Sacubitril/Valsartan

The Health Resources and Services Administration announced on Thursday that it’s rolling out a pilot program to test a rebate model for certain 340B drug discounts. The announcement comes as a handful of pharma companies fight HRSA in court over proposals to implement their own 340B rebate models. A rebate model would change the way the federal drug discount program has operated for decades, potentially requiring health centers to purchase certain 340B-eligible drugs at market price then recoup the discounts via rebates, as opposed to upfront. But the pilot is more limited than some of the models proposed by drugmakers. For now, it’s limited to drugs subject to the first round of Medicare negotiations, a group that includes Novartis’ heart failure drug Entresto, Bristol Myers Squibb’s blood thinner Eliquis and others . HRSA Administrator Tom Engels said in a news release that the program represents a “measured approach to the process of approving manufacturer rebate models.” In addition, qualifying manufacturers must meet certain criteria, including that “no additional administrative costs of running the rebate model shall be passed onto the covered entities,” according to a federal register notice. Pharma companies have alleged abuses of the federal 340B program, and Eli Lilly, Sanofi, Novartis and Bristol Myers have sued the federal government over its tough stance on their proposed 340B rebate models. Some companies have argued that a rebate model would help prevent duplicate discounts on drugs negotiated under the Inflation Reduction Act. HRSA reiterated in a federal register notice on Thursday that implementing a rebate model without approval from the secretary would violate 340B law. Drugmakers must submit their plans for participation in the pilot program by Sept. 15, according to the notice, and approvals are anticipated by Oct. 15. The pilot program would take effect on Jan. 1, 2026. HRSA said that after assessing the pilot, it “may consider expanding the rebate pilot to other drugs purchased under the 340B Program.” While Sanofi said it is “pleased to see HRSA recognizes the need for fairness and transparency within the 340B Program,” it also criticized the pilot program. A spokesperson told Endpoints News on Thursday that the program “lacks the substantial and swift reforms that are needed now.” Sanofi did not participate in the first round of Medicare negotiations under the IRA. A J&J spokesperson commended HRSA’s “initial efforts to bring much needed transparency to the 340B Program.” Alex Schriver, senior VP of public affairs at the industry trade group PhRMA, applauded the pilot program as “a positive first step toward addressing hospital abuse of the 340B program,” but added that “it should cover all medicines and address broader program integrity concerns.” Other critics such as 340B Health, which represents health centers that participate in the 340B program, have raised concerns about potential financial and administrative burdens on 340B hospitals as a result of a rebate model. “340B rebate models shift financial burden from highly profitable drug companies to hospitals with the fewest resources serving the most vulnerable patients,” 340B Health President and CEO Maureen Testoni said in a news release. “We will continue working closely with HRSA to ensure 340B remains strong, sustainable, and focused on protecting the safety net.” Aimee Kuhlman, VP of advocacy and grassroots at the American Hospital Association, said in a statement that “it will be essential that HRSA makes certain that drug companies bear all the costs of implementing these rebate models and that those companies provide discounts expeditiously.” HRSA has asked for public comment on the pilot program over the next 30 days. Editor’s Note: This story has been updated to include comment from Johnson & Johnson.

Novartis has raised its full-year 2025 earnings outlook, projecting core operating income to rise by low-teens percentages—up from earlier expectations—despite potential US drug tariffs. The Swiss pharmaceutical giant reported strong Q2 results, with operating income up 20% to $5.9 billion and sales climbing 12% to $14 billion. CEO Vas Narasimhan emphasized that Novartis is well-prepared for any new US tariff impacts in 2025, citing robust inventory levels and a strategic plan to mitigate risks. The company is committed to investing $23 billion to expand its US manufacturing footprint, shifting production of key products closer to its largest market. Novartis also announced a new $10 billion share buyback program through 2027, rewarding investors amid ongoing volatility. Kisqali sales soared 64% to $1.2 billion, while heart drug Entresto posted a 24% gain to $2.36 billion, though generic competition is expected to intensify after patent expiry. Shares dipped after the company missed expectations for psoriasis drug Cosentyx and announced CFO Harry Kirsch’s retirement, but quickly recovered. The firm is restructuring to produce more in the US, aiming to shield itself from future trade tensions and maintain growth momentum.