On December 29, 2025, Chief Judge for the U.S. District Court of Maine granted a preliminary injunction in American Hospital Association (AHA) vs. Kennedy et. al. (Case 2:25-cv-00600-LEW). This decision pauses the controversial HRSA approved 340B rebate model. The rebate model was slated to go-live on January 1, 2026.
In reaching this decision, the court stated that HRSA failed to build a sufficient administrative record regarding the implementation and operationalization of the rebate model. The court also pointed to the fact that HRSA failed to provide a reasonable explanation or address significant reliance interests on the upfront pricing currently provided through the 340B program when introducing the 340B rebate model.
The court also agreed with the AHA that covered entities will suffer irreparable harm if a preliminary injunction is not granted such as the upfront costs of covered drugs (far in excess of the costs they will ultimately be responsible for), hiring additional staff to process and track rebate claims, and cutting back or altogether abandoning certain programs and services.
Ultimately, the court held that in this case, “a preliminary injunction would preserve the status quo and preserve the reach of 340B entities to continue serving the public’s significant interest in receiving critical medical services.”
However, the preliminary injunction does not resolve the case or block the rebate program permanently. Litigation will continue surrounding AHA’s request for a permanent ban. Moreover, on the same date that the preliminary injunction went into effect, HRSA requested an interlocutory appeal of the preliminary injunction—requesting that the preliminary injunction be lifted—while the case is still ongoing. Specifically, HRSA appealed the district court’s order granting the preliminary injunction to the U.S. Court of Appeals for the First Circuit. Additionally, HRSA requested a stay of the preliminary injunction in the district court itself while the interlocutory appeal to the First Circuit is pending. On December 30, 2025, the district court denied HRSA’s request for a stay. Therefore, the preliminary injunction will remain in place while the First Circuit determines whether or not to proceed with the interlocutory appeal. If First Circuit grants the interlocutory appeal, HRSA and the manufacturers may proceed with implementing the rebate model while the case proceeds through the judicial system.
Recommendation to Covered Entities
The preliminary injunction in AHA v. Kennedy is a welcome reprieve for covered entities who are struggling with the weight of the financial and operational costs of implementing the 340B rebate model. The preliminary injunction makes it unlikely that HRSA will be able to implement the rebate model on January 1, 2026. However, Advis recommends that covered entities continue to work towards operationalizing the 340B rebate model and be prepared to submit data, as may be necessary. The expected delay should serve as an opportunity in implementation for covered entities to continue working with their data teams and TPAs to better operationalize the claims data collection process and prepare for data submission.
If you have any questions, please do not hesitate to contact Advis at 708-478-7030.
Published December 31, 2025
