By: Mike Strahan
On July 16, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that has the potential to significantly impact how 340B drugs are handled under Medicare Part D, and by extension, how pharmaceutical rebates are calculated.
So, what does that mean? For context: beginning January 1, 2026, CMS is required by law to exclude 240B units from inflation-based rebate calculations for Medicare Part D drugs.
The newly proposed rule outlines two primary approaches CMS is considering for identifying and excluding those claims:
- Prescriber-Pharmacy Methodology (PPM)
- This method would flag potential 340B claims by linking the National Provider Identifier (NPI) of prescribers affiliated with 340B-covered entities to pharmacies under contract with those same entities. While this method is data-driven, it does not confirm whether a drug has been replenished at 340B pricing, a significant limitation acknowledged by CMS.
- 340B Voluntary Claims Repository:
- This approach would allow 340B-covered entities or their third-party administrators (TPAs) to voluntarily submit claim-level data to CMS. Although this would be voluntary at first, CMS has made it clear that it is actively considering mandatory reporting with the goal of improving the accuracy of 340B claim identification.
Why this new proposed rule matters:
If finalized, this rule would mark the first time CMS attempts to identify 340B drugs at the claim level under Medicare Part D. A change that would have significant implications for 340B-covered entities, drug manufacturers and those managing rebate and formulary strategies.
Those who operate in the 340B space understand the challenges of identifying whether a claim is, in fact, a 340B claim at the time of dispensing. It is unclear whether the claims repository will solve any of those challenges or if it will, like the PPM option, potentially overinflate the number of designated claims. Nevertheless, CMS has acknowledged that neither of these proposed methods may be sufficiently accurate and that, given the numerous potential challenges to both models, there is likely a more effective way to identify 340B claims and exclude them from Part D rebate calculations.
What you can do:
Covered entities that dispense 340B drugs billed to Medicare Part D, including those that do so through contract pharmacies, should familiarize themselves with the proposals. Additionally, those who disagree with the proposals or details of the new policies have until September 12, 2025, to submit comments to CMS in response.
CMS is open to feedback, and in an environment of increasingly difficult financial pressure for 340B-covered entities, they will hopefully consider carefully input from industry experts. Again, comments to CMS are due by September 12, 2025.
Have additional questions about the implications of this newly proposed rule? Reach out to our team of industry experts at: [email protected]
