340B changes and AHA's lawsuit

You cannot build a sustainable safety net if you force it to finance its own supply chain.

As the Founder of Orchid, working in hospital revenue integrity and cash-flow analytics, I’ve been watching the 340B rebate pilot closely.

The AHA’s lawsuit to block HRSA’s 340B Rebate Pilot is a defense of the “why” behind safety-net care. Regulators argue the Jan. 1, 2026 pilot creates transparency for 10 high-cost drugs, but the mechanism fundamentally alters the cash cycle.

It shifts 340B from upfront discounts to a manufacturer-paid rebate model, forcing hospitals to front the full WAC price and carry that cost through dispensing and reconciliation.

Reality for leadership:

• Float: Immediate discounts become a weeks-long cash float, waiting on manufacturer rebates while procurement costs hit the books immediately. Even with defined timelines, predictable float is still float.
• Friction: New workflows for dispense tracking and rebate chasing create administrative overhead that drains liquidity. Transparency should not be purchased by shifting liquidity risk to safety-net providers.
• Precedent: While limited in scope today, this model validates a structure that solves manufacturer and regulator concerns by squeezing provider working capital. Today it is “just 10” high-cost drugs, but pilots that reduce manufacturer exposure rarely stay contained.

340B was designed as an upfront purchasing benefit. Requiring hospitals to front WAC reverses that design intent.

We’re now arguing about whether the 340B benefit should arrive as a discount or a rebate, while everyone quietly accepts a system whose complexity burns millions on administration, legal work, and reconciliation.

At some point, we have to ask the more uncomfortable question:
Why are we clinging to inflated list prices, discounts, and rebates at all, instead of moving toward honest net pricing and reducing waste across the system?