PhRMA sues Arkansas over law requiring companies to offer products to 340B contract pharmacies

Gavel and flag in courtroom
The Pharmaceutical Research and Manufacturers of America has sued Arkansas over a state law requiring drugmakers to offer 340B products to contract pharmacies. (Getty/AlexStar)

A top pharma lobbying group sued to strike down an Arkansas law that requires drugmakers to provide pharmaceuticals discounted under 340B to contract pharmacies.

The lawsuit, filed Wednesday by the Pharmaceutical Research and Manufacturers of America (PhRMA), comes as six drugmakers have restricted sales of 340B products to contract pharmacies, which has prompted a legal clash with the federal government.

PhRMA’s lawsuit, filed in the U.S. District Court for the Eastern District of Arkansas, wants the court to find a law passed by the state in May 2021 unconstitutional.

In the 340B program, drugmakers agree to offer discounts to safety net providers in exchange for participation in Medicare and Medicaid. Drugmakers must provide the discounted products to 15 types of covered entities, which can include hospitals and community health centers.

RELATED: Class-action lawsuit alleges 4 drug makers colluded to restrict sales to 340B contract pharmacies

However, Arkansas’ law seeks to add contract pharmacies as another covered entity. Contract pharmacies are third parties that dispense 340B drugs on behalf of 340B providers.

PhRMA argues in its lawsuit that the state law is preempted by the federal 340B statute.

“Contract pharmacies were never authorized by the U.S. Congress in the federal 340B statute, and the 340B statute does not explicitly require manufacturers to ship 340B medicines to contract pharmacies,” according to a release from PhRMA on the lawsuit.

The group also contends that the lawsuit violates the constitution’s Commerce Clause, which governs commerce among states.

“The provisions violate this fundamental limitation on state power because they would apply extraterritorially to most PhRMA members and regulate manufacturers’ out-of-state sales to out-of-state wholesalers,” the group said.

The lawsuit is the latest legal feud over access of 340B products to contract pharmacies.

Last summer, half a dozen drugmakers started to cut off sales to contract pharmacies. The pharmaceutical industry has argued the 340B program has gotten too large, and the benefits from the discounts don’t trickle down to patients.

340B advocates and safety net providers charge that the program is vital for them to continue to provide care, especially as drug prices have increased steadily in recent years.

The Health Resources and Services Administration (HRSA) warned six drugmakers earlier this year to reverse the restrictions to contract pharmacies. But none of the six drugmakers has complied, and HRSA recently referred them to the Department of Health and Human Services’ Office of Inspector General for fines for violating the 340B statute.

The drugmakers could face a $5,000 fine per violation.

But Eli Lilly, one of the six pharmaceutical companies warned by HRSA, sued the federal government back in May seeking to prevent such penalties.