The Sacramento Democrat and Rep. Tracey Mann, a Kansas Republican, want Congress to end a Health and Human Services pilot that will let 10 drugmakers pay some 340B discounts as after-the-fact rebates beginning Jan. 1, which the department says will curb improper double discounts.
Rep. Doris Matsui returns to Washington this week with her own re-election still being counted and a health care bill she wants Congress to take up before the year ends: legislation that would shut down a federal pilot program changing how hospitals and clinics receive discounts on some of the most widely prescribed brand-name drugs.
The bill, the PROTECT 340B Act, which Ms. Matsui introduced on Oct. 29 with Rep. Tracey Mann, Republican of Kansas, would require the Department of Health and Human Services to terminate its 340B Rebate Model Pilot Program and bar the department from creating a similar one. The pilot is scheduled to begin Jan. 1, 2027.
What the count shows
In the most recent update posted by the California Secretary of State, at 7:18 p.m. on Monday, Nov. 9, Ms. Matsui had 104,144 votes, or 55.8 percent, to 82,372 votes, or 44.2 percent, for Sacramento City Councilmember Mai Vang, a fellow Democrat. The Sacramento Bee reported on Friday that the contest was one of the few California House races not yet called, and The Inquirer could not confirm that the Associated Press has called it since. The result is unofficial until the count is certified. The independent tally Call the Map estimates that about 77 percent of the expected vote has been counted.
Ms. Vang has not conceded. “We are not finished,” she said in a statement on Friday, according to The Bee. Roger Salazar, a senior adviser to the Matsui campaign, told The Bee that the campaign “continues to be optimistic as all ballots are tabulated.”
What the bill would do
The 340B program, created by Congress in 1992 and run by the Health Resources and Services Administration, or HRSA, requires drugmakers that participate in Medicaid and Medicare Part B to sell outpatient drugs at steep discounts to safety-net hospitals, community health centers and other “covered entities.” Those providers bought about $100 billion worth of drugs at 340B prices in 2025, according to HRSA, and the program included 15,249 covered entities and 49,214 associated sites as of April 1.
According to Ms. Matsui’s announcement, the PROTECT 340B Act would:
Bar pharmacy benefit managers and insurers from paying lower reimbursement rates, charging extra fees or imposing restrictive network terms on a provider or pharmacy solely because it participates in 340B, with the protections extending to Medicare Part D and Medicare Advantage.
Authorize civil penalties of up to $5,000 per violation per day against pharmacy benefit managers that break those rules.
Create an independent, centralized clearinghouse to identify and resolve “duplicate discounts,” in which a single Medicaid prescription draws both a 340B discount and a Medicaid rebate, which the law prohibits.
End the rebate pilot and prohibit HHS from starting a similar program.
“The 340B program was created to ensure that patients, hospitals, and health centers have access to discounted medicines, not pad the profits of pharmacy benefit managers and insurance companies,” Ms. Matsui said in the announcement. “My bill puts a stop to these unfair practices and protects the care Sacramento families and Americans across the country depend on.”
The original cosponsors include two other Republicans, Reps. Stephanie Bice of Oklahoma and Dan Meuser of Pennsylvania, and Rep. Jim Costa, a Fresno Democrat. The California Hospital Association, the American Hospital Association, the National Association of Community Health Centers and the National Association of Counties are among the endorsers.
The administration’s case for rebates
HHS says the pilot is a narrow test meant to make a fast-growing program more accountable. Under the current model, providers get the discount up front, often through a “replenishment” system in which eligibility is determined after a drug has been dispensed. In its Aug. 3 notice in the Federal Register, HRSA wrote that this “retrospective approach” makes it hard to confirm that discounted drugs went to eligible patients and raises the risk of duplicate discounts. A rebate model, the agency says, “requires claims-level identification of each transaction, allowing verification to occur before a rebate payment is issued.”
The agency’s legal argument is that Congress allowed it from the start. The 1992 statute directs that the ceiling price be determined “taking into account any rebate or discount, as provided by the Secretary,” and HRSA notes it has allowed state AIDS drug assistance programs to use rebates since 1998. The pilot also helps drugmakers comply with the Inflation Reduction Act’s rule that a Medicare-negotiated price and a 340B discount may not both apply to the same unit, HRSA says.
The pilot is limited. It covers only the drugs selected for Medicare price negotiation for 2026 and 2027, which HRSA says made up less than 5.5 percent of 340B sales in 2025. Ten manufacturers have approved plans, including Bristol Myers Squibb for Eliquis, Boehringer Ingelheim for Jardiance, AstraZeneca for Farxiga and Merck for Januvia. Manufacturers must pay rebates within 10 calendar days of a complete claim, must cover the cost of the data platform and may not deny rebates over suspected diversion or duplicate discounts, which must be taken to HRSA. The agency has promised a public evaluation by April 30, 2028.
This is HHS’s second attempt. A federal judge in Maine blocked an earlier version in December 2025, after the American Hospital Association and other providers sued; the department withdrew it, and the court vacated it on Feb. 10, 2026. HRSA then took public comment and redesigned the program.
Drugmakers support the change. The Pharmaceutical Research and Manufacturers of America, the industry’s trade group, says on its 340B page that the program lacks guardrails and that “rebates are a common form of discount used in many other federal health care programs and would help improve integrity and transparency in 340B.” PhRMA has also called for a neutral, third-party clearinghouse for claims data, an idea that overlaps with one piece of Ms. Matsui’s bill.
What hospitals say is at stake
Hospitals and health centers argue that paying full price first and waiting for a rebate would tie up cash and add paperwork for providers that operate on thin margins. HRSA itself estimated the annual cost of reporting claims data at about $523 million across all covered entities, or roughly $34,320 per entity, though it said the burden would be modest because most of the data already exists. A 2025 survey by the trade group 340B Health, cited in Ms. Matsui’s announcement, found that 92 percent of responding hospitals said they would have to cut free or discounted medications if manufacturers broadly adopted rebate models.
“Here in California, 340B has a meaningful and positive impact by helping provide: free health screenings for low-income and unhoused Californians, emergency financial aid for children and families, community health education programs, and much more,” said Jenny Nguyen, vice president for financial policy at the California Hospital Association.
Ms. Matsui has fought the rebate approach for more than a year. In 2025 she led a bipartisan letter, signed by 166 members of Congress, opposing the administration’s first pilot, and this year she led an effort to block federal funding for putting a rebate model into effect, according to her office.
The path in a short session
The calendar is tight. The House has 16 session days scheduled before federal funding runs out on Dec. 11, The Inquirer reported on Monday, and a newly introduced bill with no committee action would need to move quickly or ride on a larger health or spending package. Ms. Matsui sits on the Energy and Commerce Committee, which oversees HHS health programs.
The Inquirer asked the Matsui campaign’s media contact, Mr. Salazar; 340B Health; and PhRMA for comment on Monday. None had responded by publication.
Ingrid Lindqvist covers Northern California’s members of Congress on Capitol Hill, from committee rooms and floor votes to the bills and spending that reach the region, for The Delegation. More from Ingrid Lindqvist
