On December 12, 2022, the U.S. District Court for the Eastern District of Arkansas issued a ruling in favor of the State of Arkansas and certain Arkansas safety net providers in a lawsuit brought by PhRMA challenging an Arkansas statute that requires manufacturers to deliver 340B drugs to contract pharmacies.   In 2021, Arkansas enacted a law that prohibits manufacturers from restricting distribution of 340B drugs to contract pharmacies.  PhRMA sued the Arkansas state agency charged with enforcing the statute, arguing that, under the Supremacy Clause of the U.S. Constitution, the law is preempted by the federal 340B statute with respect to 340B contract pharmacy arrangements and should be invalidated.  The Arkansas state agency, as well as two intervenors representing the interests of covered entities within Arkansas, defended the state law on the grounds that it regulates the distribution of 340B drugs, not the price of the drugs.  The Court agreed, noting that the “340B Program is not ‘so pervasive as to make reasonable the inference that Congress left no room for States’ to protect their specific drug distribution systems.”

The Arkansas decision is a significant victory for covered entities that are subject to the predatory policies of manufacturers that restrict access to 340B drugs at contract pharmacies.  The decision may spur other states to enact similar laws that ensure continued access to 340B drugs at contract pharmacies.  It is unclear whether PhRMA will appeal the preemption decision to the 8th Circuit and, if so, whether the defendants would oppose the appeal.

The Arkansas statute also includes provisions that prohibit discriminatory payment to covered entities and other discriminatory practices.  PhRMA did not challenge those provisions.

The District Court decision does not resolve the case because PhRMA also alleged that the Arkansas statute violates the Commerce Clause of the U.S. Constitution.  Unless PhRMA moves to stay the case to allow for an appeal of the preemption decision, the case will proceed to the Commerce Clause claim.

Powers represents the intervenors in this lawsuit, Community Health Centers of Arkansas and Piggott Community Hospital.

For questions about this case or working with your legislators to enact laws like the Arkansas statute, please contact the Powers 340B team.

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