntary for manufacturers. Approved manufacturers are required to pay rebates to covered entities within ten calendar days of submissions.   

• Pilot scope: The pilot will only apply to 10 drugs that have an active MFP under the IRA for 2026.   

• Why this matters: For covered entities, this introduces a new purchasing flow (in addition to their existing 340B process for drugs not included in the pilot program) and creates questions around how manufacturers will determine rebate eligibility.  
  

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How Can You Prepare for These Programs?  

Verity is proactively preparing for these changes by enhancing customizable reporting, claims submission tracking, and fostering deeper collaboration between covered entities, TPAs, and Rebate Model Vendors. 

While the 340B community is learning about these programs together, Verity is already adapting its solutions to support new workflows. We have impact assessment reports for available current clients and encourage you to contact your account manager today. 

To discuss your path forward with Verity, contact us at Rebates-IRA-Support@verity340b.com.  

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¹Implementation of the Inflation Reduction Act began in 2023 for other programs outside Medicare; the full bill can be reviewed here. 

² The ten drugs include: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and Fiasp (and its affiliated drug names).  
Centers for Medicare & Medicaid Services. Medicare Drug Price Negotiation Program: Selected Drugs for Initial Price Applicability Year 2026. August 2023. https://www.cms.gov/files/document/fact-sheet-medicare-selected-drug-negotiation-list-ipay-2026.pdf