In our January 14 blog, we explained that Chief Judge Lance Walker of the U.S. District Court for the District of Maine had entered a nationwide preliminary injunction in American Hospital Association v. Kennedy, blocking the Health Resources and Services Administration’s (HRSA) 340B Rebate Model Pilot Program under the Administrative Procedure Act (APA). We also noted that both the district court and the First Circuit denied the government’s requests for a stay, and that the U.S. Department of Justice (DOJ) told the First Circuit the parties planned to dismiss the appeal and consider sending the approvals back to HRSA.
That next step has now occurred, and it confirms that the current version of the Rebate Pilot will not move forward on the existing administrative record.
The Joint Motion: Vacatur and Remand to HRSA
On February 5, the American Hospital Association and other plaintiffs, together with the DOJ on behalf of the U.S. Department of Health and Human Services (HHS) and HRSA, filed a joint motion asking Judge Walker to vacate the agency actions underlying the 340B Rebate Model Pilot and remand the matter to HRSA.
The parties ask the court to vacate: (1) HRSA’s August 1, 2025 340B Rebate Model Pilot Program Application Notice; (2) the corrected August 7, 2025 notice; and (3) HRSA’s approvals of nine manufacturers’ applications covering ten drugs announced between October 30 and November 14, 2025. If granted, this would formally wipe out the pilot and related approvals, rather than simply leaving them enjoined.
Notably, the government tells the court it has now reviewed the full administrative record and “do[es] not believe the full administrative record would change the outcome of this litigation at summary judgment.” In other words, even with the complete record, the DOJ and HRSA do not expect to be able to defend the pilot against the APA defects identified by Judge Walker and the First Circuit, including the failure to grapple with 30 years of reliance on upfront 340B discounts and the substantial administrative and cash-flow burdens on safety‑net providers.
Although the DOJ reiterates its broader view that the APA does not expressly authorize vacatur as a remedy, it expressly agrees not to press that argument in this case and joins plaintiffs in asking for vacatur here.
What HRSA Has Agreed To Do If It Tries Again
The joint motion also outlines how HRSA will proceed on remand if it chooses to pursue a new rebate model. The parties represent that HRSA will not simply tweak the existing pilot. Instead, if HRSA decides to launch a new 340B rebate program, it will:
- Issue a new notice and solicit new manufacturer applications; and
- Solicit comments either before or concurrently with any new notice (or both).
In addition, HRSA has agreed that any new rebate program will have an effective date at least 90 days after the public announcement of any new manufacturer approvals. That built-in runway is designed both to avoid “extremely expedited” future litigation and to give covered entities time to assess and prepare for any new model.
For now, however, these commitments are contingent on the court granting the joint motion. Until then, the preliminary injunction remains in place.
Bottom Line
The joint motion for vacatur and remand in AHA v. Kennedy confirms that HRSA’s 340B Rebate Model Pilot Program, as designed in 2025, is effectively at the end of the road. The parties have agreed that the better course is to set aside the pilot and return the matter to HRSA, rather than continue litigating its legality.
We will continue to monitor the district court’s decision on the joint motion, as well as any subsequent steps HRSA takes on remand, and will provide further updates for 340B covered entities and manufacturers as developments occur.