Newsletter · · Ashutosh Agarwal

The 340B Rebate Rewrite Is the Real Story This Week - Drug Pricing & IRA Round 2 - Week of June 22 – 29, 2026

Drug pricing and IRA newsletter for the week of June 22 to 29, 2026. HRSA's revised 340B rebate model is being drafted to swallow Medicare-negotiated drugs and keep adding more each year, while MFN is already reshaping ex-US licensing deals and net drug revenue keeps growing double digits.

Drug Pricing & IRA Round 2

Week of June 22 – 29, 2026: The 340B Rebate Rewrite Is the Real Story This Week

The most important pricing development of 2026 advanced quietly this week at HRSA rather than on the negotiation calendar. The IRA's second-order plumbing is where the money is moving right now, and the buy side should be watching the pipes, not the headline.

TL;DR

  • 340B is being rewired to swallow IRA-negotiated drugs. HRSA's revised rebate model is explicitly drafted to cover Medicare-negotiated drugs in both 2026 and 2027, and looks built to roll forward every year after. Manufacturer cash, hospital margin, and the gross-to-net bubble all sit downstream.
  • MFN is already chilling deal-making, not in theory but in live transactions. Pharma is hoarding ex-US licensing rights so a foreign partner's low price cannot ricochet back into US Medicaid.
  • The pricing system around the marquee Round 2 topic is where the action sat this week. The 340B rebate rewrite, MFN's chill on cross-border BD, and a still-growing gross-to-net bubble are the threads that moved.

What's New

1. HRSA's 340B rebate model is being redrafted to include negotiated drugs, and to keep adding them. On Achieving Health, "Washington Watch: 340B Rebate Model Returns" (June 24), Forvis Mazars' Chad Mulvaney walked through the regulatory steps, an RFI, a pre-rule notice to OMB at the end of May, and a June 15 Information Collection Request, and flagged that the new model "will be much broader in scope to not only include those drugs that were subject to the Medicare drug price negotiation in 2026, but in 2027 as well... a rolling rebate model that incorporates additional drugs subject as the years roll on." Translation for a book: more of a covered entity's 340B economics shifts from upfront discount to back-end rebate, with undefined data, timing, and dispute-resolution rules. That moves working capital and adds compliance drag across the hospital complex.

2. Lilly is forcing the 340B data fight, and others are following. On Monitor Mondays, "Who will Blink First? 340B Health at Center Stage" (June 15), 340B Health CEO Maureen Testoni said Lilly has been "demanding that hospitals submit millions of lines of claims data" and is sending "ultimatum letters" giving hospitals "just five business days" to comply "or risk losing 340B pricing on Lilly drugs." Her warning: "a number of large drug makers have already adopted Lilly's policies and their deadlines will be upon us soon." This is manufacturers using data demands to claw back 340B leakage, a slow, litigated margin tailwind for branded pharma if it holds.

3. MFN is quietly killing ex-US licensing deals. On Citeline Podcasts, "Scrip's Five Must-Know Things, June 29" (June 29), journalist-aggregated from a BIO panel, CSL General Counsel Kasserine Chong said companies that "planned to out-licence ex-US rights... were considering keeping those rights to themselves because they could not risk a potential partner setting a much lower price" abroad. Her line: "You see fewer and fewer commercially reasonable efforts being undertaken in European markets because there is always that risk that ultimately those countries will be included in the basket that will impact pricing." MFN, negotiated with 17 big pharma names, now reaches Medicaid, and it is reshaping BD behavior today.

4. The gross-to-net bubble got bigger, not smaller. On The Astonishing Healthcare Podcast, "AH110, 2026 U.S. Medicine Use Trends" (June 26), IQVIA's Michael Kleinrock pegged 2025 US net drug revenue at "$606 billion... up 10.6% over the prior year," against list-price sales of "1.363 trillion, you know, with a T," with "about $670 billion is the spread." His point lands hard: despite "all of the discussions of drug pricing and policy and the Inflation Reduction Act and tariffs and executive orders," net spend grew double digits two years running (+14.4% in 2024). Policy noise has not dented the top line. Yet.

5. IRA is starting to break the rebate-spread machine, and push manufacturers off PBM formularies. On Relentless Health Value, "EP517: The Business of Prior Auths" (June 24), Stacey Richter argued IRA list-price cuts "collapse the rebate spread that is used to justify the game in the first place," and that manufacturers are increasingly asking "why are we chasing formulary position?" She cited a manufacturer that "said no to 340B and Medicaid in its entirety" to run its own patient-assistance and direct channel. That is a structural threat to the rebate-aggregator model the big PBMs are built on.

The Debate

Bull, "manageable modeled headwind": Kleinrock's numbers are the steel-man, two straight double-digit net-revenue years through the teeth of IRA, MFN, and tariff threats. Negotiated MFPs hit a handful of mature, often-eroding franchises; the GLP-1 and immunology growth engines are untouched; and 340B reform, if anything, recaptures discount leakage for manufacturers. On this view the IRA is a line item, not a thesis-breaker.

Bear, "structural US margin compression": The more unsettling case came from Lumanity's Steve Mather on Outcomes Rocket, "Policy Convergence and the Future of Pharma Value Creation" (June 16). MFN ties "US Medicare and now... Medicaid to the lowest prices abroad," forcing companies to model price spillovers and re-sequence launches. And the IRA's nine-year small-molecule vs. thirteen-year biologic windows are already changing what gets funded: Mather described "a top 25 company" that "chose to pivot their portfolio... toward complex therapies to have that longer runway of 13 years versus 9 years and reduce their small molecule pipeline." If that pull-back compounds across the industry, the bear case is not a revenue haircut, it is small-molecule R&D structurally starved while US net price ratchets toward ex-US levels.

Stocks in Play

The week was light on ticker-level IRA math, so calibrate conviction accordingly.

  • LLY. Bull: domestic production gives it the better hand under MFN and tariffs; per the Evaluate data cited on Scrip, tirzepatide (Mounjaro/Zepbound) is set to top $70B by 2032, "the biggest drug ever," with Lilly at ~$137B of drug sales. Bear: it is the lightning rod in the 340B data fight (per Testoni), inviting litigation and headline risk. Watch: outcome of the 340B claims-data ultimatums and any HRSA enforcement response.
  • NVO. Bull: on Wall Street Wildlife, "$SPHR and $NVO Debated, E138" (June 28), the investor framed it as "trading around 10 times earnings" vs. Lilly's "around 40 times," with "$2.3 billion worth of buybacks this year" and ~9,000 job cuts (~11% of staff). Bear: market share has slipped to "broadly 60-40 in Eli Lilly's favor," CagriSema disappointed on weight loss, and "the Trump administration is pushing down drug prices... Novo Nordisk are struggling there because Lilly has like a better deal essentially as a domestic company." Watch: US net GLP-1 pricing and whether the oral leapfrog scales.
  • ABBV. Bull: the M&A machine keeps feeding the post-Humira pipeline (the ~$11B Apogee deal for an atopic-derm antibody, per Scrip); SkyRizi is modeled as the #2 drug globally by 2032. Bear: immunology is exactly the franchise category that sits in MFN's crosshairs over time. Watch: pace of bolt-on BD vs. negotiated-price exposure on the legacy book.
  • CVS / CI / UNH (PBMs). Bull: still the toll-collectors on 85% of insured formularies (Cuban). Bear: IRA-driven list-price cuts erode the rebate spread their model monetizes (Richter), and manufacturers are testing direct and cash-pay exits. Watch: rebate-pass-through and formulary-exclusion economics into 2027.

Read-Throughs

  • PBMs / managed care: Mark Cuban, on CareTalk, "Why Healthcare Prices Are Like Fight Club" (June 26), described PBMs controlling "the formularies for 85% of insured people" and threatening to "diminish... positioning on their formularies" if manufacturers sell direct, the moat and the vulnerability in one breath. On CareTalk, "The Business & Science Behind the GLP-1 Boom" (June 19), David Williams and John Driscoll noted CVS Caremark restored Zepbound coverage after an ERISA class action, a reminder that payer cost-control has legal limits, and that GLP-1 makers "were charging 70 to 80 percent less... in Europe."
  • Biosimilar / generic makers (incl. TEVA): the only adjacent note this week was an FDA generic tofacitinib approval flagged on a rheumatology pod, "unlikely to match methotrexate-level pricing."
  • Small-mol vs. biologic R&D mix: see Mather above, the single most thesis-relevant read-through of the week.
  • Ex-US launch/pricing strategy: MFN is now a first-order input to launch sequencing and licensing (Chong, Mather).

What Changed vs Last Week

This is the first edition of this newsletter, so there is no prior issue to diff against. Baseline set: 340B rebate-model expansion to negotiated drugs, MFN's chill on ex-US BD, and the small-molecule pipeline pull-back are the three threads to track week over week. Worth flagging as open gaps: a fresh Round 2 selection or Part B 2028 mechanics, the EPIC Act and pill-penalty fix, and scaled data on the $2,000 Part D cap's effect on prescription volumes.