The American Hospital Association is once again suing the Trump administration over its plan to test revamping a federal drug discount program into one that provides after-the-fact rebates instead of upfront discounts for certain drugs.
It’s the second time the powerful hospital lobbying group has sued over such a plan. The first time, in 2025, a judge agreed to temporarily halt a more limited version from taking effect, and the Health and Human Services Department voluntarily withdrew the plan after losing on appeal. In February, the agency announced an expanded version, set to take effect Jan. 1, 2027, that would target 25 of the costliest, most widely used drugs covered under Medicare. The original plan included 10 drugs.
The AHA’s argument is largely the same as in the first case: the government failed to accurately account for the costs hospitals would incur by having to pay market prices for drugs and then apply for rebates. The lawsuit says that the Health Resources and Services Administration, the HHS division that administers 340B, received more than 2,400 comments on the rebate model’s second iteration, including hospitals describing in “granular detail the catastrophic impact” it would have.
