On Tuesday, a federal judge in Mississippi reportedly upheld a state law mandating drugmakers to provide discounts on medications dispensed by third-party pharmacies contracting with hospitals and clinics serving low-income populations.
U.S. District Judge denied preliminary injunctions in lawsuits filed by the Pharmaceutical Research and Manufacturers of America (PhRMA) and Novartis AG (NYSE:NVS).
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These lawsuits are part of a broader legal battle, with similar cases pending in Maryland and West Virginia.
The judge found that PhRMA and Novartis were unlikely to succeed in their claim that the state law conflicts with federal regulations governing the 340B program.
The 340B program requires pharmaceutical companies to offer discounts to hospitals and clinics that serve low-income patients in exchange for receiving funds from government health insurance programs such as Medicare and Medicaid.
Judge Ozerden stated that the law might support the 340B program's goal of ensuring patients can easily access their medications.
Novartis expressed disagreement with the decision and announced plans to appeal, Reuters noted.
Many providers eligible for the 340B program utilize contract pharmacies to dispense prescription drugs, avoiding the need to maintain in-house pharmacies.
The U.S. Department of Health and Human Services updated its guidance in 2010, allowing 340B providers to use an unlimited number of contract pharmacies, which replaced the earlier limit of one such pharmacy per provider.
Drug manufacturers have long argued that the extensive use of contract pharmacies within the 340B program results in reduced transparency and increases the risk of improper discounts or duplicate discounts on the same drug.
In 2020, several drugmakers began imposing restrictions on 340B drug sales via contract pharmacies.
Novartis, for instance, limited its dealings to contract pharmacies within a 40-mile radius of a 340B provider, while other companies implemented various other restrictions.
Previously, pharmaceutical companies had successfully challenged federal guidelines that mandated compliance with contract pharmacies under the 340B program.
Following these legal victories, states such as Maryland, West Virginia, Mississippi, Kansas, and Louisiana enacted laws requiring drugmakers to provide 340B discounts on drugs dispensed by contract pharmacies.
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