Jeff Dunn, Pharm.D., MBA, president and CEO of NeosRx, addressed the future of the 340B drug discount program at the Pharmacy Benefit Management Institute (PBMI) Annual National Conference in Orlando. Speaking at the 2026 event, Dunn discussed how a shift from upfront discounts to a rebate model would affect health systems and employers. The Health Resources and Services Administration has proposed a pilot project that would shift the 340B program from upfront discounts to rebates for drugs subject to Medicare price negation under the Inflation Reduction Act. Hospitals and health systems fought the change with legal challenges and by other means, saying that it would add administrative burden and expose them to added costs until the rebates are paid.
Dunn explained that the proposed change would mean more administrative burden on the health system side, with 340B entities having to pull data, submit and invoice claims and reconcile them, and a lag of six to nine months before they see money they now receive up front. For plan sponsors, however, he doesn’t expect much to change. The priorities of the rebate are still going to be at the 340B entity before it gets to the plan sponsor, and so that claim is still going to be scrubbed out, Dunn said. So you’re still not going to get a rebate on it.
The impact of the rebate model varies across different drug classes. Dunn noted that the issue matters most in heavily rebated, competitive drug classes, such as treatments for autoimmune conditions like rheumatoid arthritis and psoriasis. These drugs have accounted for roughly half of rebates over the past decade, though biosimilars have shifted that somewhat. Many specialty, oncology and orphan drugs entail no rebates for PBMs and plan sponsors, making the 340B question largely moot for them.
If rebates were to disappear, Dunn agreed the conflict would go away too, but he said rebates have already been close to 100% passed through to clients for some time. He pointed to Federal Trade Commission settlements and the Consolidated Appropriations Act 2025 as pushing the industry away from drugs with high list prices and high rebates and toward those with low net cost, though he said it remains to be seen whether that actually changes behavior.
Dunn also discussed the role of transparency in the industry. He argued that transparency does not equal aligned incentives. A PBM can tell a client what it is paying for a drug without telling it that it could save money by moving that drug elsewhere, or network rates may differ from one client to another. You’re going to get data, but it still doesn’t mean that you are changing your behavior, Dunn said.
