Title: Tobacco Report.

OMB Number: 0581-0004.

Expiration Date of Approval: September 30, 2026.

Type of Request: Extension of a Currently Approved Information Collection.

Abstract: The Tobacco Statistics Act of 1929 (7 U.S.C. 501-508) provides for the collection and publication of tobacco statistics by USDA with regard to quantities of leaf tobacco in all forms in the United States and Puerto Rico, owned by or in the possession of dealers, manufacturers, and others, with the exception of the original growers of the tobacco.

Inventory information about different tobacco products is reported on a quarterly basis, as of January 1, April 1, July 1, and October 1 of each year, and is due within 15 days of those dates.

The information furnished under the provisions of this Act is used only for the statistical purposes for which it is supplied. No publication shall be made by USDA whereby the data furnished by any particular establishment can be identified, nor shall anyone other than the sworn employees of USDA be allowed to examine the individual reports.

The regulations governing the Tobacco Stocks and Standards Act (7 CFR part 30) issued under the Tobacco Statistics Act (7 U.S.C. 501-508) specifically address the reporting requirements. Tobacco in leaf form or stems is reported by types of tobacco and whether it is stemmed or unstemmed. Tobacco in sheet form is segregated as to whether it is to be used for cigar wrappers, cigar binders, for cigarettes, or for other products.

Tobacco stocks reporting is mandatory. The basic purpose of the information collection is to ascertain the total supply of unmanufactured tobacco available to domestic manufacturers and to calculate the amount consumed in manufactured tobacco products. The Quarterly Report of Manufacture and Sales of Snuff, Smoking and Chewing Tobacco is voluntary. Information on the manufacture and sale of snuff, smoking and chewing tobacco products is available from Treasury Department publications based on the collection of taxes but not in the detail desired by the industry. All major tobacco manufacturers agreed to furnish information to AMS for this report.

The Agricultural Marketing Act of 1946 (7 U.S.C. 1621-1627) directs and authorizes USDA to collect, tabulate and disseminate statistics on marketing agricultural products including market supplies, storage stocks, quantity, quality, condition of such products in various positions in the marketing channel, utilization of sub-products, shipments, and unloads.

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.88 hours per response.

Respondents: Primarily tobacco dealers and manufacturers, including small businesses or organizations.

Estimated Number of Respondents 44.

Estimated Total Annual Responses: 176.

Estimated Number of Responses per Respondent: 4.

Estimated Total Annual Burden on Respondents: 156.

Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments may be sent to Dr. Stephen Paul Slinsky, Director, Market News Division, Cotton and Tobacco Program, AMS, USDA, 3275 Appling Road, Memphis, TN 38133, telephone (901)

Commerce's procedures for the conduct of Sunset Reviews are set forth in its Procedures for Conducting Five-Year (Sunset) Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516 (March 20, 1998) and 70 FR 62061 (October 28, 2005). Guidance on methodological or analytical issues relevant to Commerce's conduct of Sunset Reviews is set forth in Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin and Assessment Rate in Certain Antidumping Duty Proceedings; Final Modification, 77 FR 8101 (February 14, 2012).

In accordance with section 751(c) of the Act and 19 CFR 351.218(c), we are initiating the Sunset Reviews of the following AD and CVD orders and suspended investigations:

No Sunset Reviews of suspended investigations are scheduled for initiation in August 2026.

All submissions in these Sunset Reviews must be filed in accordance with Commerce's regulations regarding format, translation, and service of documents. These rules, including electronic filing requirements via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS), can be found at 19 CFR 351.303.

In accordance with section 782(b) of the Act, any party submitting factual information in an AD/CVD proceeding must certify to the accuracy and completeness of that information. Parties must use the certification formats provided in 19 CFR 351.303(g). Commerce intends to reject factual submissions if the submitting party does not comply with applicable revised certification requirements.

Pursuant to 19 CFR 351.103(d), Commerce will maintain and make available a public service list for these proceedings. Parties wishing to participate in any of these five-year reviews must file letters of appearance as discussed at 19 CFR 351.103(d). To facilitate the timely preparation of the public service list, it is requested that those seeking recognition as interested parties to a proceeding submit an entry of appearance within 10 days of the publication of the Notice of Initiation. Because deadlines in Sunset Reviews can be very short, we urge interested parties who want access to proprietary information under administrative protective order (APO) to file an APO application immediately following publication in the Federal Register of this notice of initiation. Commerce's regulations on submission of proprietary information and eligibility to receive access to business proprietary information under APO can be found at 19 CFR 351.304-306. Note that Commerce has temporarily modified certain of its requirements for serving documents containing business proprietary information, until further notice. 1

Domestic interested parties, as defined in sections 771(9)(C), (D), (E), (F), and (G) of the Act and 19 CFR 351.102(b), wishing to participate in a Sunset Review must respond not later than 15 days after the date of publication in the Federal Register of this notice of initiation by filing a notice of intent to participate. The required contents of the notice of intent to participate are set forth at 19 CFR 351.218(d)(1)(ii). In accordance with Commerce's regulations, if we do not receive a notice of intent to participate from at least one domestic interested party by the 15-day deadline, Commerce will automatically revoke the order without further review. 2

If we receive an order-specific notice of intent to participate from a domestic interested party, Commerce's regulations provide that all parties wishing to participate in a Sunset Review must file complete substantive responses not later than 30 days after the date of publication in the Federal Register of this notice of initiation. The required contents of a substantive response, on an order-specific basis, are set forth at 19 CFR 351.218(d)(3). Note that certain information requirements differ for respondent and domestic parties. Also, note that Commerce's information requirements are distinct from the ITC 's information requirements. Consult Commerce's regulations for information regarding Commerce's conduct of Sunset Reviews. Consult Commerce's regulations at 19 CFR part 351 for definitions of terms and for other general information concerning antidumping and countervailing duty proceedings at Commerce. Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f). 3 An electronically filed document must be received successfully in its entirety by ACCESS by 5:00 p.m. Eastern Time on the day on which it is due.

In prior proceedings we have encouraged interested parties to provide an executive summary of their comments, including footnotes. In these sunset reviews, we request that interested parties provide at the beginning of their comments, an executive summary for each issue raised in their comments. Further, we request that interested parties limit their public executive summary of each issue to no more than 450 words, not including citations. We intend to use the public executive summaries as the basis of the comment summaries included in the decision memorandum that will accompany the notice to be published in the Federal Register . Finally, we request that interested parties include footnotes for relevant citations in the public executive summary of each issue.

This notice of initiation is being published in accordance with section 751(c) of the Act and 19 CFR 351.218(c).

On March 27, 2026, Commerce published the Preliminary Results and invited interested parties to comment. 1 We received no comments from interested parties on the Preliminary Results. Therefore, we made no changes from the Preliminary Results and, accordingly, there is no decision memorandum accompanying this Federal Register notice. Commerce conducted this administrative review in accordance with section 751 of the Tariff Act of 1930, as amended (the Act).

The merchandise covered by the Order is thermal paper from Germany. For a complete description of the scope of the Order, see the Preliminary Results. 3

The Act and Commerce's regulations do not address the establishment of a weighted-average dumping margin to be applied to companies not selected for individual examination when Commerce limits its examination in an administrative review pursuant to section 777A(c)(2) of the Act. Generally, Commerce looks to section 735(c)(5) of the Act, which provides instructions for calculating the all-others rate in a less-than-fair-value (LTFV) investigation, for guidance when calculating the weighted-average dumping margin for companies which were not selected for individual examination in an administrative review. Under section 735(c)(5)(A) of the Act, the all-others rate is normally “an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding any zero or de minimis margins, and any margins determined entirely {on the basis of facts available}.” Therefore, because the rate calculated for Koehler Paper SE and Koehler Kehl GmbH (collectively, Koehler) in this administrative review is zero, consistent with section 735(c)(5)(A) of the Act, for the companies not selected for individual examination in this review ( i.e., Convertidoras PCM, S.A. de C.V. (Convertidoras) and Papeles y Conversiones de Mexico, S.A. de C.V. (Papeles)), we are assigning the most recent above- de minimis rate calculated in this proceeding as the review-specific rate, i.e., 0.76 percent. 4

We determine that the following estimated weighted-average dumping margins exist for the period November 1, 2023, through October 31, 2024:

Normally, Commerce discloses to interested parties the calculations performed in connection with the final results of review within five days of any public announcement or, if there is no public announcement, within five days of the date of publication of the notice of final results in the Federal Register , in accordance with 19 CFR 351.224(b). However, because Commerce made no changes from the Preliminary Results, there are no new calculations to disclose.

Pursuant to section 751(a)(2)(C) of the Act and 19 CFR 351.212(b)(1), Commerce has determined, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries of subject merchandise in accordance with the final results of this review.

Because the weighted-average dumping margin for Koehler is zero, we will instruct CBP to liquidate the appropriate entries without regard to antidumping duties. Commerce's “automatic assessment” practice will apply to entries of subject merchandise during the POR produced by Koehler for which the reviewed company did not know that the merchandise it sold to the intermediary ( e.g., a reseller, trading company, or exporter) was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. 5

For Convertidoras and Papeles, which were not selected for individual review, we will assign an assessment rate based on the most recent above- de minimis rate calculated in this proceeding as the review-specific rate, i.e., 0.76 percent, as discussed in the “Review-Specific Rate for Non-Examined Companies” section above.

Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of this notice in the Federal Register . If a timely summons is filed at the U.S. Court of International Trade, the assessment instructions will direct CBP not to liquidate relevant entries until the time for parties to file a request for a statutory injunction has expired ( i.e., within 90 days of publication).

The following cash deposit requirements will be effective upon publication in the Federal Register of these final results of administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(2)(C) of the Act: (1) the cash deposit rate for the companies listed above is the weighted-average dumping margin established in the final results of this administrative review; (2) for previously investigated or reviewed companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recently completed segment of this proceeding in which the company participated; (3) if the exporter is not a firm covered in this review, a prior review, or the LTFV investigation, but the producer is, then the cash deposit rate will be the cash deposit rate established for the most recently completed segment for the producer of the subject merchandise; and (4) the cash deposit rate for all other producers and exporters will continue to be 6.27 percent, the all-others rate established in the Amended Final Determination. 6 These cash deposit requirements, when imposed, shall remain in effect until further notice.

This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

This notice serves as the only reminder to parties subject to an APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a sanctionable violation.

We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i) of the Act, and 19 CFR 351.221(b)(5).

HMS fisheries (swordfish, sharks, tunas, and billfish) are managed under the 2006 Consolidated HMS Fishery Management Plan (FMP) and its amendments pursuant to the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act; 16 U.S.C. 1801 et seq. ) and consistent with the Atlantic Tunas Convention Act (16 U.S.C. 971 et seq. ). HMS implementing regulations are at 50 CFR part 635.

The Magnuson-Stevens Act requires the establishment of APs and requires NMFS to consult with and consider the comments and views of AP members during the preparation and implementation of FMPs or FMP amendments (16 U.S.C. 1854(g)(1)(A)-(B)). NMFS meets with the HMS AP approximately twice each year to consider potential alternatives for the conservation and management of Atlantic swordfish, sharks, tunas, and billfish fisheries, consistent with the Magnuson-Stevens Act.

Some of the discussion topics are:

• Atlantic bluefin tuna fishery update (year in review);

• HMS fisheries economics update;

• Updates on various shark actions; and

• Continued discussion on actions under Executive Order 14276.

We anticipate inviting other NMFS offices and the U.S. Coast Guard to provide updates, if available, on their activities relevant to HMS fisheries. Additional information on the meeting and a copy of the draft agenda will be posted prior to the meeting (see ADDRESSES ).

All members of the public will have virtual access to the meeting available via webinar and status updates of in-person public access to the meeting will be available on the NMFS website (see ADDRESSES ). The meeting location is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Peter Cooper at 301-427-8503, at least 7 days prior to the meeting.

EAC Progress Report (EAC-PR); OMB Control Number: 3265-0026

The EAC Office of Grants Management (EAC/OGM) is responsible for distributing, monitoring, and providing technical assistance to states and grantees on the use of federal funds. EAC/OGM also reports on how the funds are spent, negotiates indirect cost rates with grantees, and resolves audit findings on the use of HAVA funds.

The EAC-PR is employed for both interim and final progress reports for grants issued under HAVA authority. This format contains no changes to the report or instructions since the approved standard request in November 2023. The PR directly benefits award recipients by making it easier for them to administer federal grant and cooperative agreement programs through standardization of the types of information required in progress reporting- thereby reducing their administrative effort and costs.

The requirement for grantees to report on performance is the OMB grants policy. Specific citations are contained in Code of Federal Regulations TITLE 2, PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS

After obtaining and considering public comment, the EAC will prepare the format for final clearance. Comments are invited on (a) ways to enhance the quality, utility, and clarity of the information collected from respondents, including through the use of automated collection techniques or other forms of information technology; and (b) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.

Respondents: All EAC grantees and state governments.

The estimated annualized cost of this burden is $5,028.48, calculated by multiplying the annualized burden (194 hours) by an hourly rate of $25.92 (GS-8/Step 5 hourly basic rate).

CP2 LNG requests authorization to export additional volumes of domestically produced LNG from the proposed CP2 LNG Expansion Project. 1 The Project will be located at the CP2 LNG Terminal, which is currently under construction on the east side of the Calcasieu Ship Channel and the nearby Monkey Island, in Cameron Parish, Louisiana. Specifically, CP2 LNG states that the proposed Project will expand the CP2 LNG Terminal by adding six refrigerant liquefaction blocks, a new natural gas-fired combined cycle power plant, a third marine berth within the already-approved berthing area, and other associated infrastructure. CP2 LNG states that the CP2 LNG Expansion Project will be interconnected with the CP2 LNG Terminal and operated together with the Terminal as a single LNG export facility on a fully integrated basis. According to CP2 LNG, the CP2 LNG Expansion Project will increase the maximum peak liquefaction and export capacity of the CP2 LNG Terminal by 11.7 million metric tons per annum (mtpa) of LNG, or by the equivalent of 620.5 Bcf/yr of natural gas.

Therefore, CP2 LNG requests authorization to export LNG in a volume equivalent to 620.5 Bcf/yr of natural gas by vessel on a non-additive basis to: (i) any country with which the United States has entered into a free trade agreement (FTA) requiring national treatment for trade in natural gas (FTA countries), and (ii) any other country with which trade is not prohibited by U.S. law or policy (non-FTA countries). This Notice applies only to the portion of the Application requesting authority to export LNG to non-FTA countries pursuant to section 3(a) of the NGA. 2 DOE will review CP2 LNG's request for authorization to export LNG to FTA countries separately pursuant to NGA section 3(c). 3

CP2 LNG seeks this authorization on its own behalf and as agent for other entities that will hold title to the LNG at the time of export. CP2 LNG requests the authorization for a term of 20 years after commercial exports under the requested authorization begin, plus a three-year make-up period at the end of that term, consistent with recent DOE practice.

Additional details can be found in CP2 LNG's Application, posted on the DOE website at https://www.energy.gov/hgeo/articles/venture-global-cp2-lng-llc-cp2-lng-docket-no-26-78-lng.

In reviewing the Application, DOE will consider any issues required by law or policy under NGA section 3(a), DOE's regulations, and any other documents deemed appropriate.

Parties that may oppose the Application should address these issues and documents in their comments and/or protests, as well as other issues deemed relevant to the Application.

The National Environmental Policy Act (NEPA), 42 U.S.C. 4321 et seq., requires DOE to give appropriate consideration to the environmental effects of its proposed decisions. No final decision will be issued in this proceeding until DOE has met its NEPA responsibilities.

In response to this Notice, any person may file a protest, comments, or a motion to intervene or notice of intervention, as applicable, addressing the Application. Interested parties will be provided 60 days from the date of publication of this Notice in the Federal Register in which to submit comments, protests, motions to intervene, or notices of intervention.

Any person wishing to become a party to this proceeding evaluating the Application must file a motion to intervene or notice of intervention. 4 The filing of comments or a protest with respect to the Application will not serve to make the commenter or protestant a party to this proceeding, although protests and comments received from persons who are not parties will be considered in determining the appropriate action to be taken on the Application. All protests, comments, motions to intervene, or notices of intervention must meet the requirements specified by DOE's regulations in 10 CFR part 590, including the service requirements.

Filings may be submitted using one of the following methods:

(1) Submitting the filing electronically at fergas@hq.doe.gov;

(2) Mailing the filing to the Office of Global Energy Security at the address listed in the ADDRESSES section; or

(3) Hand delivering the filing to the Office of Global Energy Security at the address listed in the ADDRESSES section.

For administrative efficiency, DOE prefers filings to be filed electronically. All filings must include a reference to “Docket No. 26-78-LNG” or “CP2 LNG Expansion Project Application” in the title line. Filings must be submitted in English to be considered. 5

For electronic submissions: Please include all related documents and attachments ( e.g., exhibits) in the original email correspondence. Please do not include any active hyperlinks or password protection in any of the documents or attachments related to the filing. All electronic filings submitted to DOE must follow these guidelines to ensure that all documents are filed in a timely manner.

The Application, and any filed protests, motions to intervene, notices of intervention, and comments will be available electronically on the DOE website at www.energy.gov/hgeo/regulation.

A decisional record on the Application will be developed through responses to this Notice by parties, including the parties' written comments and replies thereto. Additional procedures will be used as necessary to achieve a complete understanding of the facts and issues. If an additional procedure is scheduled, notice will be provided to all parties. If no party requests additional procedures, a final Order may be issued based on the official record, including the Application and responses filed by parties pursuant to this Notice, in accordance with 10 CFR 590.316.

Purpose of the Committee: To provide advice, information, and recommendations to the Secretary of Energy on matters relating to oil and natural gas, and the oil and natural gas industries.

Purpose of the Meeting: The National Petroleum Council will hold a meeting on August 31, 2026, to present and consider for approval the final report of the Committee on Resource Assessment.

Tentative Agenda:

• Call to Order and Introductory Remarks

• Department of Energy Remarks

• Presentations, Discussion, and Consideration of the Final Report of the NPC Resource Assessment Committee

• Discussion of Any Other Business Properly Brought Before the National Petroleum Council

• Adjournment

Public Participation: The meeting is open to the public and will be convened virtually. The Chair of the Council will conduct the meeting to facilitate the orderly conduct of business. Members of the public who wish to listen and/or make oral statements pertaining to agenda items should contact Mr. Paul Bamonte at the address or telephone number listed above.

Approximately 15 minutes will be reserved for public comments. The time allocated per speaker will depend on the number of requests received but will not exceed five minutes. Requests to listen to the proceedings and/or make oral statements must be received at least seven days prior to the meeting. Those not able to attend the meeting or having insufficient time to address the Council are invited to send a written statement to paul.bamonte@hq.doe.gov. Any member of the public who wishes to file a written statement to the Council will be permitted to do so, either before or after the meeting.

Minutes: A recording of the meeting and the minutes of the meeting will be available at https://www.energy.gov/hgeo/national-petroleum-council-npc, or by contacting Mr. Bamonte. He may be reached at the postal address or email address listed previously.

Signing Authority: This document of the Department of Energy was signed on July 30, 2026, by David Borak, Committee Management Officer, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

This section is organized as follows:

This proposed permit would cover the following entities, as categorized in the North American Industry Classification System (NAICS):

This table is not intended to be exhaustive but rather provides a guide for readers regarding entities likely to be affected by this action. This table includes the types of entities that the EPA is now aware could potentially be affected by this action. Other types of entities not included could also be affected. To determine whether your entity may be affected by this action, you should carefully examine the definition of “construction activity” and “small construction activity” in existing EPA regulations at 40 CFR 122.26(b)(14)(x) and 122.26(b)(15), respectively. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

Coverage under this permit would be available to operators of eligible projects located in those areas where the EPA is the permitting authority. A list of eligible areas is included in Appendix B of the proposed permit. Eligibility for permit coverage would be limited to operators of “new sites,” operators of “existing sites,” “new operators of new or existing sites,” and operators of “emergency-related projects.” A “new site” would be a site where construction activities commence on or after the effective date of the final 2027 CGP. An “existing site” would be a site where construction activities commenced prior to the effective date of the final 2027 CGP. A “new operator of a new or existing site” would be an operator that through transfer of ownership and/or operation replaces the operator of an already permitted construction site. An “emergency-related project” would be a project initiated in response to a public emergency ( e.g., mud slides, earthquake, extreme flooding conditions, disruption in essential public services), for which the related work requires immediate authorization to avoid imminent endangerment to human health or the environment, or to reestablish public services.

The 2027 CGP would provide coverage to eligible operators for stormwater discharges from construction activities that occur in areas not covered by an approved state NPDES program. The areas of geographic coverage for the proposed 2027 CGP are listed in Appendix B, and include the states of New Hampshire, Massachusetts, and New Mexico, as well as most Indian country lands, Lands of Exclusive Federal Jurisdiction, and areas in selected states for federally-operated projects. The area of coverage would also include the District of Columbia, Puerto Rico, and the Pacific Island territories ( i.e., Island of American Samoa, Island of Guam, Johnston Atoll, Commonwealth of the Northern Mariana Islands, Midway Island, and Wake Island).

You may access this Federal Register document and other associated documents electronically through the United States government on-line source for Federal regulations at http://www.regulations.gov. Electronic versions of this proposed permit and fact sheet are available on the EPA's NPDES website at https://www.epa.gov/npdes/proposed-2027-construction-general-permit-cgp-and-related-documents.

Submit your comments, identified by Docket ID No. EPA-HQ-OW-2025-0760, at https://www.regulations.gov (our preferred method), or the other methods identified in the ADDRESSES section. Once submitted, comments cannot be edited or removed from the docket. The EPA may publish any comment received to its public docket. Do not submit to the EPA's docket at https://www.regulations.gov any information you consider to be Confidential Business Information (CBI), Proprietary Business Information (PBI), or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e., on the web, cloud, or other file sharing system). Please visit https://www.epa.gov/dockets/commenting-epa-dockets for additional submission methods; the full EPA public comment policy; information about CBI, PBI, or multimedia submissions; and general guidance on making effective comments.

The EPA does not currently intend to schedule a public hearing concerning the proposed permit. However, interested persons may request a public hearing pursuant to 40 CFR 124.12 concerning the proposed permit. Requests for a public hearing should be sent or delivered in writing to the same address as provided above for public comments prior to the close of the comment period. Requests for a public hearing should state the nature of the issues proposed to be raised in the hearing. Pursuant to 40 CFR 124.12, the EPA shall hold a public hearing if it finds, on the basis of requests, a significant degree of public interest in a public hearing on the proposed permit. If the EPA finds there is a significant degree of public interest and holds a public hearing, a public notice of the date, time, and place of the hearing will be made at least 30 days prior to the hearing in accordance with 40 CFR 124.10. Any person may provide written or oral statements and data pertaining to the proposed permit at the public hearing.

After the comment period closes, the EPA intends to issue a final permit prior to the expiration date of the current 2027 CGP. The EPA will consider all significant comments before issuing a final permit. The EPA's responses to public comments received will be included in the docket as part of the final permit issuance.

Assuming the EPA issues a final permit, eligible operators of existing and new construction sites may seek authorization under the final 2027 CGP. If the 2027 CGP is finalized, any construction site operator that obtained permit coverage under the 2022 CGP prior to its expiration date would automatically remain covered under the 2022 CGP as described in Part 1.4.3 and Table 1 of the proposed permit. The purpose of providing, consistent with 40 CFR 122.6, a limited period of extended coverage under the expired CGP to already permitted sites is to address the additional time needed by these operators to review the new permit, update their stormwater plans to conform with any new requirements, and submit a new Notice of Intent (NOI) for coverage under the new CGP.

For EPA Region 1, contact Meridith Finegan: email at finegan.meridith@epa.gov.

For EPA Region 2, contact Sieglinde Pylypchuk: email at pylypchuk.sieglinde@epa.gov, or for Puerto Rico, contact Sergio Bosques: email at bosques.sergio@epa.gov.

For EPA Region 3, contact Shana Stephens: email at stephens.shana@epa.gov.

For EPA Region 4, contact Mary Kuo: email at kuo.mary@epa.gov.

For EPA Region 5, contact John Nguyen: email at nguyen.john@epa.gov.

For EPA Region 6, contact Suzanna Perea: email at: perea.suzanna@epa.gov.

For EPA Region 7, contact Mark Matthews: email at: matthews.mark@epa.gov.

For EPA Region 8, contact Amy Maybach: email at: maybach.amy@epa.gov.

For EPA Region 9, contact Kelsey Husted: email at husted.kelsey@epa.gov.

For EPA Region 10, contact Jill Seale: email at seale.jill@epa.gov.

The Clean Water Act (CWA) establishes a comprehensive program “to restore and maintain the chemical, physical, and biological integrity of the Nation's waters.” 33 U.S.C. 1251(a). The CWA also includes the objective of attaining “water quality which provides for the protection and propagation of fish, shellfish and wildlife and recreation in and on the water.” 33 U.S.C. 1251(a)(2). To achieve these goals, the CWA requires the EPA to control discharges of pollutants from point sources into waters of the United States through the issuance of National Pollutant Discharge Elimination System (NPDES) permits. 33 U.S.C. 1342.

The Water Quality Act of 1987 added section 402(p) to the CWA, which directed the EPA to develop a phased approach to regulate stormwater discharges under the NPDES program. 33 U.S.C. 1342(p). The EPA published a final regulation, often called the “Phase I Rule,” in the Federal Register on November 16, 1990, establishing permit application requirements for, among other things, “storm water discharges associated with industrial activity.” See 55 FR 47990. The EPA defines the term “storm water discharge associated with industrial activity” in a comprehensive manner to cover a wide variety of facilities. See id. Construction activities, including activities that are part of a larger common plan of development or sale, that ultimately disturb at least five acres of land and have point source discharges to waters of the U.S., were included in the definition of “industrial activity” pursuant to 40 CFR 122.26(b)(14)(x). The second rule implementing section 402(p), often called the “Phase II Rule,” was published in the Federal Register on December 8, 1999. 64 FR 68722. The Phase II Rule requires NPDES permits for discharges from construction activities disturbing at least one acre but less than five acres, including activities that are part of a larger common plan of development or sale that will ultimately disturb at least one acre but less than five acres, pursuant to 40 CFR 122.26(b)(15)(i). See id.

NPDES permits for construction stormwater discharges are required under section 402(a)(1) of the CWA to include conditions to meet technology-based effluent limits established under CWA section 301 and, where applicable, section 306, and water quality-based limits under CWA section 301(b)(1)(C), 33 U.S.C. 1342(a)(1), 1311, and 1316. Technology- and water quality-based limitations for construction stormwater discharges are discussed in that order in sections II.A and II.B of this document.

Effluent Limitations Guidelines (ELGs) and New Source Performance Standards (NSPS) are technology-based effluent limitations that are based on the degree of control that can be achieved using various levels of pollutant control technology as defined in Subchapter III of the CWA. Once a new ELG and NSPS are established in accordance with CWA sections 301 and 306, NPDES permits must incorporate limits based on such technology-based standards. See 33 U.S.C. 1311 and 1316; see also 40 CFR 122.44(a)(1). On December 1, 2009, the EPA published final regulations establishing technology-based ELGs and NSPS for the Construction & Development (C&D) point source category. See 40 CFR part 450 and 74 FR 62996. The EPA amended the C&D rule on March 6, 2014 to satisfy the EPA's obligations pursuant to a litigation settlement of a challenge to the 2009 rule. See 79 FR 12661.

All NPDES construction stormwater permits issued by the EPA or states, including the proposed permit, must incorporate the requirements of the C&D rule, as amended. 40 CFR 450.21. The technology-based effluent limitations in the C&D rule are non-numeric limitations. The non-numeric effluent limitations in the C&D rule are designed to prevent or minimize the mobilization and discharge of sediment and sediment-bound pollutants, such as metals and nutrients, and to prevent or minimize the exposure of stormwater to construction materials, debris, and other sources of pollutants on construction sites.

The fact sheet that accompanies the proposed permit summarizes how the EPA has incorporated the effluent limits from the C&D rule into the proposed permit and provides the Agency's accompanying rationale.

In accordance with CWA section 301(b)(1)(C) and the EPA's regulations at 40 CFR 122.44(d)(1), the EPA and states are required to include additional or more stringent permit requirements when necessary to achieve water quality standards. 33 U.S.C. 1311(b)(1)(C). The 2022 CGP contains several provisions to protect water quality, including heightened inspection and stabilization requirements for sites discharging to certain sensitive waters, monitoring requirements for certain dewatering discharges, requirements for discharges to waters impaired for polychlorinated biphenyls (PCBs), and corrective action procedures.

In March 2025, the U.S. Supreme Court in its City and County of San Francisco v. EPA opinion ( San Francisco v. EPA, No. 23-753) invalidated certain narrative water quality-based requirements that were included in the city's NPDES permit. The 2022 CGP includes narrative requirements in the water quality-based section of the permit (Part 3) that are similar to the type of provision that was invalidated in the San Francisco decision. 1 As discussed in section IV of this document, the EPA is proposing changes to the water quality-based requirements in the proposed 2027 CGP to ensure consistency with the San Francisco decision.

As with prior iterations of the CGP, the EPA has continued to prioritize seeking input during the development of the draft permit from various stakeholders that have expressed an interest in construction stormwater in the past. The EPA met with stakeholders representing the construction industry and environmental interests. A summary of these meetings is included in the docket for this proposal. The purpose of these meetings was to help identify areas of the 2022 CGP that may benefit from further clarification or modification to more effectively achieve the pollutant reduction objectives of the permit. The feedback obtained from these meetings helped inform the types of clarifications and other changes the EPA is proposing here, as well as the areas where the Agency is soliciting further feedback during the public comment period. Also, the EPA is proposing changes to the permit as informed by the EPA's learned experiences in implementing the 2022 CGP and working directly with covered operators. As introduced in section II.B of this document, the EPA is proposing additional changes to the permit to ensure the water quality-based limitations in Part 3 are consistent with the Supreme Court's San Francisco decision, which was published after the EPA's issuance of the current 2022 CGP.

The EPA proposes to make several modifications in the 2027 CGP, which are summarized below and discussed in more detail in the fact sheet, along with EPA's accompanying rationale for each proposed permit condition. The EPA also specifically requests comment on several potential permit modifications, which are summarized in section V of this document. The fact sheet and proposed permit can be found at https://www.epa.gov/npdes/proposed-2027-construction-general-permit-cgp-and-related-documents. A comprehensive list of all the proposed changes, as well as the corresponding parts of the permit that could be modified, is included in a table in section III.B of the fact sheet.

The following is a detailed summary of the more significant changes proposed to be included in the final permit.

The EPA is proposing changes to specific water quality-based requirements to address the Supreme Court's decision in City and County of San Francisco v. EPA, No. 23-753 (S. Ct. Mar. 4, 2025) (referred to as “the San Francisco decision). The Supreme Court found that the CWA does not authorize what the Court referred to as “end-result” permit requirements that “do not spell out what a permittee must do or refrain from doing but instead make a permittee responsible for the quality of the water in the body of water into which the permittee discharges pollutants.” City and County of San Francisco v. EPA, 604 U.S. 334, 338 (2025). The 2022 CGP includes language that could be considered the type of end-result provision addressed in the San Francisco decision. The proposed changes to the permit include removing a narrative limitation that required discharges to be “controlled as necessary to meet applicable water quality standards” and replacing it with a set of more specific narrative limits that are indicators of water quality problems in the discharge. These indicator conditions were previously incorporated into the 2022 CGP as part of the EPA's April 2025 modification of the permit; however, at that time, these requirements were only made applicable to newly eligible sites within Lands of Exclusive Federal Jurisdiction given the narrow modification being made to the permit. The proposed change in the 2027 CGP would make these indicator conditions applicable to all CGP permittees. The EPA also proposes further conforming edits to other parts of the CGP that contain similar language implicated by the San Francisco decision. Refer to Sections 3 and 3.1 of the proposed permit fact sheet for further information on the rationale supporting adoption of these changes.

Currently, the EPA does not have real-time access to information from CGP permittees' Stormwater Pollution Prevention Plans (SWPPPs), which can delay the Agency's ability to provide assistance to operators and answer questions from the public about specific sites. Under the CGP, SWPPPs are required to be developed before the NOI is submitted. While the operator is required to make the SWPPP available to the EPA upon request or at the time of an on-site inspection (Part 7.3), it is not currently required to be submitted with the NOI. The lack of real-time access to the SWPPP, or key aspects of the SWPPP, such as the site map and a description of stormwater controls to be used at the site, has meant that the EPA is often limited in its ability to provide compliance assistance to permittees or answer basic questions about how a site is planning to comply with permit requirements. To address this issue, the EPA proposes to require the operator to include as part of the NOI either a copy of the full SWPPP, a Uniform Resource Locator (URL) where a copy of the SWPPP can be viewed, or a copy of the SWPPP site map and the signed certification required by Part 7.2.10. It has been EPA's experience in reviewing SWPPPs for compliance purposes that were developed by permittees covered under the CGP that nearly all of them are developed in digital format. Since these SWPPPs are already saved as digital files, requiring this information as part of the electronic submittal of the NOI will not impose a significant additional burden. In acknowledgment of the need for the SWPPP to change during the project, the EPA would also specify in the permit that the version of the SWPPP submitted with the NOI would be used by the Agency for reference purposes only and would not form a definitive basis for determinations of compliance. The EPA also proposes to clarify that if the SWPPP includes restricted information ( i.e., information that is privileged or that is otherwise protected from disclosure pursuant to applicable statutes, Executive Orders, or regulations, including for example classified national security information, protected critical infrastructure information, sensitive security information, and proprietary business information) it may be withheld from public access. The EPA is requesting specific comment on this proposed change as well as recommendations on suggested alternatives.

A proposed change related to sediment basins is intended to reflect current best practices in stormwater management at construction sites. Where operators choose to install a sediment basin at their site, they must comply with the design, installation, and maintenance requirements of Part 2.2.12 of the current permit. The EPA inspections under the 2022 CGP found instances where significant downstream sediment discharges occurred as a result of operators immediately starting to use the basin after excavation and prior to sufficient stabilization. To address this concern, for those operators installing a sediment basin at their site, the EPA proposes to require stabilization measures to be implemented prior to first directing stormwater to the sediment basin to ensure that soil from the basin itself does not become a source of sediment discharge. At a minimum, the permit would specify that the sediment basin embankment and side slopes, as well as related conveyance structures and discharge points, must be stabilized following the initial construction of the basin and prior to its first use. The specific type of stabilization, whether vegetative or non-vegetative, is left to the discretion of the operator and whatever design specifications prevail in the area of the project. This requirement is consistent with Federal and State design manuals as is discussed below in the section addressing Part 2.2.12.

The EPA's proposal also includes several modifications intended to streamline permit requirements while maintaining continued water quality protection. The following is a summary of the more noteworthy of these proposed changes:

• Clarify that perimeter controls are only needed in specific areas of the site —The EPA has found during inspections that operators frequently interpret the CGP to require the entire perimeter of the construction site to be surrounded by a sediment control regardless of whether stormwater flows in the direction of the control. Perimeter controls installed in areas that are not receiving stormwater are not achieving a stormwater control purpose and are therefore an unnecessary expenditure for CGP compliance. For this reason, the EPA proposes to further clarify Part 2.2.3 to emphasize that perimeter controls are necessary only for areas that have the potential to receive stormwater from disturbed areas.

• Clarify stabilization deadlines for sites in arid, semi-arid, or drought-stricken areas —The EPA has found that the stabilization provisions applying to arid, semi-arid, and drought-stricken areas have proven to be unnecessarily confusing. Specifically, the current stabilization deadlines differ depending on an overlapping set of factors related to whether construction will occur during the “seasonally dry period,” whether the site disturbs more or less than five acres, and whether the site discharges to a sensitive water. The EPA is proposing to simplify the permit by establishing a more straightforward approach to determine which stabilization deadline applies.

• Provide flexibility for stabilization during sudden snow or frozen conditions —The 2022 CGP does not provide clear direction for sites experiencing unforeseeable winter weather conditions (such as unforeseeable snow or frozen ground conditions) that result in triggering the permit requirement for operators to stabilize the exposed portions of the site for 14 or more days of inactivity. The EPA is aware of at least one site permitted under the 2022 CGP that faced this same situation as a result of an unexpected snowstorm during the current permit term. Though there is currently a provision addressing “unforeseen circumstances” (Part 2.2.14b.ii in the 2022 CGP) such as “problems with supply of seed stock or with the availability of specialized equipment and unsuitability of soil conditions due to excessive precipitation and/or flooding,” this provision is not directly applicable to the unforeseeable winter weather conditions scenario explained above. To provide clarity on this issue and flexibility in the timelines for unforeseeable winter conditions that could cause unplanned delays in construction, the EPA proposes to allow construction sites in these specific circumstances to temporarily suspend the need to stabilize the site while the conditions persist. Providing this flexibility would acknowledge the impracticability of complying with standard stabilization timeframes during these extreme weather conditions while also ensuring that these sites achieve stabilization at the soonest practicable time after these conditions dissipate consistent with the CGP's overall erosion control objectives.

The EPA identifies several proposed, non-substantive changes including permit formatting, corrections of typographical errors, and updates to technical references. Included in this category is one set of changes that is focused on improving permit readability by reducing the overall number of footnotes from the 2022 CGP. Over the course of the past three CGP permit terms, the number of footnotes used to provide examples and additional information and references grew from 26 in the 2012 CGP to 95 in the 2022 CGP. While these footnotes provide useful information, the EPA is concerned that the location of footnotes at the bottom of the page in smaller font makes this text less accessible. For these reasons, the EPA is proposing to cut back on the use of footnotes by instead incorporating much of the same information into the body of the permit. Where the current footnote included examples or additional notations that further clarify what is meant by specific permit text, the EPA generally moved this text to the body of the permit. Where changes to the text are proposed, they are shown in a different font at https://www.epa.gov/npdes/proposed-2027-construction-general-permit-cgp-and-related-documents. The vast majority of these changes would result in no substantive edits to the footnote text in the 2022 CGP. If finalized as proposed, this would result in reducing the number of footnotes from 95 to 31. For further information on where the footnote text is proposed to be moved, see Proposed 2026 Construction General Permit (CGP)—Tracking of Changes to Footnotes from 2022 CGP (EPA, 2026).

While the EPA encourages the public to review and comment on all provisions in the proposed permit, the EPA has included in the body of the proposed permit several proposed provisions on which the EPA specifically requests feedback. The following list summarizes

1. Request for comment on specific aspects of the EPA's proposal to require the NOI to include a copy of the operator's SWPPP, an internet site where the SWPPP may be viewed, or a copy of the SWPPP site map and signed certification. See request for comment in Part 1.4.1 of the proposed permit.

2. Request for comment on the water quality conditions included in Parts 3.1 related to proposed changes to conform with the San Francisco decision. See request for comment in Part 3.1 of the proposed permit.

3. Request for comment on whether flexibility for submitting monitoring reports should be provided for individual operators who are part of a larger group of operators coordinating to comply with their site's turbidity monitoring and whether submitting reports should still be required when there is no dewatering discharge during a monitoring quarter. See request for comment in Part 3.3 of the proposed permit.

4. Request for comment on a potential alternative turbidity monitoring framework for sites that will be discharging dewatering water for an extended period of time ( e.g., more than 2-3 days). See request for comment in Part 3.3.1 of the proposed permit.

The information collection activities in this proposed permit have been submitted for approval to the Office of Management and Budget (OMB) under the PRA. A copy of the ICR can be found in the docket for this permit (Docket ID No. EPA-HQ-OW-2025-0760), and it is briefly summarized here.

Section 402 of the CWA and the NPDES regulations require collection of information primarily used by permitting authorities, permittees (operators), and the EPA to make NPDES permitting decisions. Certain changes in this permit require revisions to the ICR to reflect changes to the forms and other information collection requirements. The EPA is reflecting the paperwork burden and costs associated with this permit in a separate ICR instead of revising the existing ICR for the entire program for administrative reasons.

The EPA is proposing to collect new information as part of the 2027 CGP, if finalized. Under the proposed permit, the NOI form would be updated from the 2022 CGP to collect new information related to the following: adding an erroneously omitted question about the type of operator (required by eReporting regulations at 40 CFR part 127, appendix A, table 2); and requiring operators to provide access to their full SWPPP or to the SWPPP site plan and signed certification. The EPA is also proposing to add a question to the NOT form for the operator to indicate which of the CGP's final stabilization criteria it has met.

The ICR for this proposed permit estimates the incremental change in recordkeeping and reporting burden for the proposed 2027 CGP (which includes burden introduced in the 2022 CGP) compared to the total EPA CGP burden accounted for in the 2023 NPDES Program ICR. Any increases in burden are attributable to changes made in the 2022 CGP; the proposed changes in the 2027 CGP would decrease incremental burden as compared to the 2022 CGP.

Respondents/affected entities: Construction operators in the areas where the EPA is the NPDES permitting authority.

Respondent's obligation to respond: Compliance with the CGP's information collection and reporting requirements is mandatory for CGP operators.

Estimated number of respondents: the EPA estimates that for the duration of the three-year ICR period approximately 7,800 operators will obtain coverage under the 2027 CGP, or 2,600 operators per year.

Frequency of response: Response frequencies in the 2027 CGP vary from once per permit term to quarterly.

Total estimated burden: the EPA estimates that the incremental change in information collection burden from the 2027 CGP is 29,367 hours per year. Burden is defined at 5 CFR 1320.3(b). This burden estimate reflects a decrease from the 2022 CGP burden, which is attributable to proposed changes that streamline reporting requirements, such as reducing the number of photographs required to be submitted with the NOT.

Total estimated cost: the EPA estimates that the incremental change in the annual information collection cost from the 2027 CGP is $2,886,987 per year. This estimate reflects an incremental decrease in costs of $25,383 from the 2022 CGP, which is attributable to the streamlining changes that are proposed as part of this permit.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for the EPA's regulations in 40 CFR are listed in 40 CFR part 9. Submit your comments on the EPA's need for this information, the accuracy of the provided burden estimates and any suggested methods for minimizing respondent burden to the EPA using the docket identified at the beginning of this notice. The EPA will respond to any ICR-related comments in the final permit. You may also send your ICR-related comments to OMB's Office of Information and Regulatory Affairs using the interface at www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting “Currently under Review—Open for Public Comments” or by using the search function. OMB must receive comments no later than September 2, 2026.

The cost analysis accompanying this proposed permit monetizes and quantifies certain incremental cost impacts of the proposed permit changes as compared to the 2022 CGP. The EPA analyzed each change in the proposed 2027 CGP considering the previous permit's ( i.e., the 2022 CGP) requirements. The objective of this incremental cost analysis is to show where or to what extent the proposed 2027 CGP requirements impose an incremental increase in administrative and compliance costs (such as the cost to conduct site inspections or to prepare compliance reports) on operators in relation to costs that are already accounted for in the 2022 CGP.

The EPA expects there would be an incremental decrease in costs to operators that would be covered under the proposed 2027 CGP, including small businesses. The EPA anticipates the estimated total average annual incremental cost decrease (compared to the 2022 CGP) would be $25,383 per year. A copy of the EPA's incremental cost analysis for the proposed permit, titled “Incremental Cost Impact Analysis for the Proposed 2027 Construction General Permit (CGP),” is available in the docket (Docket ID No. EPA-HQ-OW-2025-0760).

This action is a significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review. Any changes made in response to OMB recommendations have been documented in the docket. The EPA prepared an interim cost analysis, summarized in section VIII of this preamble, which is available in the docket (Docket ID No. EPA-HQ-OW-2025-0760). This proposed permit, if finalized as proposed, is expected to be an Executive Order 14192 deregulatory action.

This proposed action, which, if finalized, will apply in broad areas of Indian country to a wide range of potential operators, including potential Tribal operators, has Tribal implications as specified in Executive Order 13175. The EPA does not expect this proposed action, if finalized, to result in any substantial direct costs to Tribes; nor would the action preclude or preempt Tribes' ability to develop their own water quality codes or regulations under Tribal law. Nonetheless, in developing this proposed action the EPA was, as described in the Executive Order, mindful of the Federal Government's unique government-to-government relationship with Tribes and the Federal Government's trust relationship with Tribes. To help inform the EPA about Tribal views, interests, and concerns, and consistent with the EPA's “Policy on Consultation with Indian Tribes” (December 7, 2023), the Agency consulted with Tribal officials during the development of this proposed action to gain an understanding of and, where appropriate, to address the Tribal implications of the proposed permit.

The EPA conducted Tribal consultation between July 7, 2025, and September 5, 2025, during which time there were 574 federally recognized Tribes. The EPA emailed letters to the Leaders and Environmental Directors of these 574 Tribes upon initiation of consultation, providing background information about the proposed reissuance of the permit and the consultation plan, and requesting Tribal input on potential revisions to the proposed 2027 CGP. During this consultation, the EPA conducted the following activities:

• July 9, 2025—The EPA participated in the National Tribal Water Council monthly conference call and received written comments in response.

• July 22, 2025—The EPA led an informational webinar to provide an overview of the current CGP and information regarding the ongoing consultation. Tribal representatives were given the opportunity to ask questions about the current CGP and to provide any feedback on issues for the EPA to consider during the development of the proposed permit. A total of 30 Tribal representatives attended.

• July 24, 2025—The EPA led a second informational webinar to provide an additional opportunity for engagement on the CGP.

The EPA received comments providing input from Tribes and took these into consideration when developing the proposed permit. These comments are described in the EPA's Tribal consultation summary, which can be accessed at https://www.epa.gov/dockets in the docket for this permit (refer to Docket No. EPA-HQ-OW-2025-0760).

The EPA will provide email notification to Tribes of the proposed permit and invite those interested to provide the Agency with comments.

Pursuant to NEPA and the EPA's regulations for implementing NEPA (40 CFR part 6), the EPA made the determination on July 27, 2026 that the potential issuance of the EPA's final 2027 CGP was eligible for a categorical exclusion requiring documentation under 40 CFR 6.204(a)(1)(iv). See “Categorical Exclusion: Issuance of the EPA 2027 National Pollutant Discharge Elimination System (NPDES) General Permit for Discharges from Construction Activities,” Document Number N2026213 at https://cdxapps.epa.gov/cdx-enepa-II/public/action/nepa/details?nepaId=566594. The EPA has reviewed the proposed permit and has found that it does not affect the EPA's prior categorical exclusion determination for the permit, including that it does not involve any extraordinary circumstances listed in 40 CFR 6.204(b)(1) through (10). The EPA has documented these findings as part of a revised categorical exclusion memorandum that is available to the public at https://cdxapps.epa.gov/cdx-enepa-II/public/action/nepa/details?nepaId=566594. If new information or changes to the proposed permit before final issuance involve or relate to at least one of the extraordinary circumstances or otherwise indicate that the permit may not meet the criteria for categorical exclusion, the EPA will prepare an Environmental Assessment (EA) or Environmental Impact Statement (EIS).

OMB Control Number: 3060-0805.

Title: Section 90.527, Regional Plan Requirements; and Section 90.523, Eligibility.

Form No.: N/A.

Type of Review: Revision of a currently approved collection.

Respondents: Business or other for profit; not-for-profit institutions; state, local or tribal government.

Number of Respondents and Responses: 1,066 respondents; 1,066 responses.

Estimated Time per Response: 1 hour.

Frequency of Response: On occasion reporting and one-time reporting requirements; third party disclosure.

Obligation to Respond: Required to obtain or retain benefits (47 CFR 90.523 and 90.527). Statutory authority for this information collection is contained in 4(i), 11, 303(g), 303(r), 332(c)(7), and 337(f) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 161, 303(g), 303(r), 332(c)(7), and 337(f), unless otherwise noted.

Total Annual Burden: 1,066 hours.

Total Annual Cost: No Cost.

Needs and Uses: Section 90.523 requires that nongovernmental organizations that provide services which protect the safety of life or property obtain a written statement from an authorizing state or local government entity to support the nongovernmental organization's application for assignment of 700 MHz frequencies. Section 90.527 requires 700 MHz regional planning regions to submit an initial plan for use of the 700 MHz general use spectrum in the consolidated narrowband segment 769-775 MHz and 799-805 MHz. Regional planning committees may modify plans by written request, which must contain the full text of the modification and certification that the modification was successfully coordinated with adjacent regions. Regional planning promotes a fair and open process in developing allocation assignments by requiring input from eligible entities in the allocation decisions and the application technical review/approval process. Entities that seek inclusion in the plan to obtain future licenses are considered third party respondents.

Commission staff use the information to assign licenses, determine regional spectrum requirements and to develop technical standards. The information is also used to determine whether prospective licensees operate in compliance with the Commission's rules. Without such information, the Commission could not accommodate regional requirements or provide for the efficient use of the available frequencies. This information collection includes rules to govern the operation and licensing of the 700 MHz band rules and regulation to ensure that licensees continue to fulfill their statutory responsibilities in accordance with the Communications Act of 1934, as amended. Such information will continue to be used to verify that applicants are legally and technically qualified to hold licenses, and to determine compliance with Commission rules.

This is a summary of the Public Notice released on July 21, 2026 in PS Docket No. 26-189. The full text of this document is available at: https://docs.fcc.gov/public/attachments/DA-26-758A1.docx.

In November 2022, the Federal Communications Commission (FCC or Commission) adopted rules to prohibit authorization of equipment identified on the Covered List. However, the Commission did not revoke previously granted authorizations of covered equipment. In October 2025, the Commission adopted the EA Security Second R&O (90 FR 53227) which, among other things, established a procedure to limit the scope of an existing authorization of covered equipment to prohibit continued importation or marketing of such equipment, without revoking the underlying authorization. The Commission noted that its goal is to mitigate potential national security risks associated with covered equipment in the nation's supply chain that was authorized prior to a Covered List addition under 47 U.S.C. 1601(b).

The Commission directed PSHSB and OET to “institute proceedings to determine whether to apply these prohibitions to some or all of the equipment currently on the Covered List,” and it delegated authority to PSHSB and OET to apply such prohibitions pursuant to the framework and process outlined in the EA Security Second R&O. The Commission gave specific directives to PSHSB and OET regarding how to analyze and implement the new procedures.

On December 22, 2025, PSHSB added all UAS and UAS critical components produced in a foreign country to the Covered List. This action was based on a National Security Determination from an Executive Branch interagency body, including several appropriate national security agencies, determining (among other things) that UAS produced in a foreign country pose an unacceptable risk to the national security of the United States and to the safety and security of United States persons.

Today, we initiate another proceeding to prohibit the continued importation and marketing of certain previously authorized equipment: foreign-produced UAS and UAS critical components on the FCC's Covered List that qualify as “military-grade” as defined below.

The Commission has legal authority to review an existing authorization for covered equipment, and to revoke such authorization pursuant to current rules. Under section 2.939(a), the FCC may “revoke . . . any equipment authorization” for various reasons, including “conditions coming to the attention of the Commission which would warrant it in refusing to grant an original application.” Likewise, under section 2.939(e), PSHSB and OET “may place limitations on an existing authorization for covered equipment authorizations to prohibit continued importation or marketing” of such equipment.

Scope. Pursuant to section 2.939(e), we propose to prohibit the continued importation and marketing of any previously-authorized military-grade UAS or UAS critical component that is listed on the Covered List. We propose to limit the proposed prohibitions to military-grade UAS or UAS critical components, which we define on the basis of other agencies' regulations governing certain high-risk UAS, and following discussions with our partners in other national security agencies. Specifically, we consider military-grade UAS and UAS critical components to be any of the following:

(1) UAS that weigh 55 pounds or more on takeoff, i.e. UAS that are not “small unmanned aircraft” pursuant to Federal Aviation Administration (FAA) rules.

○ These UAS are considered “larger platforms” that offer greater payload capacity, endurance, and range, which make them suitable for military operations requiring heavy sensors, communications equipment, or specialized weapons systems ( i.e., deep-strike operations, persistent wide-area surveillance, electronic warfare, and cargo resupply).

○ Their increased power and stability also allow them to operate effectively in more demanding environments, making them highly effective for various missions.

○ UAS that weigh over 55 pounds or more operating individually or in a swarm have the capability to carry out a significant attack on the United States homeland.

(2) UAS capable of dispensing “economic poison” under FAA rules.

○ These UAS can be used to deliver hazardous substances in ways that bypass traditional defense and detection systems. Their ability to fly autonomously, reach remote areas, and carry dangerous materials make them ideal for military operations.

○ Aerosol dispensing platforms operating independently or in a swarm can carry out mass chemical or biological attacks against United States persons and our food supply.

(3) UAS that contain or integrate sensors capable of thermal imaging ( i.e. the capability to capture and translate the difference in temperature between objects, as well as an object's heat signature and residual heat signature).

○ UAS that feature these sensors are ideal for military use because their ability to operate effectively in low visibility environments enhances night operations, covert surveillance, and targeting capabilities.

○ These capabilities allow forces to bypass camouflage, navigate in total darkness, and identify concealed heat signatures that are entirely invisible to standard optical sensors and the human eye.

○ These capabilities also make it more difficult to protect critical infrastructure, maintain operational security, and prevent intelligence collection in sensitive areas.

(4) UAS that contain or integrate sensors capable of Light Detection and Ranging (LiDAR), a “remote sensing technology that measures distance by illuminating a target with a laser and analyzing the reflected light.”

○ These UAS offer military utility by providing enhanced capability to conduct detailed three-dimensional terrain mapping, penetrate dense foliage to reveal hidden structures, assist in autonomous navigation in GPS-denied environments, and conduct covert reconnaissance under a range of environmental conditions.

(5) UAS docking stations, defined as multipurpose systems that enable UAS to land safely, take off, recharge and/or replace batteries, and transfer data and payload.

○ UAS docking stations are infrastructure that enable persistent, 24/7 autonomous operations allowing faster, more continuous intelligence, surveillance, reconnaissance, and other mission workflows.

○ Additionally, by serving as coordinated launch, recovery, and servicing nodes, docking stations facilitate the capability for large-scale drone swarms to support military operations.

(6) UAS “specially designed to incorporate a defense article.”

○ These UAS are ideal for military use because they can enable combat commanders to conduct unparalleled precision strikes, kinetic effect delivery, and electronic warfare capabilities at a significantly lower cost and risk to human life than manned aircraft.

○ They also extend range, persistence, or precision beyond traditional platforms.

(7) Swarming UAS, defined as:

• Ground control stations purpose-built for, or UAS integrated with flight control or vehicle management systems specially designed for, managing drone swarms, consisting of UAS that operate autonomously (without human intervention) to coordinate with each other, avoid collisions, maintain formations, and dynamically respond to changes in operational or threat environments, or if weaponized, synchronize targeting activities across multiple drones; or

• UAS purpose-built to perform flights in coordinated and synchronized formations, including applications such as multi-UAS light shows, where numerous illuminated UAS work together to create synchronized aerial displays.

○ This capability enables large numbers of UAS to coordinate autonomously, making them harder to detect, track, and counter.

○ Swarm-enabled UAS can overwhelm defenses, provide persistent surveillance, and create complex operational challenges that strain traditional air defense systems, which pose significant risks to public safety and national security.

This prohibition on importation and marketing would not apply to any non-military-grade UAS or UAS critical components, nor would it apply to any domestically produced UAS or UAS critical components or to any other already-authorized covered equipment. It would also only apply to covered UAS and UAS critical components and would therefore not apply to any UAS or UAS critical components that are exempt from the Covered List—including UAS and UAS critical components identified on the Defense Contract Management Agency's (DCMA's) Blue UAS Cleared List; UAS and UAS critical components that qualify as “domestic end products” under the Buy American Standard, 48 CFR 25.101(a); and UAS and UAS critical components granted a Conditional Approval by the Department of War or the Department of Homeland Security. Any UAS or UAS critical component subsequently removed from the Covered List, such as through Conditional Approval, would also be exempt from this prohibition. Furthermore, this prohibition would not apply to importation or marketing for the purpose of use by the federal government, nor for the purpose of commercial testing and product development. Finally, while importation and marketing would be prohibited, this prohibition would not affect the continued use or operation of already-purchased UAS or UAS critical components.

We seek comment on this list of prohibitions. Does this list adequately capture military-grade UAS and UAS critical components? Are there UAS and UAS critical components that are listed above, but are not military-grade? Are there UAS and UAS critical components that are not listed above that are military-grade?

Below, we provide a brief analysis of the relevant factors that would justify limitation on the authorization of previously authorized covered equipment and tentatively conclude that prohibiting the continued importation and marketing of this previously authorized covered equipment serves the public interest.

National security impacts. We start with national security concerns, because, as the Commission noted in the EA Security Second R&O, “[i]t is obvious and unarguable that no governmental interest is more compelling than the security of the Nation.” In the EA Security Second R&O, the Commission stated that older models of covered equipment, which are still widely sold in the United States, pose an unacceptable risk to national security when imported or marketed in the United States, “not only when such equipment is new to the market.” The Commission agreed with commenters who pointed out that certain previously authorized devices that are now considered covered equipment “likely remain[ ] marketable in the United States” and “may present continuing national security threats.” The Commission also directed PSHSB and OET to “give particular weight to the fact that the relevant equipment was determined to pose `an unacceptable risk to the national security of the United States or the safety and security of United States persons.' ”

Subject to exceptions, an Executive Branch interagency body with appropriate national security expertise, including appropriate national security agencies, one of whom was the Department of War, specifically determined that UAS and UAS critical components produced in foreign countries “pose unacceptable risks to the national security of the United States or the safety and security of United States persons.” This determination of “unacceptable risks” was based on an assessment of “threats from unauthorized surveillance, sensitive data exfiltration, supply chain vulnerabilities, and other potential threats to the homeland.” We tentatively accept this determination and “give [it] particular weight,” as the Commission directed. This determination, which covered foreign-produced UAS and UAS critical components generally, necessarily includes already-authorized foreign-produced military-grade UAS and UAS critical components.

Therefore, based on the EA Security Second R&O and the UAS and UAS critical component National Security Determination, we tentatively conclude that prohibiting the continued importation and marketing of previously authorized covered military-grade UAS and UAS critical components as described above is necessary to protect national security by mitigating risks to the U.S. communications sector.

We also believe that military-grade foreign-produced UAS and UAS critical components might pose even particularly acute national security or related risks, given their military-grade capabilities. We invite comment on whether military-grade UAS and UAS critical components, as described above, pose particularly acute national security risks of the sort described in the National Security Determination.

Economic and supply chain impacts. We seek comment on the potential economic and supply chain impacts of prohibiting the continued importation and marketing of already-authorized covered military-grade UAS and UAS critical components. How would this proposed action affect the financial interests of consumers, providers, and manufacturers in the communications sector? As the Commission noted in the EA Security Second R&O, it may consider “countervailing economic concerns when implementing the prohibitions for already-authorized devices.” What are the economic or supply chain considerations that weigh either in favor or against taking this proposed action? We invite commenters to provide data that we should consider in our analysis.

We tentatively conclude that our proposed action would not have substantial economic and supply chain impacts. Outside of importation, marketing, and sales to the U.S. government, which are excluded from the scope of this proposed action, military-grade UAS and UAS critical components represent a minority of the remaining UAS and UAS critical component market. Recreational consumers comprise the majority of individual drone operators and are unlikely to fly military-grade UAS. While foreign-produced UAS and UAS critical components dominate the recreational market, domestic production of UAS and UAS critical components in the higher-end, military-grade subsectors is more prevalent. Moreover, several of the categories of UAS and UAS critical components are subject to U.S. export controls or other regulatory restrictions and likely comprise a small market within the United States.

Do commenters agree that economic and supply chain impacts are relatively minor and contained? Are there domestically-produced alternatives for military-grade UAS and UAS critical components? Would this proposal be cost-effective for the public in terms of obtaining trusted equipment? Would providers' compliance costs decrease as they replace covered equipment with trusted equipment? We strongly encourage commenters to supply data and other specific evidence of economic costs to this prohibition.

On the other hand, we seek comment on any economic benefits that might arise as a result of these prohibitions. We note that after the initial update to the Covered List, billions of dollars have already been raised by domestic UAS producers, creating thousands of U.S. manufacturing jobs. Additionally, billions more have been committed for domestic production of UAS and UAS critical components, which are expected to generate additional jobs. These investments include capital from domestic investors as well as foreign investors supporting U.S. manufacturing. We tentatively conclude that the proposed prohibitions of military-grade UAS and UAS critical components would similarly generate substantial investment in domestic production, given the loss of foreign-produced supply. Do commenters agree? We seek comment on the economic effects of the likely investment in United States production that this proposed prohibition would yield.

Public interest analysis. We tentatively conclude that prohibiting the importation and marketing of previously authorized covered military-grade foreign-produced UAS and UAS critical components is consistent with the public interest, because it protects American communications networks from devices specifically determined by an Executive Branch interagency body to “pose an unacceptable risk to the national security of the United States or the security and safety of United States persons.”

We also tentatively conclude that there are no public interest factors that outweigh our tentative conclusion regarding the proposed ban on import and marketing of this previously authorized equipment. After all, as the Commission noted in the EA Security Second R&O, “[i]t is obvious and unarguable that no governmental interest is more compelling than the security of the Nation.” We seek comment on this public interest analysis. Do commenters agree that the national security benefits outweigh any negative economic or supply chain factors? Are there any other public interest considerations that weigh in favor or against taking this proposed action?

We invite commenters to provide any information that would assist the Commission in its balancing of the need to address the national security risks posed by the continued importation and marketing of previously-authorized covered equipment that are military-grade UAS and UAS critical components in communications networks with the impact of the proposed prohibitions on government partners, consumers, industry, and the public at large.

Existing authorizations. We clarify that, if this prohibition is adopted, the continued use or operation of previously-authorized military-grade UAS and UAS critical components that are already in the hands of users would remain authorized. This is consistent with the approach that the Commission adopted in the EA Security Second R&O. The limitation on existing authorizations would not result in the revocation of an existing authorization of covered equipment and, therefore, would not affect the continued use or operation of devices that consumers already possess.

Implementation timeline. We propose that all parties must cease all importation and marketing activities regarding such previously-authorized military-grade UAS and UAS critical components 180 days after publication in the Federal Register . We believe that this timeline is reasonable and strikes the appropriate balance between addressing the national security concerns and minimizing any potential adverse economic or supply chain impacts. Although the Commission's prohibition with respect to covered equipment added to the Covered List in 2024 or earlier took effect within 10 days of publication in the Federal Register , given the expected large scope of equipment at issue in this proposed prohibition, as well as the shorter time that such foreign produced military-grade UAS and UAS critical components have been listed on the Covered List, we believe that a more extended time period to permit an orderly transition is appropriate.

We seek comment on the proposed timeline and invite input from responsible parties and relevant manufacturers, importers, distributors, retailers, and other interested entities. Specifically, we request that commenters address implementation considerations including the quantity of devices that have already been imported into the United States and are available for or being held for marketing or sale, new or recently updated device models that are en route to the United States or pending shipment, and devices that are subject to executed distribution, marketing, or sales agreements, but have not yet entered the supply chain.

Permit-but-disclose proceeding. The proceeding this Public Notice initiates shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must: (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation.

If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum.

Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format ( e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

Authority: 47 U.S.C. 151, 154, 229, 301, 302a(b), 303, 1004, 1601-1609; Pub. L. 117-55, 135 Stat. 423-24.

OMB Control Number: 3060-0848.

Title: Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket No. 98-147.

Form Number: N/A.

Type of Review: Extension of a currently approved collection.

Respondents: Business or other for-profit.

Number of Respondents and Responses: 584 respondents; 7,278 responses.

Estimated Time per Response: 0.5-26 hours.

Frequency of Response: On occasion reporting requirement, recordkeeping requirement and third-party disclosure requirement.

Obligation to Respond: Required to obtain or retain benefits. Statutory authority for this information collection is contained in 47 U.S.C. 201 and 251 of the Communications Act of 1934, as amended.

Total Annual Burden: 25,873 hours.

Total Annual Cost: No cost.

Needs and Uses: The information collection requirements implement sections 201 and 251 of the Communications Act of 1934, as amended, to provide for physical collocation on rates, terms and conditions that are just, reasonable and nondiscriminatory, and to promote deployment of advanced telecommunications services without significantly degrading the performance of other services.

All of the requirements will be used by the Commission and competitive local exchange carriers (LECs) to facilitate the deployment of telecommunications services, including advanced telecommunications services.

Section 306(a)(2)(A) of the FD&C Act requires debarment of an individual from providing services in any capacity to a person that has an approved or pending drug product application if FDA finds that the individual has been convicted of a felony under Federal law for conduct relating to the development or approval, including the process of development or approval, of any drug product under the FD&C Act.

On January 14, 2026, Mrs. Baquero was convicted as defined in section 306(l)(1) of the FD&C Act in the U.S. District Court for the Southern District of Florida, Fort Lauderdale Division, when the court accepted her plea of guilty and entered judgment against her for conspiracy to commit wire fraud against the United States in violation of 18 U.S.C. 371. The underlying facts supporting the conviction are as follows:

As contained in the Information and in the Factual Proffer in Support of Guilty Plea from Mrs. Baquero's case, between about January 2019 and January 2020, Mrs. Baquero engaged in a conspiracy to defraud the United States through her role as co-owner and clinical research director of A&R Research Group LLC (A&R), a medical research clinic conducting clinical drug trials. Along with her husband Ricardo Acuna, who served as regulatory and contract affairs manager, Mrs. Baquero orchestrated a scheme to unlawfully enrich themselves by falsifying data and making fraudulent representations while conducting two asthma clinical trials sponsored by a pharmaceutical company.

A&R contracted with a drug sponsor through a Contract Research Organization (CRO) to conduct trials for investigational drugs treating moderate to severe asthma and mild to moderate asthma. The company received $320,247.98 for these trials. Mrs. Baquero served as study coordinator, responsible for recruiting subjects, maintaining case histories, and communicating with sponsors. She signed delegation logs acknowledging her responsibilities to perform certain tasks as part of the trials and received protocol training from the CRO prior to beginning the asthma trials. Mrs. Baquero understood that A&R was required to conduct trials honestly, accurately, and in accordance with Federal regulations and clinical trial protocols, and that the sponsor, CRO, and FDA could audit the trial site at any time.

The conspiracy's purpose was twofold: first, to make false representations about subject eligibility and participation to secure payments from the sponsor and CRO; second, to falsify and fabricate material documents including case histories, spirometry readings, electrocardiogram data, and other trial data. Mrs. Baquero and her co-conspirators knowingly failed to conduct the clinical trials according to their protocols and applicable Federal regulations.

To inflate payments received from the sponsor, Mrs. Baquero and two co-conspirators obtained fake medical records for at least 17 trial subjects who lacked legitimate documentation of qualifying asthma diagnoses. She provided Co-Conspirator 1 and Co-Conspirator 2 with eligibility criteria needed to create fraudulent medical records, which they then purchased for themselves and others. Upon receiving these fake records, Mrs. Baquero directed Mr. Acuna to pay the co-conspirators for obtaining them. She then enrolled these subjects in the asthma trials using the falsified documentation. In one instance, Mrs. Baquero enrolled Co-Conspirator 1 in Asthma Trial 1 on March 22, 2019, despite knowing this individual used a fake driver's license, participated under a false identity, and was simultaneously enrolled in another A&R trial under their real name.

Mrs. Baquero furthered the conspiracy by obtaining false study assessments and blood samples to conceal the fact that those subjects enrolled in the asthma trials were not qualified for and were not participating in the trials. On March 4, 2019, she personally performed a spirometry reading while pretending to be a trial subject. She also had Co-Conspirator 1 and Co-Conspirator 2 perform spirometry readings and provide blood samples for other enrolled subjects, with Mr. Acuna then issuing payments for these fraudulent assessments. These falsified results were submitted to the CRO and sponsor to create the illusion of legitimate trial participation and protocol compliance.

The fabricated medical records and falsified physical examination forms were included in subjects' case histories. When the sponsor conducted an in-person audit in August 2019 due to suspicious spirometry and electrocardiogram readings, Mrs. Baquero and the clinical investigator knowingly provided case histories containing falsified data. On January 24, 2020, these same fraudulent case histories, containing fake medical records, falsified clinical data, and documentation of payments to non-participating subjects, were provided to an FDA investigator during an official inspection.

Through these false and fraudulent representations, Mrs. Baquero's conduct resulted in A&R receiving the full $320,247.98 payment from the sponsor, enriching herself and Mr. Acuna as joint owners of the company while compromising the integrity of clinical research intended to ensure drug safety and efficacy.

As a result of this conviction, FDA sent Mrs. Baquero, by certified mail, on March 27, 2026, a notice proposing to permanently debar her from providing services in any capacity to a person that has an approved or pending drug product application. The proposal was based on a finding, under section 306(a)(2)(A) of the FD&C Act, that Mrs. Baquero was convicted of a felony under Federal law for conduct relating to the development or approval, including the process of development or approval, of any drug product. The proposal informed Mrs. Baquero of the proposed debarment and offered her an opportunity to request a hearing, providing her 30 days from the date of receipt of the letter in which to file the request, and advised her that failure to request a hearing constituted a waiver of the opportunity for a hearing and a waiver of any contentions concerning this action. Mrs. Baquero received the proposal and notice of opportunity for a hearing on April 6, 2026. Mrs. Baquero failed to request a hearing within the timeframe prescribed by regulation and has, therefore, waived her opportunity for a hearing and waived any contentions concerning her debarment (21 CFR part 12).

Therefore, the Division of Field Enforcement Director, Office of Inspections and Investigations, under section 306(a)(2)(A) of the FD&C Act, under authority delegated to the Director, Division of Enforcement, finds that Mrs. Angela Anatilde Baquero has been convicted of a felony under Federal law for conduct relating to the development or approval, including the process of development or approval, of any drug product.

As a result of the foregoing finding, Mrs. Baquero is permanently debarred from providing services in any capacity to a person with an approved or pending drug product application, effective (see DATES ) (see sections 306(a)(2)(A) and 306(c)(2)(A)(ii) of the FD&C Act. Any person with an approved or pending drug product application who knowingly employs or retains as a consultant or contractor, or otherwise uses in any capacity the services of Mrs. Baquero during her debarment, will be subject to civil money penalties (section 307(a)(6) of the FD&C Act (21 U.S.C. 335b(a)(6))). If Mrs. Baquero provides services in any capacity to a person with an approved or pending drug product application during her period of debarment, she will be subject to civil money penalties (section 307(a)(7) of the FD&C Act. In addition, FDA will not accept or review any abbreviated new drug application from Mrs. Baquero during her period of debarment, other than in connection with an audit under section 306 of the FD&C Act (section 306(c)(1)(B) of the FD&C Act. Note that, for purposes of sections 306 and 307 of the FD&C Act, a “drug product” is defined as a “drug subject to regulation under section 505, 512, or 802 of the FD&C Act (21 U.S.C. 355, 360b, 382) or under section 351 of the Public Health Service Act (42 U.S.C. 262)” (section 201(dd) of the FD&C Act (21 U.S.C. 321(dd))).

Section 306(a)(2)(A) of the FD&C Act requires debarment of an individual from providing services in any capacity to a person that has an approved or pending drug product application if FDA finds that the individual has been convicted of a felony under Federal law for conduct relating to the development or approval, including the process of development or approval, of any drug product under the FD&C Act.

On January 14, 2026, Mr. Acuna was convicted as defined in section 306(l)(1) of the FD&C Act in the U.S. District Court for the Southern District of Florida, Fort Lauderdale Division, when the court accepted his plea of guilty and entered judgment against him for conspiracy to commit wire fraud against the United States in violation of 18 U.S.C. 371. The underlying facts supporting the conviction are as follows:

As contained in the Information and in the Factual Proffer in Support of Guilty Plea from Mr. Acuna's case, between about January 2019 and January 2020, Mr. Acuna conspired with others to defraud a pharmaceutical sponsor conducting clinical trials for asthma medications. As co-owner of A&R Research Group LLC (A&R) with his wife Angela Baquero, Mr. Acuna served as the regulatory and contract affairs manager, responsible for maintaining study documents, collecting signatures, completing required forms, and serving as the primary contact for sponsors. Mrs. Baquero acted as clinical research director and study coordinator of A&R which partnered with a licensed Florida physician who served as the clinical investigator for all trials.

A&R conducted two clinical trials for investigational asthma drugs, receiving $320,247.98 from the sponsor. Mr. Acuna signed Clinical Trial Agreements with the Contract Research Organization (CRO) representing the sponsor, acknowledging A&R's obligation to follow trial protocols and applicable Federal regulations. He also signed Site Delegation Authority Logs and received training from the CRO, demonstrating his knowledge of the requirements and his delegated responsibilities. Mr. Acuna understood that the sponsor, CRO, and FDA could audit the trial site at any time and that A&R was required to cooperate fully with auditors.

The conspiracy's purpose was to unlawfully enrich Mr. Acuna and his co-conspirators through two primary schemes: making false representations about subject eligibility and participation to secure payments from the sponsor and/or CRO, and falsifying material trial documents and data, including case histories, spirometry readings, echocardiogram data, and other data.

Mr. Acuna and his co-conspirators knowingly failed to conduct the trials according to the trial protocols and applicable federal regulations. Mrs. Baquero, along with Co-Conspirator 1 and Co-Conspirator 2, obtained fake medical records for at least 17 trial subjects who lacked legitimate documentation of qualifying asthma diagnoses. Mr. Acuna facilitated this fraud by issuing payments to the co-conspirators for obtaining these false records. For instance, on June 12, 2019, Mr. Acuna signed a check for $120 to Co-Conspirator 1 for fake medical records for two subjects.

The fraud extended beyond falsified enrollment documents. Mrs. Baquero directed Co-Conspirator 1 and Co-Conspirator 2 to perform spirometry readings and provide blood samples on behalf of other enrolled subjects, and Mr. Acuna issued payments for these fraudulent assessments. On May 28, 2019, Mr. Acuna signed a check for $150 to Co-Conspirator 2 for “4 Spriometries,” knowing this compensated the co-conspirator for performing tests on behalf of other subjects. Significantly, Mr. Acuna did not include this payment in any trial-related records. These fraudulent spirometry readings and blood samples were submitted to the CRO and sponsor to create the false impression that subjects were participating properly and that A&R was conducting the studies in accordance with the clinical trial protocols.

In August 2019, based in part on suspicious spirometry and echocardiogram readings, the sponsor conducted an in-person audit of A&R. During this audit, Mr. Acuna and Mrs. Baquero provided case histories that they knew contained records of payments to subjects who had not actually participated in the studies. On January 24, 2020, these same fraudulent case histories were provided to an FDA investigator during an official inspection. Through these false and fraudulent representations regarding the asthma trials, Mr. Acuna's conduct resulted in A&R receiving the full $320,247.98 payment from the sponsor, enriching both himself and Mrs. Baquero as joint owners and controllers of the company.

As a result of this conviction, FDA sent Mr. Acuna, by certified mail, on March 27, 2026, a notice proposing to permanently debar him from providing services in any capacity to a person that has an approved or pending drug product application. The proposal was based on a finding, under section 306(a)(2)(A) of the FD&C Act that Mr. Acuna was convicted of a felony under Federal law for conduct relating to the development or approval, including the process of development or approval, of any drug product. The proposal informed Mr. Acuna of the proposed debarment and offered him an opportunity to request a hearing, providing him 30 days from the date of receipt of the letter in which to file the request, and advised him that failure to request a hearing constituted a waiver of the opportunity for a hearing and a waiver of any contentions concerning this action. Mr. Acuna received the proposal and notice of opportunity for a hearing on April 6, 2026. Mr. Acuna failed to request a hearing within the timeframe prescribed by regulation and has, therefore, waived his opportunity for a hearing and waived any contentions concerning his debarment (21 CFR part 12).

Therefore, the Division of Field Enforcement Director, Office of Inspections and Investigations, under section 306(a)(2)(A) of the FD&C Act, under authority delegated to the Director, Division of Enforcement, finds that Mr. Ricardo Andres Acuna has been convicted of a felony under Federal law for conduct relating to the development or approval, including the process of development or approval, of any drug product.

As a result of the foregoing finding, Mr. Acuna is permanently debarred from providing services in any capacity to a person with an approved or pending drug product application, effective (see DATES ) (see sections 306(a)(2)(A) and 306(c)(2)(A)(ii) of the FD&C Act. Any person with an approved or pending drug product application who knowingly employs or retains as a consultant or contractor, or otherwise uses in any capacity the services of Mr. Acuna during his debarment, will be subject to civil money penalties (section 307(a)(6) of the FD&C Act (21 U.S.C. 335b(a)(6))). If Mr. Acuna provides services in any capacity to a person with an approved or pending drug product application during his period of debarment he will be subject to civil money penalties (section 307(a)(7) of the FD&C Act. In addition, FDA will not accept or review any abbreviated new drug application from Mr. Acuna during his period of debarment, other than in connection with an audit under section 306 of the FD&C Act (section 306(c)(1)(B) of the FD&C Act. Note that, for purposes of sections 306 and 307 of the FD&C Act, a “drug product” is defined as a “drug subject to regulation under section 505, 512, or 802 of the FD&C Act (21 U.S.C. 355, 360b, 382) or under section 351 of the Public Health Service Act (42 U.S.C. 262)” (section 201(dd) of the FD&C Act (21 U.S.C. 321(dd))).

FDA is announcing the availability of a guidance for industry titled “Assessing Adhesion With Transdermal and Topical Delivery Systems for ANDAs.” This guidance finalizes the draft guidance (Revision 2), which was announced in the Federal Register on April 13, 2023 (88 FR 22456). FDA received no comments on the revised draft guidance (Revision 2) and, thus, no comments were considered before publication of this guidance.

The guidance provides recommendations for the design and conduct of studies evaluating the adhesion performance of a TDS. Depending on the objectives of a generic TDS product development program, applicants may choose to evaluate TDS adhesion in studies performed to evaluate TDS adhesion only, or in studies performed with a combined purpose ( e.g., for the simultaneous evaluation of adhesion and BE with PK endpoints). FDA recommends that applicants consult this guidance in conjunction with any relevant product-specific guidances for industry when considering the design and conduct of studies that may be appropriate to support the BE of a proposed generic TDS product to its reference listed drug and/or reference standard product. FDA also recommends that an applicant who seeks to use an alternative approach to FDA's recommendations for the design and conduct of studies evaluating the adhesion performance of a TDS contact the Agency to discuss the proposed alternative approach to evaluate adhesion performance for that particular drug product.

This guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of FDA on “Assessing Adhesion With Transdermal and Topical Delivery Systems for ANDAs.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.

While this final guidance contains no collection of information, it does refer to previously approved FDA collections of information. The previously approved collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3521). The collections of information in 21 CFR part 314 relating to the submissions of abbreviated new drug applications have been approved under OMB control number 0910-0001.

Persons with access to the internet may obtain the guidance at either https://www.fda.gov/drugs/guidance-compliance-regulatory-information/guidances-drugs, https://www.fda.gov/regulatory-information/search-fda-guidance-documents, or https://www.regulations.gov.

FDA is announcing the availability of a draft guidance for industry entitled “Biosimilar and Interchangeable Biosimilar Products: Considerations for Container Closure Systems and Device Constituent Parts.” As part of the negotiations relating to the reauthorization of the Biosimilar User Fee Act (BsUFA), as described in “Biosimilar Biological Product Reauthorization Performance Goals and Procedures for Fiscal Years 2023 Through 2027” (BsUFA III goals letter), FDA agreed to issue guidance on “considerations for developing presentations, container closure systems, and device constituent parts for proposed interchangeable biosimilar biological products.” This draft guidance expands on and clarifies the Agency's recommendations and expectations regarding the development of delivery devices and container closure systems described in Q.I.4 of the guidance for industry entitled “Questions and Answers on Biosimilar Development and the BPCI Act” issued on September 20, 2021 (86 FR 52154) (the Biosimilar Q&As) and the guidance for industry entitled “Considerations in Demonstrating Interchangeability With a Reference Product” issued on May 14, 2019 (84 FR 21342) (the Interchangeability guidance) for biosimilar and interchangeable biosimilar products, respectively. When this draft guidance is finalized, the Agency intends to update section VIII of the Interchangeability guidance, “Considerations for Developing Presentations for Proposed Interchangeable Products,” and to remove Q.I.4 of the of the Biosimilar Q&As.

Section 351(k) of the Public Health Service Act (PHS Act) (42 U.S.C. 262(k)) provides an abbreviated licensure pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed reference product. Section 351(k) of the PHS Act sets forth the requirements for an application for a proposed biosimilar product and an application or a supplement for a proposed interchangeable biosimilar product. In this draft guidance, FDA outlines its recommendations for the development of container closure systems and device constituent parts for biosimilar and interchangeable biosimilar products.

Expectations regarding product quality considerations for container closure systems and devices are generally the same for proposed biological products submitted in a marketing application under section 351(a) of the PHS Act as for proposed biosimilar and interchangeable biosimilar products submitted in a marketing application under section 351(k) of the PHS Act. The draft guidance provides a high-level summary of product quality recommendations that are captured across multiple FDA guidances.

The draft guidance also describes considerations for the evaluation of the user interface of the presentations of proposed biosimilar and interchangeable biosimilar combination products through comparative analyses to determine if potential differences from the reference product warrant collecting additional information to support approval of the proposed combination product as biosimilar to or interchangeable biosimilar with its reference product.

In addition, the draft guidance explains the challenges that may arise when seeking licensure of an interchangeable biosimilar combination product in a different presentation than its reference product and encourages discussions with the Agency early during the development of such products.

This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the current thinking of FDA on “Biosimilar and Interchangeable Biosimilar Products: Considerations for Container Closure Systems and Device Constituent Parts.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.

As we develop final guidance on this topic, FDA will consider comments on costs or cost savings the guidance may generate, relevant for Executive Order 14192.

While this guidance contains no collection of information, it does refer to previously approved FDA collections of information. The previously approved collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3521). The collections of information in 21 CFR part 312 regarding sponsor requests to FDA related to the submission of an investigational new drug application have been approved under OMB control number 0910-0014. The collections of information in section 351(a) of the PHS Act and part 601 (21 CFR part 601) relating to the submission of a biologics license application have been approved under OMB control number 0910-0338. The collections of information in section 351(k) of the PHS Act and part 601 relating to the submission of biosimilar applications and biosimilar user fee applications have been approved under OMB control number 0910-0718. The collections of information in 21 CFR parts 210 and 211 relating to current good manufacturing practice requirements have been approved under OMB control number 0910-0139. The collections of information in 21 CFR 201.56 and 201.57 for the submission of labeling have been approved under OMB control number 0910-0572.

Persons with access to the internet may obtain the guidance at https://www.fda.gov/drugs/guidance-compliance-regulatory-information/guidances-drugs, https://www.fda.gov/vaccines-blood-biologics/guidance-compliance-regulatory-information-biologics/biologics-guidances, https://www.fda.gov/regulatory-information/search-fda-guidance-documents , or https://www.regulations.gov.

FDA is announcing the availability of a revised draft guidance for industry titled “Assessing the Irritation and Sensitization Potential of Transdermal and Topical Delivery Systems for ANDAs.” This guidance revises the draft guidance of the same name that was published in the Federal Register on April 13, 2023 (83 FR 50945).

The components and composition of a TDS formulation, including the nature of the drug substance and/or the occlusivity of the TDS materials, in conjunction with other factors such as the environmental humidity or the condition of the skin, may have the potential to irritate the skin or lead to a sensitization reaction. Such reactions can be unpleasant to the patient and may affect patient compliance, skin permeability, and/or adhesion of the TDS to the skin. The collective consequence of these potential effects could create uncertainty about the resulting drug delivery profile and the rate and extent of drug absorption from the TDS. Therefore, when appropriate, applicants should perform a comparative assessment of the test (T) and reference (R) TDS products using an appropriately designed skin irritation (or combined irritation and sensitization) study with human subjects to demonstrate that the potential for a skin irritation or sensitization reaction with the T TDS is no worse than the reaction observed with the R TDS.

This revised draft guidance (Revision 2) provides the following updates to the last revised draft guidance (Revision 1) from April 2023:

(1) Clarifies recommendations for the design and conduct of studies to evaluate the in vivo skin irritation (and sensitization, if applicable) potential of a proposed TDS.

(2) Clarifies when an in vivo study to assess the sensitization potential of a TDS product may not be needed.

The recommendations in this revised draft guidance relate to studies submitted in support of an ANDA. The Agency is seeking comments on the recommendations reflected in the revised draft guidance announced in this notice. In addition, FDA invites comments on the scoring scales and any alternative approaches, including those recommended by international regulatory agencies, that may have been used for the comparative assessment of the irritation/sensitization potential for proposed generic TDS products. FDA also specifically invites comments regarding the comparative assessment of sensitization itself, i.e., whether there are clinical scenarios where a comparative sensitization assessment may be uninformative when conducted in addition to a comparative irritation assessment.

This revised draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the current thinking of FDA on “Assessing the Irritation and Sensitization Potential of Transdermal and Topical Delivery Systems for ANDAs.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations. As we develop final guidance on this topic, FDA will consider comments on costs or cost savings the guidance may generate, relevant for Executive Order 14192.

While this guidance contains no collection of information, it does refer to previously approved FDA collections of information. The previously approved collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3521). The collections of information in 21 CFR part 314 relating to the submission of abbreviated new drug applications, including the design and conduct of studies and the submission of study data, as well as the collections of information relating to good clinical practice, have been approved under OMB control number 0910-0001. The collections of information for controlled correspondence and meetings related to generic drug development are approved under OMB control number 0910-0727.

Persons with access to the internet may obtain the draft guidance at https://www.fda.gov/drugs/guidance-compliance-regulatory-information/guidances-drugs, https://www.fda.gov/regulatory-information/search-fda-guidance-documents, or https://www.regulations.gov.

Section 340B of the Public Health Service Act entitled “Limitation on Prices of Drugs Purchased by Covered Entities,” was created under section 602 of Public Law 102-585, 106 Stat. 4943, 4967, the “Veterans Health Care Act of 1992,” and codified at section 340B of the Public Health Services Act (PHSA)  2 (hereinafter “the 340B statute” or otherwise referred to herein as “section 340B”). Section 340B requires pharmaceutical manufacturers participating in Medicare Part B (which covers physician-administered drugs) and Medicaid to sell drugs at reduced prices to certain healthcare providers known as “covered entities.” While the 340B Program “was intended to enable certain hospitals and clinics `to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services, Am. Hosp. Ass'n v. Hargan, 289 F. Supp. 3d 45, 47 (D.D.C. 2017) (quoting H.R. Rep. No. 102-384, pt. 2, at 12 (1992)), participation is not limited to small hospitals that traditionally serve a low-income population, such as community disproportionate share hospitals. Rather, large academic medical centers and integrated health systems may also qualify if they meet certain criteria. As of April 1, 2026, the 340B Program includes 15,249 covered entities  3 and 49,214 associated sites  4 and reached $100 billion in purchases at discounted 340B pricing in 2025.

Section 340B(a)(1) of the PHSA instructs HHS to enter into pharmaceutical pricing agreements with manufacturers of covered outpatient drugs  5 . Under section 1927(a)(1) and (5)(A) of the Social Security Act, a manufacturer must enter into an agreement with the Secretary that complies with section 340B “[i]n order for payment to be available under section 1903(a) or under part B of title XVIII of the Social Security Act for covered outpatient drugs of a manufacturer.” These “are not transactional, bargained-for contracts” but rather “simply incorporate statutory obligations and record the manufacturers' agreement to abide by them.” Astra USA, Inc. v. Santa Clara Cnty. 563 U.S. 110, 113, 118 (2011). When a drug manufacturer signs a pharmaceutical pricing agreement, it agrees that the prices charged for covered outpatient drugs to covered entities will not exceed statutorily defined 340B ceiling prices. 340B ceiling prices are based on quarterly pricing reports that manufacturers provide to the Secretary through the Centers for Medicare & Medicaid Services (CMS) and are calculated by HRSA.

Section 340B imposes two core prohibitions on covered entities: (1) duplicate discounts, and (2) diversion of drugs purchased under the 340B Program. 42 U.S.C. 256b(a)(5). To prevent duplicate discounts, the statute specifies that a covered entity shall not request a discount for a drug that is already subject to a separate Medicaid rebate requirement. Id. § 256b(a)(5)(A); see also Social Security Act § 1927(a)(5)(C) (creating a default mechanism for enforcing duplicate discount prohibition if HRSA fails to implement a mechanism to enforce the prohibition). And to prevent diversion, the statute specifies that “a covered entity shall not resell or otherwise transfer the drug to a person who is not a patient of the entity.” Id. § 256b(a)(5)(B).

The landscape governing 340B pricing obligations has also been shaped by more recent legislation with direct implications for how 340B ceiling prices interact with other federal drug pricing programs. In the Inflation Reduction Act of 2022, Public Law 117-169, 136 Stat. 1818, Congress gave the Secretary authority to negotiate the prices that Medicare pays for certain pharmaceutical products that lack generic competition and that account for a disproportionate share of Medicare's expenses (“selected drugs”). 42 U.S.C. 1320f(a), 1320f-1(b), (d), (e) (hereinafter “the Medicare Drug Price Negotiation Program” or “MDPNP”). The MDPNP  6 applies only to manufacturers that choose to participate in Medicare and Medicaid and applies only to the prices that Medicare pays for the selected drugs. Id. § 1320f-1(b), (d). If negotiations for a selected drug are successful, the manufacturer memorializes its agreement to make the drug available to Medicare beneficiaries at the negotiated price, which is called the maximum fair price (MFP). Id. § 1320f-2(a).

The negotiated price of drugs and biologics in the MDPNP and the 340B Program are not cumulative. 42 U.S.C. 1320f-2(d). If a manufacturer provides a drug to a Medicare beneficiary at the MFP established by the MDPNP and if the negotiated price is lower than the 340B ceiling price, then the manufacturer need not also provide a 340B discount to the covered entity. Id.; see Ctrs. for Medicare & Medicaid Servs. (CMS), Medicare Drug Price Negotiation Program: Final Guidance, Implementation of Sections 1191-1198 of the Social Security Act for Initial Price Applicability Year 2028 and Manufacturer Effectuation of the Maximum Fair Price in 2026, 2027, and 2028, at 253-256 (Sept. 30, 2025), https://perma.cc/37EL-GRUW. Negotiated prices for the first year of the MDPNP took effect on January 1, 2026. Id. at 154.

Since its beginning, the 340B price reductions were to be “implemented, at the discretion of the Secretary, either by a point-of-purchase discount, a rebate, or other mechanism.” H.R. Rep. No. 102-384, pt. 2, at 12 (1992); id. (stating manufacturers “would have to enter into an agreement with the Secretary of HHS to provide price reductions (whether through a discount, rebate, or other mechanism) to these `covered entities' on covered outpatient drugs”); see also Guidance Regarding Section 602 of the Veterans Health Care Act of 1992; Limitation on Prices of Drugs Purchased by Covered Entities, 58 FR 27289, 27290 (May 7, 1993) (stating that the act creating the 340B Program is “an attempt to provide federal purchasers with a process whereby they will receive drug discounts or rebates”). As the House Report stated:

During the 340B Program's early stages, covered entities maintained separate physical inventories of 340B drugs for eligible patients and drugs purchased at a higher commercial price for ineligible patients. Over time the replenishment (or virtual inventory) model emerged as the standard approach. Under a replenishment model, a pharmacy first dispenses drugs to patients from one commercial inventory, also referred to as its neutral inventory. Specialized software then evaluates each dispense to determine whether the patient qualifies as a 340B-eligible patient of the covered entity. Once a sufficient quantity of eligible dispenses has accumulated, the covered entity is authorized to purchase a matching replenishment quantity of that drug at the discounted 340B price through its wholesaler account, which is then shipped to the pharmacy to restock its neutral inventory. In this way, the covered entity effectively captures the 340B discount retroactively on drugs already dispensed to eligible patients, allowing it to realize the cost savings the program is designed to provide.

After several years of experience with this system, HRSA identified limitations for certain covered entities. In particular, it found that State AIDS Drug Assistance Programs (ADAPs) “have drug purchasing systems that have prevented their participation in the section 340B discount program.” 62 FR 45824 (Aug. 27, 1997). To address this constraint, unlike other 340B entities, ADAPs can choose to participate as a direct purchase entity ( i.e. receive the 340B discount upfront) and/or through a rebate mechanism. In the ADAP rebate model, ADAPs pay retail prices to dispensing pharmacies on behalf of their clients. The Secretary subsequently recognized this approach, permitted ADAPs to obtain 340B pricing through rebates from manufacturers equal to the difference between the retail price paid and the 340B ceiling price, and required manufacturers to offer such rebates to ADAPs, emphasizing that the agency was “recogniz[ing] a rebate option” for these providers.

Following passage of the MDPNP, a number of pharmaceutical manufacturers approached HRSA in 2024 with proposals to implement a new rebate model for complying with 340B pricing requirements. Each proposal for a rebate model worked in a similar way: covered entities (or contract pharmacies acting on their behalf) would initially purchase drugs at commercial prices and then, after dispensing the drugs to 340B patients, would submit claims to the manufacturers for a cash rebate “equal to the difference between the acquisition cost and the 340B ceiling price.”

In the fall of 2024, several pharmaceutical manufacturers informed HRSA that they intended to roll out rebate models irrespective of the Secretary's approval. HRSA responded to these proposals with similar letters and expressed concern that “[s]hifting to the rebate model would disrupt how the 340B Program has operated for over thirty years” and sought clarification on how rebates would affect providers and patients. To that end, HRSA requested responses to a detailed list of questions to enable it to better evaluate the manufacturers' proposals. The letters sought additional information about how the manufacturers would process and approve or reject claims; inquired into data privacy practices; and sought assurances that in implementing the rebates, the manufacturers would comply with their obligations under section 340B. Each manufacturer responded to these questions, and covered entities expressed concerns that the proposed models would fundamentally shift how the 340B Program has operated for over 30 years. At the time, HRSA considered information from a variety of stakeholders, including manufacturers, covered entities, trade organizations representing the interests of covered entities and manufacturers, information technology (IT) companies, and other supply chain trade organizations.

HRSA concluded its deliberations by determining manufacturer-imposed rebate approaches violate a manufacturer's obligations under Section 340B(a)(1) of the Public Health Service Act because the 340B statute requires Secretarial pre-approval of any rebate mechanism and that no manufacturer may unilaterally shift from upfront discounts to a rebate structure without HHS authorization. The court in Eli Lilly & Co. v. Kennedy, No. 24-cv-03220, 2025 WL 1423630 (D.D.C. May 15, 2025) agreed, holding that HRSA does have authority to require pre-approval of rebate models and that manufacturers may not implement such models unilaterally. 7 Id. at *14.

Consistent with these developments, after considering the information received, on August 1, 2025, HRSA published a Federal Register Notice (“2025 Notice”) inviting manufacturers with MDPNP Agreements with CMS for initial price applicability year 2026 to participate in a voluntary rebate model pilot program. 90 FR 36163 (Aug. 1, 2025); see also HRSA Announces Application Process for the 340B Rebate Model Pilot Program and Request for Public Comment (July 31, 2025), https://www.hrsa.gov/about/news/press-releases/rebate-model-pilot-program. The pilot program was intended to launch a rebate model across a limited set of drugs that were subject to the MDPNP in 2026 to ensure a fair and transparent 340B rebate model process for all stakeholders involved.

HRSA received 1,243 public comments from stakeholders in response to the 2025 Notice, including from covered entity and manufacturer trade organizations, individual covered entities, and drug manufacturers. HRSA's review of the public comments helped to inform the Agency's review of and decision on whether to approve the manufacturer applications, and the conditions of approval.

On October 30, 2025, HRSA announced the approval of eight manufacturer applications for participation in the pilot program, with an effective date of January 1, 2026. HRSA later approved a ninth manufacturer application for participation in the pilot program with an effective date of April 1, 2026.

On December 1, 2025, covered entity stakeholders filed suit under the Administrative Procedure Act in the U.S. District Court for the District of Maine to enjoin implementation of the 2025 340B Rebate Model Pilot Program. See Am. Hosp. Ass'n v. Kennedy, 820 F. Supp. 3d 30 (D. Me. 2025). On December 29, 2025, the District Court granted the Plaintiffs' request for a preliminary injunction, thus triggering a nationwide pause of the Pilot, while confirming that in establishing and implementing the 2025 340B Rebate Model Pilot Program, HRSA was not required to respond to public comments. Id. at 45. HHS appealed the preliminary injunction to the U.S. Court of Appeals for the First Circuit, which denied a stay of the District Court's order, thus keeping in place a nationwide pause of the 2025 Pilot. Am. Hosp. Ass'n v. Kennedy, 164 F.4th 28 (1st Cir. 2026).

HHS later voluntarily dismissed its appeal of the preliminary injunction, which was granted by the First Circuit on January 20, 2026, and opted to withdraw the 2025 Pilot. On February 10, 2026, the District Court formally vacated and remanded to HHS the “340B Rebate Model Pilot Program Application Notice,” 90 FR 36163 (Aug. 1, 2025), the “Corrected 340B Rebate Model Pilot Program Application Notice,” 90 FR 38165 (Aug. 7, 2025), and the approvals of applications from drug manufacturers submitted pursuant to those notices (announced between October 30 and November 14, 2025).

At its inception, the 340B Program operated as a relatively simple pricing requirement. Covered entities were few in number, and the statutory scheme contemplated a straightforward transactional model in which manufacturers would provide drugs at discounted prices at the point of sale. Program administration reflected those assumptions: entities dispensed drugs directly, often from segregated inventories, and the application of the ceiling price occurred in a largely contemporaneous and verifiable manner. This structure aligned with the program's scale. With limited participants and relatively simple distribution arrangements, an upfront discount model provided a practical and administrable means of ensuring compliance with the ceiling price requirement.

Over time, however, the program expanded significantly. Administrative guidance permitted covered entities to rely on contract pharmacies and to utilize replenishment inventory systems rather than maintaining separate physical inventories. 8 Congress further expanded the program through the Patient Protection and Affordable Care Act, which increased the number and types of eligible covered entities. 9 Public Law 111-148, § 7101(a), 124 Stat. 119, 821-22 (2010). As a result of these developments, the 340B Program has evolved into a large and economically significant component of the pharmaceutical marketplace.

That growth has been substantial. In 2022, total 340B program sales reached $53.7 billion when measured at the discounted 340B price by 2023, covered entities purchased $66.3 billion in covered outpatient drugs under the program, representing approximately 23.4% growth in just 1 year. Comparatively, in 2023, prescription drug spending in the U.S. grew 10.1%. By 2024, covered entities purchased $81.4 billion in covered outpatient drugs under the program, representing approximately 50% growth in just 2 years.

Over a longer horizon, there was a 174% increase in the number of covered entities between 2013 and 2023. As the market has shifted, covered entities now include large hospital systems and extensive networks of affiliated hospital outpatient sites, often operating through numerous arrangements with contract pharmacies.

A 340B contract pharmacy is a retail or specialty pharmacy that has entered into a formal agreement with a covered entity to dispense drugs on the covered entity's behalf. Because many covered entities, such as federally qualified health centers, lack the ability to operate their own in-house pharmacy, contract pharmacy arrangements provide a mechanism to extend their 340B Program benefits to eligible patients by leveraging existing pharmacy infrastructure. Under this arrangement, a contract pharmacy dispenses drugs to the covered entity's eligible patients, while the covered entity retains ultimate responsibility for ensuring compliance with 340B Program requirements, including proper tracking of eligible dispenses and accurate replenishment ordering.

As the 340B Program has grown, so too has its operational complexity. Transactions now frequently occur through multi-step distribution channels involving contract pharmacies and retrospective eligibility determinations. Because 340B transactions often flow through multi-step distribution channels, including contract pharmacies that serve multiple covered entities, real-time eligibility verification at the point of sale is not always feasible, leaving eligibility determinations to be made after the fact based on claims data that may be incomplete or inconsistently documented. This retrospective approach creates a gap between when a drug is dispensed and when eligibility is confirmed, making it difficult to ensure that discounted purchases are accurately matched to qualifying patients ( i.e., raising the risk of diversion) and raising the risk that the same transaction could be counted toward both a 340B discount and a Medicaid rebate, a duplicate discount that the statute expressly prohibits. In this environment, administrative and program integrity challenges, including difficulties in verifying patient eligibility at the point of sale and preventing statutorily prohibited diversion and duplicate discounts, present challenges as the 340B Program has evolved over time.

The progression of the 340B Program from a narrow pricing safeguard to a complex, multi-billion-dollar system thus underscores the importance of flexibility in determining how statutory pricing obligations are implemented. The 340B statute itself contemplates such flexibility, directing that the ceiling price be determined “taking into account any rebate or discount, as provided by the Secretary.” 42 U.S.C. 256b(a)(1). Accordingly, the method by which that price is effectuated must be capable of adapting to the Program's current scale and operational realities.

While HRSA initially administered the Program as primarily an upfront discount drug purchasing model, the size and complexity of the 340B Program and the pharmaceutical distribution chain, together with the MDPNP framework and nonduplication requirements, 10 warrant reconsideration of whether the upfront discount model remains the most effective means of carrying out statutory objectives. In exercising its stewardship role, HRSA must balance covered entities' longstanding reliance on the upfront discount model against the need to ensure effective program oversight, safeguard the benefits of 340B pricing, and maintain program integrity and accountability in a rapidly evolving landscape, as it has done in the past.

When HRSA adopted the rebate option for ADAPs in 1998, commenters asserted that such a model should be limited only to ADAPs and not expanded to other categories of covered entities. HRSA responded that it agreed with those commenters, “at this time.” 63 FR 35241, 35241-42 (June 29, 1998). As noted above, however, the Program has changed dramatically in the intervening 28 years. Since 1998, there have been multiple reports by Congress and governmental agencies noting the exponential growth of the Program;  11 the difficulty of enforcing the prohibition on duplicate discounts;  12 and concerns surrounding diversion. 13 The 1998 ADAP guidance predates the adoption of the outpatient prospective payment system in 2000 (which led CMS to codify a regulatory policy on off-campus provider billing), as well as the enactment of Medicare Part D in 2003 (which created a new outpatient drug benefit for Medicare beneficiaries while dramatically expanding the use and understanding of rebates in the pharmaceutical supply chain), the Deficit Reduction Act in 2005 (which added pediatric hospitals as a class of 340B covered entities), the Affordable Care Act in 2010 (which added five additional categories  14 of 340B hospital covered entities), and the Inflation Reduction Act in 2022 (which gave CMS the authority to negotiate drug prices but creating the potential for a new category of duplicate discounts).

The growing complexity of the pharmaceutical supply chain, combined with the enactment of the statutory provisions cited above, makes program integrity a growing risk. For example, the 340B statute is clear that a manufacturer is not required to provide a rebate for a unit of a covered outpatient drug under the Medicaid Drug Rebate Program and provide 340B pricing for that same unit of drug. Yet the growing number of child sites of covered entities and contract pharmacies and the growth in the number of patients who are eligible for insurance coverage for prescription drugs make it more difficult to guard against duplicate discounts with an up-front discount model. Child sites and contract pharmacies introduce complexity because they operate separately from the covered entity itself, often billing under their own identifiers or through intermediary systems that may not be fully integrated with the covered entity's patient eligibility records. When a prescription is dispensed at one of these locations, the covered entity may lack real-time visibility into whether a Medicaid payer is involved, making it difficult to flag the transaction and exclude it from 340B pricing before the discount is applied. Without an ability to verify if a drug is 340B priced, the same drug purchase risks being simultaneously discounted under 340B and submitted for a Medicaid rebate, precisely the duplicate discount the statute is designed to prevent. Moreover, the HHS Office of Inspector General has noted that the prohibition on duplicate discounts is difficult to enforce with respect to drugs dispensed to Medicaid managed care enrollees, especially because the Medicaid Exclusion File, (MEF)  15 which HRSA created in 1993 for fee-for-service Medicaid, is inadequate to capture duplicate discounts with respect to Medicaid managed care enrollees, and that this inadequacy results in both duplicate discounts going unreported as well as excluding some non-340B claims from rebate invoices, thereby resulting in foregone Medicaid rebates to states. 16 The Government Accountability Office (GAO) has identified a similar concern. 17

While there is no federal estimate of the financial extent of duplicate discounts in 340B, the topic has been evaluated by industry and academia. Manufacturer commenters stated in 2019, when the 340B program was less than half its current size, Medicaid/340B duplicate discounts amounted to as much as $1.5 billion annually. HRSA is using the flexibility granted by the 340B statute and recognized by Congress on the enactment of the program to expand the use of a rebate model in the program. The Pilot will use a rebate approach to mitigate the deficiencies cited by Congress and other governmental entities in enforcing the prohibition on duplicate discounts, by proving a mechanism to avoid duplicate discounts.

On February 17, 2026, HRSA published a Request for Information (RFI) (91 FR 7287 (Feb. 17, 2026)) to gather broad stakeholder comments on a wide range of topics having to do with the potential use of rebates to effectuate the ceiling price under the 340B Program. The RFI sought comments on whether HRSA should implement a rebate model under the 340B Program, how best to operationalize any such rebate framework for stakeholders, and the potential operational and financial impacts of transitioning to a rebate model under the 340B Program. The RFI also sought comment on reliance interests in continuing to obtain the 340B ceiling prices through upfront discounts and whether such reliance interests are reasonable in light of the Secretary's express statutory authority to provide for acquisition of covered outpatient drugs at the 340B ceiling price via “rebate or discount.” Commenters were invited to provide privileged or confidential information that they believed was necessary to comment on the RFI. Those comments were not made public and were submitted to a separate email box ( 340Bpricing@hrsa.gov ).

HRSA reviewed 2,449 public comments in response to that RFI, including 1,170 identical comments as part of a letter campaign. HRSA also received 26 non-public submissions for a total of 2,475 comments, all of which HRSA considered in the design of the revised Pilot.

This substantial feedback on the RFI came from a broad range of stakeholders across the health care and pharmaceutical sectors, including hospitals, health systems, federally qualified health centers, rural providers, Tribal organizations, manufacturers, pharmacies, technology companies (technology vendors with platforms to receive claims submissions), advocacy groups, and other interested parties. Comments reflect differing perspectives on the potential implementation of a rebate-based approach. Many covered entity stakeholders expressed concerns regarding the financial, operational, and administrative implications of a rebate model, including potential cash flow impacts and implementation burden. Covered entities expressed a high degree of consistency in comments across provider types. While Critical Access Hospitals, rural hospitals, FQHCs, and larger health systems emphasized different operational challenges, there was broad agreement that a rebate model could increase financial and administrative burden. The principal differences in covered entity type comments were in the nature of the risks highlighted: cash flow and liquidity for rural providers, operational complexity for larger systems, and patient access concerns for community-based and specialty safety-net providers. In contrast, manufacturers, technology vendors, some employer and purchaser coalitions, several patient advocacy groups and other stakeholders generally support a rebate model, emphasizing its potential to improve transparency, enhance program integrity, and address manufacturer challenges related to avoiding duplicative price concessions, including those involving the MDPNP and the Medicaid Drug Rebate Program. Across stakeholder groups, HRSA also received input on the importance of minimizing administrative burden and ensuring that any model leverages existing data and operational processes. The comments received on the RFI also provided HRSA with information on the potential advantages and disadvantages that implementation of a rebate model would have on the patients served by different covered entity types.

HRSA carefully reviewed and evaluated all comments submitted in response to the RFI. The agency conducted a systematic assessment of stakeholder input and used that feedback to inform the design and policy rationale of this revised Pilot. The following sections describe in greater detail how stakeholder perspectives shaped specific components of this revised Pilot and explain HRSA's responses to the principal issues raised. HRSA's evaluation considered both the substance and the evidentiary support of the comments received, and the agency's responses to the major comment themes are summarized below.

Commenters express differing views on the reliance interests of covered entities in the current upfront discount model. Several covered entity organizations express concern that HRSA has not accounted for covered entities' reliance interests in maintaining an upfront discount model. These commenters state that an upfront discount model has been used in the Program for more than 30 years and covered entities have reasonably relied on this consistency when designing their internal operations. They argue that there is no reason to shift to what they view as a costly rebate mechanism given this history. By contrast, manufacturers assert the costs of implementing a rebate mechanism have been overstated and the benefits of a rebate mechanism far outweigh the additional costs. They further assert that a rebate mechanism is not a novel concept as it has been used in a limited capacity in the 340B Program for decades, is widely employed across the drug industry, and the current replenishment system functions in several respects like a rebate mechanism, particularly insofar as post-dispensing determinations and financial true-up already occur outside the point of sale.

HRSA does not agree that exclusive reliance on an upfront discount model is reasonable or that such reliance foreclose consideration of alternative statutory mechanisms. The 340B statute expressly recognizes the authority to provide the 340B ceiling price via “rebate or discount,” which provides the Secretary, through HRSA, discretion in how best to operationalize the statutory pricing requirement. Therefore, stakeholders cannot reasonably claim that a rebate model is unforeseeable or outside the range of expected administrative options. Rebates are a common reimbursement mechanism across the pharmaceutical sector and have been recognized by HRSA since 1998 as a valid mechanism for 340B reimbursement for AIDS drug assistance programs. Rebates are also used extensively in Medicare Part D, including with respect to Part D drugs that are dispensed by pharmacies that may have contract pharmacy agreements with 340B Program covered entities. To the extent covered entities structured their operations around a single delivery mechanism, such reliance must be understood in light of the 340B statute's plain language and the 340B Program's evolving administrative framework and the evolution of the pharmaceutical distribution chain over the past 20 years.

The Medicare Part D Program relies extensively on rebates. Manufacturers pay rebates to Part D plans in exchange for formulary placement and other services such as developing a pharmacy network and Part D benefit design. Typically, dispensing a drug for which there is a rebate agreement to a Part D enrollee triggers the payment of a rebate from the manufacturer to the Part D plan, and CMS has a mechanism in place to report the payment of that rebate via its Direct and Indirect Remuneration guidance. 18 HRSA anticipates that a rebate model would work similarly to the operation of rebates in the Part D Program; the 340B covered entity's dispensing of a drug that qualifies for the 340B price reduction would trigger the payment of a rebate by the manufacturer. Over the 20-year history of the Part D Program, a sophisticated rebate mechanism has developed and HRSA anticipates that a rebate model in the 340B Program would work similarly.

The significant growth in size and complexity of the 340B Program has introduced oversight challenges that were less pronounced when the Program was smaller and less complicated. While covered entities have relied on the upfront discount model for three decades, HRSA in its stewardship role must balance these interests against the rapidly changing 340B landscape that requires HRSA to weigh competing policy concerns, including program accessibility, administrative feasibility, statutory compliance, and the prevention of duplicate discounts and diversion.

The Supreme Court has explained that in those instances where an agency must consider reliance interests when deciding whether to change a long-standing policy, an agency may consider whether language in the ultimate source of the alleged reliance interests should have warned the public away from relying too heavily on a particular policy. See Dep't of Homeland Sec. v. Regents of Univ. of Cal., 591 U.S. 1, 32 (2020) (explaining that it would be permissible for the Department of Homeland Security to “respond that reliance on forbearance [from removal] and benefits was unjustified in light of the express limitations in the [agency memorandum]” stating that it conferred no substantive rights). But even if one assumed for the sake of discussion that covered entities' reliance interests in this context are reasonable as a matter of law, such a conclusion does not thereby transform such reliance interests into a categorical prohibition against the Secretary exercising his express statutory discretion to provide for 340B pricing via “rebate or discount.” Were it not otherwise, reliance interests would have the impermissible effect of amending statutory language that gives an agency the express discretion to choose between two different implementation methods. As the Supreme Court has explained, “even if [an agency] ultimately concludes that the reliance interests rank as serious, they are but one factor to consider. [The agency] may determine, in the particular context before it, that other interests and policy concerns outweigh any reliance interests.” Regents of Univ. of Cal., 591 U.S. at 32.

Such is the case here. As cited throughout this Notice, HRSA recognizes that there are costs associated with a rebate model, and for this reason has incorporated implementation features designed to limit or reduce operational disruption. The 340B statute expressly gives the Secretary the authority to choose between discounts or rebates. HRSA has taken into consideration covered entities' reliance interests and found that, on balance, they do not outweigh the significant benefits of proceeding with the Pilot as described in this Notice.

Moreover, it is true that the 340B statute “was intended to enable certain hospitals and clinics to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” Am. Hosp. Ass'n v. Hargan, 289 F. Supp. 3d 45, 47 (D.D.C. 2017) (internal quotation marks and citation omitted). But as the Supreme Court recently confirmed in rejecting hospitals' reliance on the general purpose of a statute designed to increase certain hospitals' Medicare payments, “[n]o statute pursues a single policy at all costs, and we are not free to rewrite this statute (or any other) as if it did.” Advocate Christ Med. Ctr. v. Kennedy, 605 U.S. 1, 19 (2025) (internal quotation marks and citation omitted). As explained above, the 340B Program has witnessed unprecedented growth recently that has caused certain 340B Program stakeholders to reasonably question whether covered entities are complying with the 340B statute's requirements, including the prohibition against duplicate discounts. The Pilot as described in this Notice exercises the Secretary's express statutory authority to provide for 340B pricing via rebate, applied to a well-defined subset of 340B drugs that represent a relatively modest portion of overall 340B drug discounts.

Commenters identify duplicate discount prevention and overall program integrity as key considerations in evaluating a potential 340B rebate model. Manufacturers, technology and data intermediaries, certain pharmacy and manufacturer vendor stakeholders and some employer purchaser organizations emphasize that the current 340B framework presents challenges in identifying and preventing duplicate discounts across federal pricing programs, including Medicaid (fee-for-service and managed care) and Medicare, particularly in light of the implementation of the MDPNP and the Medicare Prescription Drug Inflation Rebate Program. These commenters state that existing mechanisms, such as the MEF and claims modifiers, are limited in their ability to ensure accurate, real-time identification of 340B utilization and often require post-hoc audits, manual reconciliation, and dispute resolution. Some commenters cite industry analyses, proprietary data, and government oversight reports suggesting that duplicate discounts may represent a significant source of program inefficiency and financial exposure. These commenters reference government reports identifying challenges in preventing duplicate discounts, particularly within Medicaid managed care, and separately cite industry analyses estimating that duplicate discounts could affect a substantial portion of 340B transactions and represent tens of billions of dollars annually, as well as hundreds of millions of dollars in unresolved disputes. These commenters assert that the implementation of the maximum fair prices under the MDPNP, further increases the likelihood of overlapping price concessions across programs and state that a rebate model, supported by claims-level data validation, could improve transparency and enable more accurate coordination across pricing programs, thereby reducing the incidence of duplicate discounts and related disputes.

Manufacturers express that existing mechanisms are insufficient to reliably identify and prevent duplicate discounts between the 340B Program and the MDPNP. These commenters emphasize that, under the current framework, manufacturers lack timely access to claims-level data to identify all units subject to 340B pricing for which maximum fair price effectuation is not required. Manufacturers state that current efforts rely on claims modifiers, estimation methodologies, and voluntary data reporting that do not provide the manufacturers with precision they desire to minimize duplication of discounts. Manufacturers further highlight the operational challenges created by timing misalignments, whereby 340B eligibility is often determined after pricing decisions must be made, increasing the risk of duplicate discounts and requiring retrospective reconciliation through resource-intensive “pay-and-chase” processes. Based on these limitations, manufacturers contend that a rebate-based model, which links price concessions to validated claims data, would provide a more accurate, transparent, and administratively efficient mechanism to identify and prevent duplicate discounts across federal pricing programs.

Covered entity groups acknowledge the importance of preventing duplicate discounts but contend that the current framework, when properly implemented, is sufficient to meet statutory requirements, including in the context of MDPNP implementation. These commenters state that covered entities already maintain compliance systems, including inventory controls, billing safeguards, and audit processes, to prevent duplicate discounts and diversion, and that existing coordination mechanisms can be adapted to address MDPNP-related requirements.

Many commenters also express concern that a rebate model could shift compliance responsibility and financial risk onto covered entities while introducing additional administrative complexity, particularly given the requirements associated with MDPNP implementation. Commenters also identify alternative approaches to addressing duplicate discounts within the existing framework, including enhanced use of claims modifiers, improvements to the MEF, standardized data-sharing arrangements, and the potential use of centralized or third-party clearinghouse models that do not require a shift from upfront discounts to a rebate-based pricing mechanism.

In response to these comments, HRSA recognizes the importance of ensuring program integrity and enabling manufacturers to prevent duplicate price concessions across all applicable pricing programs. HRSA believes that a rebate-based approach, which is authorized by the 340B statute, including the use of standardized claims-level data, will improve the identification and prevention of duplicate discounts. HRSA will use data collected through the Pilot, including rebate submissions, denials, and dispute outcomes, to more effectively prevent duplicate discounts relative to existing mechanisms and to inform future policy considerations related to program integrity and compliance. HRSA believes that the manufacturer data collection from covered entities under this Pilot will enable manufacturers to better identify 340B transactions both for purposes of their nonduplication efforts in MDPNP and deduplication in Medicaid Managed Care.

Also, there are many advantages a rebate model has for prospective program integrity measures and overall transparency, including ensuring that stakeholders have transparency into 340B transaction information. Alternatives that would preserve the upfront discount model or rely on clearinghouse mechanisms would not inform whether rebates are an efficient means of effectuating the 340B ceiling price, an option expressly authorized under the 340B statute, and therefore would fail to advance the central purpose of the Pilot. HRSA does not believe that reliance solely on standardized claim identifiers, audits, or improved coordination between government programs would be sufficient to address duplicate discount risks. Retrospective reviews, audits, and dispute resolution processes are inherently reactive, identifying potential duplicate discounts only after they have occurred. Conversely, a rebate model incentivizes covered entity compliance as a prerequisite to receiving 340B discounts.

Improved coordination across government programs is complicated by differences in timing, data availability, and program administration, which limit the ability to reconcile transactions accurately and in real time. As a result, these approaches alone may not provide the level of precision, timeliness, and scalability necessary to ensure compliance with statutory nonduplication requirements. A rebate-based model, which ties price concessions to validated, claims-level data prior to payment, is intended to enhance HRSA's oversight of the 340B Program and improve program integrity by enabling more accurate, prospective identification of eligible transactions.

The Pilot will assist HRSA's evaluation of retrospective, claims-based reconciliation and may offer additional safeguards to assess whether a rebate model can improve transparency and HHS will use information from this Pilot to support compliance with statutory requirements across federal drug pricing programs.

Several commenters, primarily covered entities and provider organizations, assert that implementation of a rebate model would impose significant additional costs on covered entities across multiple dimensions. These commenters identify increased administrative burden, staffing needs, system modifications, and heightened financial exposure related to cash flow as key areas of concern. Many compare the costs associated with the upfront discount model to projected costs under a rebate-based approach and contend that the latter would be substantially higher.

By contrast, manufacturers and technology company commenters dispute these characterizations, arguing that the cost estimates submitted by covered entities are overstated or unsupported. Manufacturer and technology company commenters emphasize that covered entities are already required to collect and maintain the relevant claims-level data as part of routine billing, compliance, and audit activities. In their view, the data sharing requirements contemplated under a rebate model are materially similar to existing obligations imposed by Medicare, Medicaid, and commercial payers. These commenters further assert that existing infrastructure, including internal systems and third-party administrators (TPAs), can be leveraged to support data submission and rebate processing, thereby mitigating any incremental administrative burden or associated costs.

More specifically, covered entity and provider organizations commenters raise the following concerns regarding the potential costs of implementing a rebate pilot program, which manufacturer and technology company commenters contend are overstated.

Covered entities and provider organizations generally describe current administrative costs for the upfront discount replenishment model as manageable and well-integrated into existing operations, noting that their systems, staffing, and workflows have been developed over time to support compliance with 340B requirements, including inventory management, split-billing, duplicate discount prevention, and audit readiness. Covered entities employ third-party administrators (TPA), which are specialized vendors that manage the administrative and operational functions of the 340B Program on behalf of covered entities, including tracking patient eligibility, managing split-billing software, processing claims data, and ensuring compliance with program requirements. These commenters emphasize that while program participation entails ongoing administrative effort, including use of third-party administrators (TPAs), compliance monitoring, and periodic audits, these activities are predictable, standardized, and embedded within existing pharmacy and billing infrastructure.

Manufacturers and technology company commenters offer a contrasting view, asserting that current administrative processes under the upfront discount model are complex, fragmented, and resource-intensive. In particular, they point to challenges in identifying and resolving duplicate discounts, preventing diversion, and avoiding discounts that are not required under the nonduplication provision of the MDPNP. These commenters state that existing mechanisms, such as the MEF, which is the mechanism that HRSA developed pursuant to section 340B(a)(5)(A)(ii) of the PHSA, as well as claims modifiers, are insufficient and often require significant manual reconciliation, audits, and dispute resolution efforts, resulting in ongoing administrative costs across stakeholders. Commenters cited to an Office of Inspector General report  19 that noted that the MEF is not able to identify claims for outpatient prescription drugs paid by Medicaid managed care plans and noted that this is a particular area of vulnerability for duplicate Medicaid discounts. They further emphasize that, under the replenishment model, covered entities receive 340B pricing upfront without contemporaneous verification of eligibility, while manufacturers lack access to the claims-level data necessary to confirm compliance with statutory requirements. In their view, this lack of transparency contributes to inefficiencies and necessitates reliance on retrospective oversight mechanisms that are resource-intensive, limited in scope, and ineffective at preventing improper claims in real time.

Commenters also expressed divergent views regarding the administrative costs associated with implementing a 340B rebate model pilot program. Covered entities, provider trade associations, contract pharmacy representatives, third-party administrator consultants and patient advocacy stakeholders, generally assert that a rebate model would introduce substantial new administrative requirements, including claims-level data submission, rebate tracking, reconciliation across multiple systems, and management of denied or disputed claims. They state that implementation would likely require additional staffing and operational changes as well as increased reliance on TPAs or other external vendors, potentially resulting in additional service fees and contractual complexity. Commenters further express concern that, particularly during a transition period or for drugs not included in a pilot, covered entities may be required to maintain both existing upfront discounts processes and new rebate-related workflows, creating duplicative operational burdens. Several commenters also note that variability in manufacturer-specific requirements, such as differing data formats, submission timelines, validation criteria, and dispute processes, combined with a lack of standardized systems, could increase administrative complexity, require the use of multiple platforms, and lead to higher operational costs and inefficiencies.

By contrast, manufacturers and trade organizations assert that the incremental administrative burden associated with a rebate model would be limited or manageable. They emphasize that covered entities already collect and maintain much of the relevant claims-level data as part of routine billing and compliance activities, including data captured in electronic health records and submitted to payers. According to these commenters existing systems and TPAs can be leveraged to support data submission and rebate processing, minimizing the need for new infrastructure. They further contend that a rebate model could, over time, reduce administrative burden by improving data transparency, decreasing reliance on retrospective audits and dispute resolution, and enabling more efficient identification and prevention of duplicate discounts and other compliance issues within the 340B Program.

Commenters provide a range of quantitative estimates regarding potential staffing impacts associated with a 340B rebate model pilot program. Covered entities generally predict that a rebate model would result in the need for additional personnel to support claims-level data submission, rebate tracking, reconciliation, and denial or dispute resolution activities. Several commenters estimate that implementation could require approximately 0.5 to 1 full-time equivalent (FTE) for smaller entities and 1 to 2 or more FTEs for larger organizations or those with higher prescription volumes or extensive contract pharmacy networks. A covered entity trade association commenter cites that over 80% of surveyed entities anticipated needing additional staff, with associated annual personnel costs ranging from approximately $30,000 to over $200,000 per FTE, depending on role and location. In addition, commenters report that existing rebate-related processes can require 10 to 40 or more hours per week of staff time and indicate that a rebate model could increase workload due to expanded reporting, reconciliation, and appeals processes. These commenters provided only estimates of anticipated staffing impacts.

Manufacturers and other groups, on the other hand, assert that staffing impacts would be limited, emphasizing that covered entities already maintain the relevant claims-level data and operational infrastructure necessary to support rebate processing. These commenters state that, in addition to leveraging existing billing systems and TPAs, the administrative workload associated with rebate models may be comparable to or lower than current processes over time, particularly as improved data transparency reduces the need for manual audits and dispute resolution. One manufacturer trade group contends that a rebate model would leverage existing staffing and workflows, rather than necessitating new personnel or fundamentally different operational systems. Manufacturers also question the reliability of specific quantitative estimates submitted by covered entity commenters, citing concerns about survey sample size, response bias, and assumptions regarding rebate payment timelines that differed materially from the Pilot's requirements.

In particular, a manufacturer trade group emphasizes that modern pharmacy and health system infrastructure including automation, batch processing, and TPAs can handle data extraction, formatting, and submission with minimal manual intervention once systems are configured. Accordingly, it maintains that ongoing staffing demands would be limited with most processes becoming automated after initial implementation. Finally, manufacturers assert that over time a rebate model could reduce overall administrative burden, including staffing demands, by improving data transparency and minimizing the need for labor-intensive retrospective activities such as audits, reconciliation, and dispute resolution.

A technology vendor commenter that has developed and deployed a 340B Program rebate processing platform similarly asserts that staffing impacts can be minimized through direct TPA integration. That commenter reports that, as of spring 2026, 53 TPAs are able to submit data directly to its rebate processing platform on behalf of covered entities, which in its view would significantly reduce or eliminate any potential burden of data compilation on the part of covered entities and reduce the need for additional in-house staff. The commenter asserts that for the more than 7,000 covered entities that have previously submitted data to the vendor's existing 340B ESP platform, the incremental work necessary to submit data under a rebate model is very limited because the required data fields are the same. With regard to covered entity concerns of maintaining processes for both existing upfront discounts processes and new rebate-related workflows, the Pilot design seeks to reduce burden in this area by requiring plans to allow covered entities to order the selected drugs under existing distribution mechanisms ( e.g., 340B wholesaler accounts with WAC prices loaded) to ensure purchases flow through existing infrastructure, eliminating the need for duplicative operational burdens.

Commenters express differing views regarding the systems and infrastructure required to implement a 340B rebate model pilot program. Most covered entity groups express that their current IT systems, pharmacy management platforms, and TPA arrangements are designed to operate under the existing upfront discount and replenishment model and would require significant modification or replacement to support claims-level rebate submission and reconciliation. These commenters describe potential needs for new data integration across electronic health records, pharmacy systems, billing platforms, and financial systems, as well as the development of new workflows to manage rebate eligibility determination, submission, and tracking. Some commenters estimate that implementation could require tens of thousands of dollars in annual software and reporting costs for smaller entities, with estimates commonly ranging from approximately $30,000 to $50,000 per year for software, tracking functionality, and workflow redesign. Other commenters, particularly larger health systems, project substantially higher costs associated with systems integration, vendor support, and operational implementation, in some cases describing hundreds of thousands of dollars in one-time implementation costs and significant ongoing vendor expenditures. Commenters also express concern that variation in manufacturer-specific data requirements or platform requirements could necessitate the use of multiple systems, increasing complexity, interoperability challenges, and long-term maintenance costs. Manufacturers argue the opposite and assert that existing systems and infrastructure are largely sufficient to support a rebate model, noting that covered entities already maintain and transmit the relevant claims-level data for purposes of billing and reimbursement under Medicare, Medicaid, and commercial payers. These commenters state that current IT systems and TPAs could be leveraged to facilitate data submission and reconciliation and emphasize the availability of centralized or interoperable platforms designed to streamline rebate processing and improve data transparency. They further assert that such systems could reduce fragmentation over time by enabling standardized data exchange and more efficient coordination among stakeholders.

Technology vendors that have developed rebate processing platforms similarly assert that existing systems and infrastructure are sufficient to support implementation. One such commenter, a technology company that has engaged with HRSA since 2019 to develop and operationalize a 340B rebate model, states that its platform is capable of effectuating discounted pricing directly to covered entities as a rebate at the unit level. This commenter reports that multiple manufacturers are already using its platform to collect claims data, that thousands of covered entities have registered on the platform, and that covered entities have reported fully onboarding in less than ten minutes through a self-service process. The commenter further explains that the platform integrates with existing billing, pharmacy, and TPA systems through publicly available application programming interfaces (or APIs), supports near real-time data submission, and incorporates automated validations that check for duplicate discounts before they occur. The commenter also notes that beta testing with covered entities, including health centers, hospitals, and clinics, confirmed that covered entity partners such as TPAs can connect to the platform using existing systems cheaply and quickly, and that standard TPA reports could be leveraged to create dispensation reports matching the format required by the platform. Based on this experience, the commenter contends that the administrative burden on covered entities is minimal once systems are configured, and that a rebate model will simplify the process of identifying when the right discount applies to the right dispense, thereby reducing the costs associated with manufacturer good-faith inquiries, audits, and dispute resolution under the current model.

Commenters identified a range of additional anticipated costs and operational impacts associated with a potential 340B Rebate Model Pilot Program beyond those related to direct administrative, staffing, and systems requirements. Covered entities and provider organizations express concern that a rebate model could result in secondary financial effects, including loss of wholesaler prompt-pay or cost of goods discounts, increased borrowing or financing costs to manage larger working-capital requirements, and potential inventory-related financial risk associated with purchasing drugs at higher upfront prices. While few commenters quantified these secondary effects directly, several quantified the underlying financial exposure, including 20- to 40-fold increases in upfront acquisition costs for affected drugs, approximately $10 million in additional annual working-capital requirements for one large health system, and measurable reductions in liquidity ( e.g., a 0.5% reduction in days cash on hand and more than $1 million in cumulative liquidity impacts over 5 years). Some commenters also note the potential for disruptions (or actual disruptions, during the brief period in preparation for the earlier rebate model) to contract pharmacy arrangements, including reduced participation by pharmacy partners due to increased administrative complexity and financial risk, as well as broader impacts on wholesaler relationships, credit limits, and purchasing terms. In addition, commenters indicate that these combined pressures could lead to reductions in patient services, program offerings, or workforce capacity, particularly for smaller or resource-constrained covered entities. Commenters estimates for indirect financial exposures varied and ranged from hundreds of thousands of dollars annually to tens of millions of dollars annually for larger covered entities.

Manufacturer groups did not identify significant additional categories of cost beyond those associated with implementation and administration and instead emphasized potential offsetting benefits. These commenters state that improved claims-level transparency and coordination across pricing programs could reduce inefficiencies, minimize disputes, and improve overall program integrity. Some also suggested that more accurate application of discounts could lead to more predictable financial flows and reduced long-term administrative and compliance costs.

HRSA carefully considered the full range of comments while considering a range of policy options to best meet the commenters' varying perspectives. HRSA recognizes that most covered entities currently operate under an upfront discount model that reduces the need for post-purchase reconciliation. HRSA agrees that the upfront discount model limits certain administrative steps. However, the record demonstrates that covered entities and their contract pharmacy partners already perform extensive administrative functions under the 340B Program, including inventory management, compliance oversight, audit preparation, collection and submission of claims-level data to manufacturers, TPAs, and payers, and reconciliation activities. The record further demonstrates that IT systems and vendors already exist in a competitive marketplace to allow covered entities to shift to a rebate model without significant burden. These existing capabilities reflect a mature operational infrastructure that can be leveraged, rather than replaced, under a rebate model to more effectively prevent duplicate discounts and address the program integrity concerns discussed in this Notice.

HRSA finds that many projections of administrative burden rest on assumptions that do not align with the design of the Pilot or that do not accurately reflect what is needed administratively to implement a rebate approach. For example, several commenters assumed that covered entities would be required to develop and maintain manufacturer-specific data submissions, support multiple proprietary submission platforms, submit purchasing data, encounter-level information, patient-level clinical information, or real-time claims feeds, and manually reconcile claims across multiple systems. Other commenters projected substantial staffing increases, including estimates of six or seven additional full-time employees, more than 12,000 additional annual labor hours, or approximately 240 additional staff hours per week, to support rebate administration, based on assumptions that data would require extensive manual collection, validation, and submission. Similarly, some commenters projected significant one-time system development costs by assuming the need to build new interfaces between electronic health records, split-billing software, third-party administrators, financial systems, and multiple manufacturer portals. These projections generally assumed limited automation, manufacturer-specific reporting requirements, or ongoing parallel workflows that are not contemplated under the Pilot. By contrast, the Pilot requires submission only for the limited universe of drugs included in the Pilot, utilizes standardized pharmacy and medical claims data elements, and relies primarily on information that covered entities already collect, maintain, and retain in the ordinary course of billing, dispensing, audit, and compliance activities. As discussed in Section VIII.D., the Pilot does not require submission of purchasing records, encounter-level clinical documentation, or other patient-level information beyond the standardized claims elements specified by HRSA. HRSA also anticipates that use of standardized submission formats and centralized reporting will substantially reduce the need for the manual reconciliation and customized interfaces assumed by many commenters. HRSA published its estimate of the annual administrative cost in an Information Collection Request  20 to total $523,345,680 for the 15,249 covered entities reporting claims. Based on that estimate, HRSA projects administrative costs of reporting claims data for the Pilot will average approximately $34,320 per entity, but may vary by entity type.

The Pilot is structured to enable covered entities, manufacturers, and vendors to operationalize processes and identify implementation challenges on a limited, manageable scale. Based on 2025 data, the included products represent less than 5.5% of total 340B sales with the remaining 94.5% of drug sales continuing under the upfront 340B discount model in 2027. This approach allows for the evaluation and adjustment of workflows and data exchange mechanisms based on actual experience prior to broader application, generating concrete, practice-based evidence on how the rebate model operates.

Given the limited scope of the Pilot and its reliance on existing data infrastructure and operational processes, HRSA anticipates that any staffing impacts will generally be modest. The record shows that covered entities already collect and maintain relevant claims and purchase data and routinely utilize TPAs and automated systems for billing, compliance, and reconciliation activities. As a result, HRSA expects that, in many cases, additional staffing will be unnecessary because they may be absorbed within existing operational structures or supported through existing third-party arrangements. In limited cases, where operational structures are less sophisticated or TPAs are not utilized, covered entities may need additional staffing to support the Pilot's claims reporting processes.

Several commenters quantified one-time implementation activities associated with a rebate model, including process development, workflow redesign, staff training, IT system configuration, legal review, and early-stage reconciliation. One academic medical center estimated approximately $90,000 in one-time administrative implementation costs and an additional $130,000 for initial IT integration and system configuration. Other commenters estimated approximately 40 hours of initial IT development, 20 hours of legal review, and elevated staffing requirements during the initial implementation period. HRSA recognizes that implementation of a new reporting process may require certain transitional activities. However, many commenters' estimates assumed manufacturer-specific submission requirements, manual reconciliation across multiple proprietary platforms, and customized interfaces that are not contemplated under the Pilot's standardized reporting approach. Consequently, while commenters identified legitimate startup activities, HRSA expects that implementation costs under the Pilot would be substantially reduced through standardized data elements, centralized reporting processes, and reliance on information already maintained by covered entities in the ordinary course of billing and compliance activities and the costs will be transitional. These costs are inherent to the adoption of a new operational approach, which requires that new processes be introduced on a limited scale to allow for calibration and refinement. HRSA expects that, as processes become standardized and integrated into routine operations, these transitional costs will diminish, consistent with ordinary program evolution.

Regarding systems and infrastructure, HRSA recognizes that implementation of a rebate model may require coordination with IT platforms to support the submission and validation of claims data. As an initial matter, the costs of the rebate IT platform must be paid by manufacturers. That is a requirement of participation in this Pilot. Additionally, consistent with comments from manufacturers and technology stakeholders, the record shows that rebate processing platforms have already been developed or are in the process of being operationalized and are designed to integrate with existing billing, pharmacy, and TPA systems. HRSA anticipates that these platforms will leverage existing data flows and automation capabilities, thereby minimizing the need for covered entities to develop new systems. While some covered entity commenters raise concerns that covered entities do not currently submit the data outlined in the Pilot to these IT platforms, HRSA disagrees as manufacturers have utilized similar platforms and oftentimes the same company for implementation of various contract pharmacy requirements since at least 2021. 21 Moreover, covered entities' data collection and reporting obligations under the current system extend beyond these specific manufacturer systems. HRSA expects that manufacturers and their designated platform vendors will be responsible for the development, operation, and maintenance of rebate processing platforms, including associated system costs for the rebate processing platform, and encourage platform designs that promote interoperability, minimize disruption to existing workflows, and reduce administrative burden on covered entities.

In response to commenter assertions that a rebate model would impose unmanageable costs and complexity, the record includes operational data from a technology vendor that has developed and deployed a rebate processing platform for the 340B Program. That commenter reports that the data fields and utilization data required for rebate submission are the same as those already submitted by more than 7,000 covered entities through the vendor's 340B ESP platform, making the incremental increased effort for those entities very limited. For entities that have not previously submitted data through such platforms, the commenter states that the upload, mapping, and validation steps are designed to be straightforward and user-friendly and typically require approximately 15 minutes per data upload submission, based on actual usage patterns. Furthermore, 53 TPAs are able to submit data directly to the rebate platform on behalf of covered entities, which the commenter states would significantly reduce or eliminate any potential data compilation burden on covered entities. Over 10,000 covered entities have already completed registration on the 340B rebate platform.

With respect to other anticipated costs, including vendor fees and training, HRSA notes that participation in the 340B Program has always entailed some level of compliance and operational cost. Covered entities derive significant financial benefit from participation in the Program. For example, manufacturer commenters cited industry analyses estimating that covered entities derive substantial financial benefit from the difference between 340B acquisition costs and third-party reimbursement rates.

Covered entities are expected to maintain compliance as program requirements evolve. As part of its ongoing oversight, HRSA conducts audits and compliance reviews, and provides education and guidance to covered entities based on those efforts. Covered entities routinely update policies, procedures, IT systems and operational practices to align with program requirements and guidance and there may be operational costs associated with program participation and to ensure compliance. In addition, in 2025, covered entities purchased approximately $100 billion in covered outpatient drugs under the 340B Program, underscoring the scale of discounted drug purchasing available to covered entities and the resulting financial resources and savings available to support care for underserved populations.

Overall, HRSA concludes that while a rebate model may introduce incremental or transitional administrative and operational changes, HRSA believes the magnitude of the associated costs is likely to remain low. The core data elements required for rebate processing, namely, standardized pharmacy and medical claims data, are already generated, maintained, and routinely transmitted by covered entities and their contract pharmacy partners in the ordinary course of billing and reimbursement across Medicare, Medicaid, and commercial payers. As a result, the rebate model builds on existing data infrastructure and workflows rather than requiring the creation of entirely new systems or data streams. In addition, commenters note that established technologies, including automated claims processing, batch data submission, and TPAs, can be leveraged to facilitate rebate submission and reconciliation with minimal manual intervention once implemented. Also, increased claims-level transparency may reduce reliance on retrospective audits, dispute resolution processes, and other resource-intensive compliance activities, offsetting some administrative costs over time. Taken together, these considerations support HRSA's conclusion that the overall costs of implementing a rebate model are likely to be modest, and in some cases, may be offset by efficiencies gained through improved data visibility and streamlined program administration. HRSA believes the anticipated benefits of the Pilot outweigh the costs.

Many commenters expressed concern that covered entities would be required to pay wholesale acquisition cost (WAC) upfront and wait for rebate payments, potentially creating liquidity constraints, reliance on credit, and financial instability, particularly for rural and safety-net providers. Other commenters stated that this would have limited impact because rebates would be paid prior to when drug purchase payments are due to wholesalers and that 340B rebate models cost the same or less than current drug inventory models. Commenters further state that the potential cash-flow impacts of a rebate-based model may be inaccurate or overstated. These commenters note that the numbers provided are only estimates and that healthcare providers already operate within reimbursement frameworks in which payment is received after the point of purchase, including under Medicare, Medicaid, and commercial payer systems, and asserted that rebate payment timelines could be structured to align with or occur prior to standard drug purchasing payment obligations. The commenters further note that wholesalers commonly provide covered entities with payment windows or credit arrangements for product purchases, allowing entities to receive and dispense medications prior to remitting payment for the corresponding wholesaler invoice. These commenters also indicate that unit-based rebate models could reduce delays associated with current models that require accumulation of a full package size before purchasing at the 340B discounted price and improve the predictability of reimbursement over time.

HRSA has considered the comments but based on available studies of a rebate model, HRSA believes that the Pilot is unlikely to result in unstable cash flow for covered entities, as certain commenters have predicted. IQVIA, a healthcare data analytics firm, recently empirically evaluated the opposing narratives about the impact of a shift from upfront discounts to rebates on providers' cash flow. 22 IQVIA modeled the effects on cash flow of existing drug inventory and replenishment models and compared those effects with a rebate model. Its analysis modeled liquidity impact and interest costs under a variety of assumptions, including different rebate timelines, different wholesaler payment timelines, different interest rates, and different 340B discount percentages. Their study concluded that: for entity-owned pharmacy purchases, interest costs for the rebate model (0.19%) were no larger than for the predominant drug inventory model used by those pharmacies, referred to as physical replenishment. For contract pharmacies, the rebate model had lower interest costs (0.03%) than both types of replenishment model, physical and credit-based replenishment. Even under unfavorable assumptions, rebate interest costs remained under 1.2%.

Similarly, a 2021 study by 3 Axis Advisors (another healthcare data analytics company) found a 340B rebate model improves cash flow relative to replenishment models in the case of covered entities that use contract pharmacies. 23

HRSA has incorporated several design elements intended to mitigate potential cash-flow impacts on covered entities. First, the Pilot requires prompt rebate payments, within 10 calendar days of submission of a complete claim. This accelerated payment timeline is intended to precede the payment deadlines associated with standard wholesaler payment terms, thereby reducing or eliminating the need for covered entities to “float” the WAC price or finance drug purchases for extended periods. Thus, while many covered entities would need to place an order at the higher WAC price for the drugs included in the Pilot, payment to wholesalers for those orders, in most cases, would occur after the rebate from the manufacturer is received. Therefore, HRSA expects the cash-flow impacts on covered entities to be minimal. Second, the Pilot requires unit-level rebate processing, which allows covered entities to receive rebates based on individual dispenses or administrations rather than waiting for full package utilization, as occurs under the current replenishment model. This approach is expected to accelerate the timing and frequency of rebate payments, resulting in more predictable and continuous cash flow. Third, the Pilot accounts for starting inventory considerations to facilitate the transition from upfront discounts to rebates for a limited set of drugs. HRSA has incorporated operational flexibilities, such as a 15-day implementation grace period for unreplenished accumulations, to address commenter concerns regarding inventory timing, cash flow, and potential gaps between drug purchase and rebate eligibility during the transition to a rebate-based model.

Taken together, these design features are intended to ensure that covered entities can access 340B pricing in a timely manner while minimizing short-term liquidity pressures. HRSA emphasizes that timely rebate payment is a core requirement of manufacturer participation in the Pilot and is critical to maintaining operational stability for covered entities. HRSA intends to monitor manufacturer compliance with established payment deadlines and may take appropriate enforcement action where delays occur. Such actions may include corrective measures and, where warranted, removal of manufacturers from the Pilot that demonstrate repeated or systemic noncompliance with rebate payment requirements. If, for example, covered entities report that a manufacturer is consistently exceeding the 10 calendar day threshold for rebate payment, then HRSA could review a sample of allegedly affected transactions over a sufficient period of time ( e.g., 10 calendar days) and, if HRSA were to find that a significant portion of those transactions ( e.g., five or more percent) were delayed without justification, HRSA could initiate removal proceedings of that manufacturer from pilot participation for non-compliance.

Commenters raise a range of concerns regarding rebate denials and dispute resolution under a potential 340B rebate model. Covered entities and other groups generally express concern that rebate determinations made after dispensing could introduce uncertainty regarding payment outcomes, including the risk of denied or delayed rebates. Several commenters indicate that even modest denial rates could result in unrecoverable financial losses and increase administrative burden associated with tracking, appealing, and reconciling denied claims. Commenters also express concern regarding the potential for inconsistent or non-standardized denial criteria across manufacturers, as well as the absence of clearly defined timelines, documentation requirements, or dispute resolution processes. In addition, some commenters noted that existing dispute mechanisms in related programs require significant manual effort and extended resolution periods, which could be exacerbated under a rebate model if claim volumes increase.

Other commenters disagree and argue that the rebate model could improve the accuracy and efficiency of rebate determinations by enabling claims-level validation prior to payment and reducing the need for post hoc reconciliation. These commenters indicate that improved data transparency could help prevent improper payments and reduce the volume of disputes over time, particularly if standardized data elements and submission processes are used. Some commenters also note that centralized or platform-based approaches could facilitate more timely identification and resolution of discrepancies, provided that clear rules, standardized data requirements, and defined dispute resolution processes are established. They also indicated that such centralized or platform-based approaches support more predictable outcomes for covered entities, facilitate more efficient manufacturer review processes, and minimize the need for appeals.

In response to commenter concerns regarding rebate denials and dispute resolution, HRSA includes design features within the Pilot to promote transparency, consistency, and accountability in rebate determinations. Specifically, the Pilot requires manufacturers to document and report denied claims, including the basis for each denial and the status of any associated dispute. HRSA intends to use this information to monitor denial patterns and assess whether rebate determinations are applied in a consistent and appropriate manner across participating manufacturers and will remove manufacturers from the Pilot where appropriate. If, for example, covered entities report that a manufacturer is consistently denying rebate payment without acceptable justification, then HRSA could review a sample of allegedly affected transactions over a sufficient period of time ( e.g., 10 calendar days) and, if HRSA were to find that a significant portion of those transactions ( e.g., 5 or more percent) were denied without acceptable justification, HRSA could initiate removal proceedings of that manufacturer from pilot participation for non-compliance.

In addition, the Pilot will provide a defined pathway for covered entities to challenge denied claims, including specified timeframes for review and response, to facilitate timely resolution of disputes. Tools will be made available for reporting rebate denials to be challenged to assist HRSA's review and facilitation of resolution. This information will be made public on our website within 30 calendar days of the Pilot's effective date. HRSA anticipates that these measures will reduce administrative burden associated with prolonged reconciliation efforts, improve visibility into rebate outcomes, and support more standardized processes for dispute resolution. To the extent that disputes cannot be resolved through these mechanisms, covered entities may pursue available remedies through the 340B Administrative Dispute Resolution (ADR) process in accordance with the regulations issued pursuant to 42 U.S.C. 256b(d)(3)(A).

Commenters recommend that HRSA establish mechanisms to receive ongoing feedback during implementation of any rebate model pilot program. Suggested approaches included formal stakeholder engagement processes, such as public listening sessions, advisory groups, or technical working groups representing a range of stakeholders, as well as periodic opportunities for written input. Commenters also emphasized the importance of collecting and analyzing quantitative data generated through the Pilot, including information on rebate submissions, denials, dispute resolution, and payment timelines, and suggested that certain data be made available to support transparency and evaluation. In addition, commenters recommend that HRSA issue interim and final evaluation reports and use implementation experience to refine program design. Some commenters further highlight the need for direct communication channels and technical assistance to address operational issues in real time. HRSA is considering these recommendations in developing processes to monitor Pilot implementation, gather stakeholder input, and evaluate program outcomes.

Commenters provide differing perspectives regarding the data collection and reporting requirements associated with a 340B Rebate Model Pilot Program. Most covered entities generally state that a rebate model could require expanded data collection and reporting, including claims-level tracking, validation, and reconciliation across multiple systems. Some commenters indicate that these requirements could necessitate additional staff time and coordination across pharmacy, billing, compliance, and finance functions, particularly for entities with limited administrative resources or complex contract pharmacy arrangements. Commenters also raise concerns regarding the potential for variation in reporting requirements across manufacturers, which could increase complexity and require the use of multiple reporting systems or formats. Smaller covered entities indicate that they have limited IT capacity and express concern regarding the potential need for system modifications, increased reliance on TPAs, and additional data management resources. Some of these commenters also raised concerns regarding data privacy and security, particularly with respect to the transmission of claims-level information to manufacturers or third-party platforms.

On the other hand, manufacturers asserted that the incremental data collection and reporting burden would be limited, noting that covered entities already collect and maintain the relevant claims-level data as part of routine third-party billing, compliance, and audit processes. These commenters stated that existing TPAs and automated reporting systems could be leveraged to support data submission and reporting and that standardized data formats and centralized platforms could reduce duplicative reporting requirements over time.

In response to these comments, HRSA intends to limit data collection manufacturers may impose on covered entities under the Pilot to the minimum necessary to effectuate rebate payments and support 340B program integrity and nonduplication under the MDPNP. HRSA believes that limiting the required data collection to a narrowly defined set of standardized pharmacy and medical claims data elements substantially reduces the potential burden relative to broader reporting models considered during development of the Pilot. In response to stakeholder feedback, HRSA declined at this juncture to require additional data elements proposed by manufacturers, including purchasing data, encounter data, invoice-level information, and patient-level clinical information, because HRSA determined that collecting and reconciling such information could create additional operational complexity and systems burden for covered entities acclimating to a new rebate environment. Instead, the Pilot relies primarily on claims-level information that is already generated and maintained in the ordinary course of pharmacy and medical billing and that, in many cases, is already exchanged through existing payer, TPA, or contract pharmacy relationships.

HRSA anticipates relying on a defined set of standardized pharmacy and medical claims data elements that are commonly available and already maintained by covered entities or their vendors in the ordinary course of billing and dispensing operations. For example, CMS requires submission of prescription drug event data (PDE) for purposes of calculating payments to Part D plans. HRSA expects that data submitted by covered entities to manufacturers will be comparable to data already being collected and maintained through existing third-party vendor relationships and therefore does not expect a significant impact on covered entities disproportionate to the significant benefits covered entities derive from the 340B Program.

In addition, the reporting requirements are limited to the selected drugs for initial price applicability years 2026 and 2027 as included on the CMS Medicare Drug Price Negotiation Selected Drug List during their price applicability periods, which represents a small portion of overall 340B utilization relative to the total number of covered outpatient drugs available under the Program. HRSA anticipates that this limited scope will allow covered entities and vendors to leverage existing infrastructure and implement operational changes incrementally rather than across the full universe of 340B transactions. HRSA also encourages the use of standardized reporting formats and interoperable systems to reduce variability and improve efficiency.

HRSA further believes that the burden associated with limited claims-level reporting is justified by the importance of ensuring program integrity, duplicate discount prevention, and coordination across federal pricing programs, including the MDPNP and Medicaid rebate programs. The Pilot is intended to generate implementation data and operational experience regarding these issues in a controlled and limited environment. HRSA anticipates that the Pilot will help to improve transparency, support prospective validation of transactions, and reduce reliance on retrospective audits and dispute resolution processes that many stakeholders described as resource-intensive under the current framework.

HRSA further notes that the Pilot introduces new reporting requirements for manufacturers that are not present under the upfront discount model. As a condition of participation, manufacturers will be required to report rebate data to HRSA, including information necessary to support program oversight and monitoring. HRSA anticipates that these requirements will enhance transparency and enable HHS to evaluate the operational impacts of the rebate model.

In light of the differing perspectives regarding the data collection and reporting requirements discussed in Section F, HRSA recognizes the importance of addressing questions regarding the applicability of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to the data transfers contemplated under the Pilot. Although specific public comments raising concerns about HIPAA compliance and the ability of 340B covered entities that are HIPAA covered health care providers to disclose protected health information (PHI) under the Pilot were not submitted in response to the RFI, HRSA is aware that questions regarding the intersection of HIPAA and claims-level data submissions have arisen in other contexts within the 340B Program. HRSA addresses these questions here to provide clarity to covered entities, manufacturers, and other stakeholders regarding the applicability of HIPAA to the disclosure of PHI under the Pilot.

As an initial matter, HRSA notes that the data elements required under the Pilot, as set forth in Section VIII.D of this Notice, are limited to standardized pharmacy and medical claims fields such as date of service, NDC-11, quantity dispensed, prescriber ID, service provider ID, 340B ID, RX BIN, RX PCN, and health plan identification information. These data elements do not include direct patient identifiers such as patient names, addresses, dates of birth, Social Security numbers, medical record numbers, or other information that would directly identify individual patients.

To the extent that the data submitted under the Pilot is not individually identifiable health information, it is not PHI as defined under the HIPAA Privacy Rule, 45 CFR 160.103, and accordingly is not subject to the restrictions on use and disclosure set forth in the HIPAA Privacy Rule (45 CFR part 160 and subparts A and E of part 164). The Pilot requires that manufacturer plans ensure the IT platform used for data submission has mechanisms in place to protect the privacy of the data submitted. Under the HIPAA Privacy Rule, individually identifiable health information that has been de-identified in accordance with 45 CFR 164.514 is no longer PHI, and the Privacy Rule's restrictions on use and disclosure do not apply to such de-identified information. The HIPAA de-identification standard may be satisfied through either the expert determination method, under which a person with appropriate knowledge and experience applies statistical and scientific principles and methods to determine that the risk of identifying an individual is very small, 45 CFR 164.514(b)(1), or the safe harbor method, under which specified identifiers are removed and the covered entity has no actual knowledge that the remaining information could be used alone or in combination with other information reasonably available to an intended recipient to identify an individual, 45 CFR 164.514(b)(2). Any de-identification of PHI to meet HIPAA obligations must comply with the HIPAA Privacy Rule requirements. Covered entities that submit data that has been properly de-identified consistent with 45 CFR 164.514 to manufacturers through the platforms would not be disclosing PHI to manufacturers and therefore would not need to rely on a HIPAA permission to allow the disclosure.

HRSA also recognizes that some stakeholders have raised questions in other contexts regarding the point at which de-identification occurs in the data transmission process, and specifically whether data may be considered PHI at the moment of transfer from a covered entity to a manufacturer's platform even if it is subsequently de-identified. HRSA's general view is that this concern may reflect a misunderstanding of how rebate processing platforms operate. As described in publicly available documentation for existing 340B claims data platforms, de-identification occurs through automated processes prior to data ingestion by the platform, such that neither the manufacturer nor its vendor receives or retains PHI. 24 Where such automated de-identification is validated through an expert determination under 45 CFR 164.514(b)(1), the resulting data does not constitute PHI regardless of whether the underlying source data, prior to automated processing, included identifiable elements. 25 HRSA emphasizes that the Pilot's design is intended to ensure that manufacturers do not receive or have access to PHI at any point in the data submission process.

Even assuming, for purposes of analysis, that the data submitted by covered entities under the Pilot were to constitute PHI, HRSA notes that the HIPAA Privacy Rule generally permits covered entities to disclose PHI without individual authorization for purposes of payment. Under 45 CFR 164.506(c), a covered entity may use or disclose PHI for its own payment activities, which include activities undertaken to obtain reimbursement for the provision of health care, including the determination of eligibility or coverage and the adjudication of health benefit claims. See 45 CFR 164.501 (definition of “payment”). A covered entity's submission of claims-level data to a manufacturer, including vis-à-vis a rebate processing platform, in order to effectuate a rebate that reduces the covered entity's net acquisition cost for a covered outpatient drug relates to, and may affect by rebate, the payment activity of the covered entity. 26 HRSA further notes that the HIPAA Privacy Rule's minimum necessary standard, 45 CFR 164.502(b) and 164.514(d), requires that disclosures of PHI be limited to the minimum necessary to accomplish the intended purpose. The Pilot's data requirements, which are restricted to a defined and limited set of standardized claims fields, are designed to satisfy this standard.

HRSA also notes that certain of the covered entities that have raised data privacy concerns in other contexts routinely transmit materially identical claims-level data, including through the same or similar vendor platforms, for purposes of contract pharmacy replenishment, third-party payer billing, and compliance with Medicare, Medicaid, and commercial insurance requirements. The data elements required under the Pilot are comparable to, and in many cases, a subset of the information that covered entities already collect, maintain, and transmit in the ordinary course of these operations.

Finally, HRSA notes that the Pilot incorporates multiple data safeguard requirements that further mitigate any residual privacy risk to individuals. As detailed in Section VIII.A, manufacturer plans must ensure that the IT platform has assurances in place to ensure data security, that data collection is limited to the specific elements necessary for providing 340B rebates, and that the platform has mechanisms in place to protect patient identifying information consistent with HIPAA and other applicable privacy and data security laws not inconsistent with federal law or 340B program requirements. The Pilot further requires that IT platforms have the capacity to filter and use only the data required to effectuate the rebate. These requirements, taken together, are designed to ensure that data submitted under the Pilot is collected, transmitted, and maintained in a manner that protects patient privacy while enabling the claims-level transparency necessary to support program integrity. HRSA does not anticipate that compliance with the Pilot's data submission requirements will require covered entities to violate HIPAA or any other applicable federal data privacy law. HRSA will further monitor implementation to confirm that participating manufacturers and their designated platforms maintain appropriate privacy and data security protections and whether any such violations would need to be reported to appropriate officials.

Manufacturers, technology and data intermediaries, and certain transparency-oriented stakeholders generally support the submission of data regarding the Pilot by manufacturers to HRSA. They indicate that the data can be used to assess compliance with a rebate model and its effectiveness. Commenters suggest that aggregate data, making certain to protect confidential and proprietary information, should be shared with the public and would be useful for all stakeholders. Several commenters express concern about the use of the 340B Prime Vendor to collect this information due to a perceived conflict of interest.

HRSA will require participating manufacturers to submit purchase data reports to the agency. HRSA will continue to assess reporting burden and implementation experience and may refine requirements as appropriate to balance program integrity objectives with administrative feasibility. HRSA agrees that the collection of Pilot data is important to evaluate adherence to the rebate framework and to evaluate the impact and effects of the Pilot. HRSA also agrees that providing aggregate data, which will not contain confidential or proprietary information, to the public is important to provide further transparency into the 340B Program.

HRSA appreciates the commenters' concerns regarding perceived conflicts of interest in connection with the agency's use of the 340B Prime Vendor for certain Pilot-related activities. The 340B Prime Vendor, a contractor engaged by HRSA to provide operational support to covered entities participating in the 340B Program, including negotiating additional discounts with manufacturers and offering tools and resources to help entities manage Program compliance, does not make any eligibility determinations, enforcement decisions, or policy judgments regarding the 340B Program. HRSA does not agree that use of the 340B Prime Vendor to assist with Pilot data collection, for example, would pose a conflict of interest—actual or perceived. HRSA retains full authority over all aspects of the 340B Program and the long-standing role of the 340B Prime Vendor, which is recognized in the 340B statute (42 U.S.C. 256b(a)(8), is operational and administrative in nature and akin to contractor support functions.

Covered entities, provider organizations, and some patient advocacy groups generally state that a shift from upfront discounts to a rebate-based model could affect the timing and availability of financial resources used to support patient care. They express concerns that patients will lose access to discounted drugs and needed services because covered entities will necessarily have to divert resources away from patient care and toward complying with a rebate pilot that carries a significant price tag. These commenters state that the rebate Pilot will undermine access to care for patients, particularly for small, rural, or under-resourced covered entities. They assert that certain covered entities will not be able to pay the list price for IRA drugs because they lack cash reserves or borrowing power to cover the initial costs of these medications and will be forced to turn away patients in need because they cannot afford to maintain their usual inventory of drugs. If the Pilot is implemented, these commenters indicate that potential delays in receiving rebates combined with potential rebate denial rates could reduce funds available to support patient services.

Several commenters also provide examples of the scale of services supported by 340B savings, noting that such savings are used to fund sliding fee discount programs, medication assistance for uninsured and underinsured populations, and clinical services, with some entities reporting that tens of thousands of patients annually rely on these programs. Other commenters indicate that 340B savings support a broad range of services, including behavioral health, chronic disease management, and outreach programs, and expressed concern that reductions or delays in these resources could result in reduced service capacity, limitations on access to medications, or delays in care, particularly for smaller or resource-constrained providers. Patient and caregiver submissions emphasize the importance of ensuring that 340B savings translate into direct patient benefits, including reduced out-of-pocket costs. As a further adverse impact on patient access to care, commenters also highlight the potential withdrawal of certain retail pharmacies from processing 340B claims for IRA drugs dispensed at contract pharmacies. According to these commenters, if pharmacy chains opt not to provide 340B pricing, even on a temporary basis, for drugs included in the Pilot, this could result in patients having to go elsewhere and potentially travel far distances to obtain necessary medications—a problem that is particularly acute for rural communities.

In contrast, manufacturer commenters state that a rebate model could maintain or enhance patient access by improving program integrity and ensuring that discounts accrue to the patients that the 340B Program was intended to benefit. Some commenters cite industry analyses suggesting that duplicate discounts may affect up to approximately 25% of 340B drug transactions, representing tens of billions of dollars annually, and asserted that reducing such inefficiencies could improve the overall availability of resources within the healthcare system. These commenters also indicate that improved claims-level transparency and coordination across programs, including with the MDPNP, could support more accurate pricing and reduce the need for post hoc reconciliation, which may contribute to more predictable financial flows over time. While pharmacy stakeholders raise concerns about the seamless implementation of the Pilot with respect to contract pharmacy claims, they also highlight that testing rebates in the 340B Program could be done with certain safeguards in place such as 10-day rebate payment timelines, minimal necessary data, and clear federal oversight.

Congress created the 340B Program so covered entities could “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992). The Pilot does not deviate from that statutory purpose. Nor does implementation of a rebate-based model modify the statutory 340B ceiling price, covered entity eligibility requirements, or the legal framework governing patient eligibility under the 340B Program. Rather, the Pilot changes the mechanism and timing by which the 340B price is effectuated, shifting from an upfront discount to a post-dispense rebate that is expressly authorized by the 340B statute.

HRSA further notes that the Pilot is structured to mitigate any potential operational or financial disruption to covered entities. Manufacturers participating in the Pilot would be required to issue rebates within the defined 10-day timeframe, from the date of data submission and the agency expects that, in most cases, covered entities will submit data shortly after dispense so that covered entities would receive rebate payments before payment obligations to wholesalers become due. As a result, HRSA does not anticipate that the Pilot will materially impair covered entities' cash flow or their ability to furnish services to patients.

In addition, HRSA anticipates the Pilot will provide program integrity benefits that ultimately support patient care and stewardship of federal resources. By introducing claims-level verification and improved transparency, a rebate model will reduce the risk of duplicate discounts and diversion that undermine the integrity and sustainability of the 340B Program.

Commenters also raise a range of additional issues that did not fall within the specific topics outlined above. Several covered entities and provider organizations recommend that any rebate model pilot be limited in scope, including restricting participation to a subset of covered entities, such as voluntary participants, specific provider types, or entities with sufficient administrative and financial capacity to implement the model. These commenters state that a more targeted approach would allow HRSA to evaluate operational feasibility while minimizing potential disruption to smaller or resource-constrained entities. Other commenters suggest limiting the Pilot to certain drug categories, dispensing settings, or payer types to better isolate potential program impacts.

Additional comments address issues such as the need for clear implementation guidance, stakeholder education and training, alignment with existing federal and state requirements, and coordination across federal programs including the MDPNP. Some commenters also emphasized the importance of standardization across manufacturers, including consistent data requirements, timelines, and processes, to reduce complexity and administrative burden.

HRSA has designed the Pilot to be limited in scope. HRSA will continue to consider stakeholder input regarding participation parameters and implementation approaches and may refine design elements. HRSA intends to ensure that stakeholders receive education and technical assistance as the Pilot is underway and more information on the mechanism by which stakeholders submit feedback and receive technical support is forthcoming.

As noted in the comment summaries above, covered entity commenters proposed several alternatives to a rebate model that they contend would address program integrity concerns within the existing upfront discount framework. These alternatives generally included: (1) enhanced use of claims modifiers; (2) establishment of a centralized clearinghouse or similar data-sharing mechanism; (3) more intensive audits and oversight activities; and (4) narrower pilot structures, including limiting participation to voluntary participants, restricting the Pilot to certain covered entity types, limiting the Pilot to fewer drugs or dispensing settings, or excluding physician-administered drugs, contract pharmacy arrangements, or other categories of transactions. HRSA carefully considered each of these proposals and, for the reasons explained below, does not believe that any of these alternatives, individually or in combination, would adequately achieve the program integrity and evaluation objectives that the Pilot is designed to advance. Several covered entity commenters urged HRSA to rely on enhanced use of claims modifiers as the primary mechanism for preventing duplicate discounts, rather than transitioning to a rebate model. Under this approach, covered entities and pharmacies would apply standardized identifiers to claims at the point of adjudication to flag 340B transactions, enabling payers and manufacturers to distinguish 340B utilization from non-340B utilization without altering the upfront discount purchasing model. HRSA acknowledges that claims modifiers are a component of the current framework for identifying 340B transactions. However, HRSA does not believe that reliance on claims modifiers alone would adequately address the program integrity deficiencies that the Pilot is designed to mitigate and prevent.

The existing MEF, which HRSA created in 1993 to prevent duplicate discounts under the Medicaid Drug Rebate Program, relies on claims modifiers as its central mechanism. Yet multiple governmental oversight bodies have found this approach may be insufficient. In 2016, the HHS Office of Inspector General (OIG) reported that the MEF is inadequate to capture duplicate discounts with respect to Medicaid managed care enrollees, and that this inadequacy results in both duplicate discounts going unreported as well as the exclusion of some non-340B claims from rebate invoices, thereby resulting in foregone Medicaid rebates to states. 27 The OIG further noted in that same report that contract pharmacy arrangements create additional complications in preventing duplicate discounts. The GAO has identified similar deficiencies. 28 And the House Committee on Energy and Commerce, in its 2018 review of the 340B Program, documented the exponential growth of the program and the corresponding challenges in maintaining program integrity under existing mechanisms. 29 These findings demonstrate that claims modifiers, as currently implemented, may not be the best method to ensure compliance with the statutory duplicate discount prohibition, particularly in the context of Medicaid managed care and the increasingly complex distribution channels through which 340B drugs are dispensed.

Moreover, claims modifiers can be applied inconsistently, may be incomplete or unavailable at the time of adjudication, and depend on voluntary compliance by covered entities and dispensing pharmacies without an enforcement mechanism that ties the receipt of the 340B discount to verified claims data. Under the current model, manufacturers have argued that they lack timely access to claims-level data to identify all units subject to 340B pricing. The implementation of maximum fair prices under the MDPNP further increases concerns of overlapping price concessions across programs, potentially compounding the limitations of a claims modifier approach.

Other covered entity commenters proposed the establishment of a centralized or third-party clearinghouse model as an alternative to a rebate-based approach. Under this proposal, an intermediary would serve as a central data hub to coordinate 340B transaction information among covered entities, manufacturers, and payers, with the goal of facilitating real-time or near-real-time identification of 340B utilization and preventing duplicate discounts without requiring covered entities to transition away from upfront discounts.

HRSA has considered this proposal and concludes that a clearinghouse model is, in substance, an enhanced claims modifier system operating under a different name. Like claims modifiers, a clearinghouse would depend on covered entities to accurately and completely report 340B transaction data to the intermediary, and on the intermediary to relay that information to manufacturers and payers in a timely and standardized manner. As manufacturer commenters have observed, unlike a clearinghouse, a rebate model by its very nature incentivizes covered entity compliance as a prerequisite to receiving 340B discounts. Under a rebate model, the covered entity must affirmatively submit validated claims data to receive the discount, which may help to align the incentive structure with program integrity objectives. A clearinghouse, by contrast, would preserve the current dynamic in which the discount is provided upfront and compliance verification occurs only after the fact. In addition, proposals to establish clearinghouses or similar intermediaries are not explicitly authorized under the 340B statute.

Commenters also proposed significantly narrowing the Pilot itself, including limiting participation to voluntary participants, restricting participation to entities with sufficient operational capacity, limiting the Pilot to fewer drugs or dispensing settings, or excluding physician-administered drugs or contract pharmacy arrangements. HRSA carefully considered these alternatives, including limiting the Pilot to certain entity types.

Regulatory regimes that impose fixed compliance costs ( e.g., legal, operational, and administrative) may disproportionately burden small entities that often lack the economies of scale of larger entities. Large hospitals, for example, have dedicated legal, compliance, accounting, and information technology departments capable of absorbing shifting regulatory mandates without disrupting patient care. As discussed throughout and below, we do not believe small hospitals and non-hospital healthcare entities will struggle to accommodate such changes. The Regulatory Flexibility Act of 1980 (RFA) directs agencies to avoid “one-size-fits-all” approaches and instead consider alternatives that mitigate impacts on small entities, especially when “the problems that gave rise to government action may not have been caused by those smaller entities.”  30 The procedural requirements of the RFA ( e.g., 5 U.S.C. 604) are not statutorily mandated for this notice since this notice does not constitute a rulemaking action per 5 U.S.C. 553. Nevertheless, HRSA has carefully considered the principles of the RFA in line with HHS's 2003 guidance. 31 This guidance directs HRSA to mitigate impacts on small entities through, for example, “lessening the record-keeping and reporting requirements, delaying effective dates, establishing minimal requirements, or, if possible, waiving certain requirements” for any “proposed and final notices that function as rules.”  32 Furthermore, Executive Order 12866 directs agencies to consider streamlining regulatory requirements for small entities when developing significant regulatory actions and the Office of Management and Budget's Office of Information and Regulatory Affairs (OMB OIRA) has determined that this notice is “significant” per Section 3(f)(1) of E.O. 12866. 33 Likewise, the Paperwork Reduction Act of 1995 directs agencies to minimize the paperwork burden imposed on small entities. 34

HRSA categorizes covered entities by types that correspond to the statutory definition of “covered entity” provided at Section 340B(a)(4) of the PHSA. 35 There are 22 such types that are largely divisible into two categories: 340B hospitals and non-hospital entities. The former category, nonprofit or governmental hospitals participating in 340B, accounted for about 87% of program purchases in 2024. 36 These 340B hospitals constitute roughly half of all U.S. hospitals  37 and they provide inpatient and outpatient care. About 90% of hospitals' 340B purchases ($64.1 billion; roughly 79% of total 340B purchases) come from disproportionate share hospitals (DSH). DSHs are nonprofit or governmental hospitals that serve a large volume of low-income, Medicaid, and uninsured patients. The latter category, non-hospital entities, are generally clinics and health centers that receive federal grant funding. These non-hospital entities are more variegated in purpose and structure. Federally qualified health centers (FQHC, also known as Community Health Centers) provide comprehensive outpatient primary care while other non-hospital entities provide specialized care restricted to a narrow public health mission ( e.g., 340B Black Lung Clinics treat active and retired coal miners suffering from Coal Mine Dust Lung Disease). FQHCs and Look-Alikes ( i.e., clinics that meet all FQHC rules but do not receive federal funding; FQHC-LAs) constitute about half non-hospital entities' 340B purchases ($5.2 billion; roughly 6% of total 340B purchases).

As mentioned earlier in the discussion of potential impacts of a 340B Rebate Model Pilot Program, a 2025 report estimated that 340B covered entities' financing (interest) costs associated with transitioning to a 340B rebate model would be negligible (less than one half a percent of the drugs' list price), but it also found that these costs may be disproportionately larger for smaller entities that would need to obtain small business loans at higher interest rates. 38 But after careful consideration, HRSA has determined that these differences between the average hospital and the average FQHC do not justify carving up the Pilot. Phasing in, or otherwise scoping, the Pilot would fail to account for these differences and would undermine the integrity of the Pilot, which will provide important information to HRSA. Indeed, clean delineations along the lines of covered entity type may not be a particularly robust measure of disproportionality of impact (rendering such a distinction potentially arbitrary). HRSA specifically determined that limiting participation to non-hospital entities, voluntary covered entities, or only operationally sophisticated entities could introduce substantial selection bias and reduce the reliability and generalizability of Pilot findings. Covered entities vary significantly in size, structure, patient population, dispensing models, and reliance on contract pharmacy arrangements. A narrowly tailored or self-selected participant pool would not adequately reflect these differences and would constrain the agency's ability to assess how a rebate model functions across the broader 340B environment. Similarly, further limiting the number of drugs included in the Pilot would reduce the agency's ability to evaluate rebate administration and duplicate discount prevention in the context of the MDPNP and other overlapping pricing programs.

The nonduplication and duplicate discount issues that the Pilot is designed to address are inherently drug-specific and apply to all covered entities. The program integrity risk, along with the nonduplication risk, that the Pilot is designed to mitigate thus attaches to particular drugs, namely, those drugs for which overlapping federal pricing obligations create a heightened risk of duplicative price concessions, rather than to particular categories of covered entities. Scoping the Pilot by the drugs that generate the specific compliance challenge is therefore a rational and direct means of targeting the identified problem.

HRSA additionally notes that scoping the Pilot by entity type alone would not adequately address the identified 340B program integrity concern. The risk of duplicate discounts arises whenever a selected drug is dispensed by any 340B covered entity, regardless of whether that entity is a hospital, FQHC, or other provider type. Limiting the Pilot to a subset of entity types while excluding others would leave the duplicate discount problem unaddressed for a significant portion of selected drug transactions, undermining the Pilot's ability to generate meaningful implementation data and to fulfill its program integrity objectives. By contrast, a drug-type scope ensures that the Pilot captures all transactions for which the specific compliance risk exists, across the full range of covered entity settings in which those drugs are dispensed, precisely the comprehensive and representative evaluation that the Pilot requires.

Retrospective enforcement mechanisms are inherently reactive and identify potential duplicate discounts only after they occur. By contrast, HRSA believes that a rebate-based model may improve prospective identification and validation of transactions by linking price concessions to standardized claims-level data submitted as part of the rebate process. Retrospective reviews, audits, and dispute resolution processes are inherently reactive, identifying potential duplicate discounts only after they have occurred. The exponential growth of the 340B Program, which now encompasses more than 15,000 covered entities, over 49,000 associated sites, and $100 billion in annual purchases, has further strained the capacity of audit-based approaches.

In contrast, a rebate model shifts the compliance framework from a reactive enforcement posture to a prospective approach in which verification and claims-level validation occur before the discount is provided. This structural difference addresses a core limitation shared by all three of the alternatives proposed by covered entity commenters: under a clearinghouse, claims modifier, or audit-based approach, the 340B discount is provided upfront and compliance is assessed only retrospectively. Under a rebate model, the covered entity must submit validated claims data as a precondition to receiving the discount, creating an inherent incentive for accurate reporting and reducing the opportunity for duplicate discounts to go undetected.

For these reasons, HRSA concludes that none of the proposed alternatives would adequately serve the program integrity and evaluation objectives that the Pilot is designed to advance, and that a limited rebate pilot provides the most appropriate mechanism to evaluate operational feasibility, duplicate discount prevention, transparency, and coordination across federal pricing programs in the current programmatic environment.

HRSA will evaluate the Pilot using a combination of quantitative and qualitative methods. Quantitative measures will include data submitted by participating manufacturers and covered entities regarding rebate requests, rebate payments, payment timeliness, claim denials, dispute resolution outcomes, reporting burden, and other operational metrics. HRSA will also review information relating to administrative burden, duplicate discount prevention, data quality, and program integrity and may use data gleaned from the Pilot during reviews of routine 340B Program audits of both covered entities and manufacturers. Qualitative information will be collected through stakeholder engagement activities, including written feedback, listening sessions, technical assistance interactions, and other implementation-related communications.

HRSA intends to conduct ongoing monitoring throughout the Pilot and shall publish interim periodic summaries of implementation findings and lessons learned on our public-facing website. Upon conclusion of the first year of Pilot operations, HRSA will publish an evaluation by April 30, 2028. To the extent practicable and consistent with applicable law, HRSA will ensure that any public and aggregated information regarding Pilot performance will not contain confidential, proprietary, or individually identifiable information.

In light of all the comments received on the RFI, prior rebate model discussions with manufacturers, and feedback received from stakeholders on a rebate model, HRSA has developed a 340B Rebate Model Pilot Program that is consistent with the 340B statute, and that balances the burden on program stakeholders with the benefits to transparency and program integrity that a rebate model would provide. In developing the rebate pilot, HRSA considered the full range of stakeholder feedback and incorporated key updates to the prior 340B rebate model in direct response to that feedback.

HRSA is introducing this rebate approach in a methodical and thoughtful manner and limiting it to a select group of drugs (as described below). This approach will ensure a fair and transparent 340B rebate model process for all stakeholders involved. The drugs in the 340B Rebate Model Pilot Program are limited to the NDC-11s of the selected drugs for initial price applicability years 2026 and 2027 included on the CMS Medicare Drug Price Negotiation Selected Drug List, 39 regardless of payer or indication and shall be limited to the price applicability period for the selected drug. Accordingly, the call to submit plans for HRSA/OPA review is limited to the manufacturers that have active selected drugs in the MDPNP for initial price applicability years 2026 and 2027. 40 HRSA/OPA is inviting qualifying drug manufacturers that meet this criteria to apply for participation in the 340B Rebate Model Pilot Program for a minimum 1-year period.

Manufacturer plans for participation in the 340B Rebate Model Pilot Program should be submitted to 340BPricing@hrsa.gov no later than August 24, 2026. Approvals, if any, will be made by September 24 2026, for a January 1, 2027, effective date for drugs that are a selected drug for initial price applicability period 2026 and 2027. Manufacturers may not implement plans without first receiving HHS approval in accordance with section 340B(a)(1) of the PHSA.

Manufacturer plans for the 340B Rebate Model Pilot Program must include the criteria outlined below. Manufacturer plans that exceed or go beyond these criteria must include detailed justification and will be subject to additional levels of review by HRSA/OPA prior to approval HRSA/OPA will review submitted plans and notify manufacturers if their plan is approved and the manufacturer may participate in the 340B Rebate Model Pilot Program. Submitted plans should succinctly describe how they meet all the criteria below. HHS reserves the right to revoke a manufacturer's approval to participate in the 340B Rebate Model Pilot Program at any time if a manufacturer is not in compliance with the criteria outlined below and with any other requirements set forth in the approved manufacturer plan.

1. Plan must identify the IT platform to be used for covered entity data submission and include assurances that all costs for IT platform used for data submission, be borne by the manufacturer.

2. Plan must allow for 90 calendar days' notice to covered entities and other impacted stakeholders before implementing an approved rebate pilot plan, with instructions for registering for any IT platforms. Changes to approved plans must be submitted to OPA for review and approval prior to implementation, including the mechanism by which covered entities are to acquire drugs included in the rebate model pilot. OPA will determine if the changes can take effect immediately or if they require a notification period to covered entities. Manufacturers will be expected to provide HRSA with a copy of their final approved plan for public posting on HRSA's website to ensure consistency with what HRSA approved.

3. Plan must allow for covered entities to order the selected drugs under existing distribution mechanisms ( e.g., 340B wholesaler accounts with WAC prices loaded) to ensure purchases flow through existing infrastructure.

4. Plan must provide technical assistance/customer service component and ensure that opportunities to engage directly with the manufacturer in good faith regarding questions or concerns are made available to covered entities through both the IT platform and provide a point of contact at the manufacturer.

5. Plan must ensure that the IT platform has assurances in place to ensure that the data is secure and protected and collection of the data is limited to the elements listed below that are necessary for providing 340B rebates pursuant to section 340B(a)(1) of the PHSA.

6. Plan must ensure that the manufacturer and the IT platform have mechanisms in place to protect the privacy and security of PHI or other PII, which is required to be safeguarded in a manner consistent with any applicable federal privacy and data security laws, including HIPAA.

7. Plan must describe whether an exception that would not apply broadly to all covered entities, and if any, will be communicated to both HRSA and affected covered entities ( e.g., covered entities without access to a third-party administrator or rural hospitals or health centers).

1. Plan must ensure that covered entities are allowed to submit and report data (as detailed below), at a minimum, up to 45 calendar days from date of dispense, with allowances for extenuating circumstances and other exceptions, including adjustments when a 340B status change occurs on a claim.

2. Plan must ensure that the IT platform will have the capacity to receive data from all applicable covered entities and to filter and use only the data required to effectuate the rebate ( e.g., if drugs other than a selected drug for initial price applicability year 2026 or 2027 during its price applicability period under the MDPNP are submitted, the platform will be able to identify and discard unneeded data).

3. Plan must ensure that the IT platform will have the capability to provide real-time reconciliation reports for covered entities to be informed of the rebate status of submitted claims.

4. Plan must ensure that a quarterly 340B price file for each of the manufacturer's 11-digit NDCs is made available to covered entities, so that covered entities may use the price file in conjunction with pharmacy billing systems to appropriately account for actual acquisition cost ( i.e., post rebate price) for Medicaid billing and also to assist with sliding fee scales or cost sharing with patients.

5. Plan must require the manufacturer to provide HRSA/OPA with periodic reports consistent with the information outlined in this Notice, in a format and manner specified by HRSA/OPA (instructions forthcoming). Such data should detail data on purchases provided through rebates, information related to claim denials, and other information that may evaluate the effectiveness of the rebate model.