Jeff Dunn, Pharm.D., MBA, on how PBMs and payers can respond to ‘340B rebate erosion’ | PBMI 2026

Employers and other plan sponsors have few good options for recovering the rebates they lose when drug claims run through 340B pharmacies, and the most effective option is also the most disruptive, according to Jeff Dunn, Pharm.D., MBA, president and CEO of NeosRx, a transparent pharmacy benefit manager (PBM) headquartered in Salt Lake City, Utah.

Drug manufacturers don’t pay rebates on drug claims coming from 340B “covered entities” because the 340B discount has typically been applied already to the claims, Dunn explained. That “340B rebate erosion” can be costly to PBMs and payers that have come to count on rebates as a source of revenue.

One option payers have is steering claims away from 340B entities to non-340B pharmacies. Dunn called it the “nuclear option” that creates internal friction if the client is an integrated delivery network that has reasons to keep those claims within its system, and it affects members, who must change pharmacies, he said.

A second strategy is negotiating shared savings with the covered entities. Under that kind of arrangement, the entity keeps the prescriptions in its pharmacies but pays a portion of its 340B discount to the PBM, health plan or employer group. Dunn said that approach is more difficult and requires top-level management to take a systemwide approach.

A third choice, which Dunn said is "not super successful," is going back to manufacturers to show that some of the claims excluded from rebates weren’t legitimately 340B claims. For example, a pharmacy may carry the name of a hospital or clinic in the 340B program —"covered entities,” in 340B parlance — because it is part of a larger system, even though it isn't itself a 340B pharmacy.

Dunn spoke with Managed Healthcare Executive about the 340B program and the rebate erosion at the 2026 Pharmacy Benefit Management Institute Annual National Conference in Orland, Florida, earlier this month. He was one of four panelists in a session at the conference titled “340B and the Employer: Rebate Erosion, Transparency and What Comes Next.” The other panelists were Mary Bellanti, RPh, vice president of clinical strategy at MedImpact; Deborah Dempsey, Pharm.D., MBA, RPh, chief operating officer of ProAct; and Karen van Caulil, Ph.D., president and CEO of the Florida Alliance for Healthcare Value.