Judge won't block Mississippi law on discounts for hospitals' contract pharmacies
By Brendan Pierson
July 1 (Reuters) -A federal judge in Mississippi on Monday refused to block a Mississippi law requiring drugmakers to offer discounts on drugs dispensed by third-party pharmacies that contract with hospitals and clinics serving low-income populations.
U.S. District Judge Halil Ozerden in Gulfport, Mississippi, denied motions for preliminary orders blocking the law in separate lawsuits by the Pharmaceutical Research and Manufacturers of America (PhRMA), the nation's leading drug industry group, and by Novartis NOVN.S.
The lawsuits are among several challenging similar state laws, with others pending in Maryland and West Virginia. There have not been rulings in the other cases.
Ozerden ruled that PhRMA and Novartis were unlikely to prevail in their argument that the state law conflicts with the federal law governing the so-called 340B program, which requires drugmakers to offer discounts to hospitals and clinics that serve low-income patients as a condition of receiving funds from government health insurance programs like Medicare and Medicaid.
"If anything, (the law) arguably promotes Section 340B's objective of ensuring covered-entity patients can conveniently access their medications," the judge wrote in both decisions.
Novartis said in a statement that it disagreed with the decision and planned to appeal.
PhRMA and a spokesperson for Mississippi Attorney General Lynn Fitch did not immediately respond to requests for comment.
Many providers eligible for the 340B program contract with outside pharmacies to dispense prescription drugs, so that they do not have to maintain in-house pharmacies. In 2010, the U.S. Department of Health and Human Services issued new guidance stating that 340B providers could use an unlimited number of these so-called contract pharmacies, replacing previous guidance that they could use only one such pharmacy.
Drugmakers have argued for years that the widespread use of contract pharmacies in the 340B program leads to a lack of transparency and makes it more likely that some drugs are discounted when they should not be, or that duplicate discounts are applied to the same drug.
In 2020, many began imposing restrictions on 340B drug sales using contract pharmacies. Novartis said it would only deal with contract pharmacies located within 40 miles of a 340B provider, and other companies imposed other kinds of restrictions.
Drug companies previously prevailed in court against federal guidance that would have required drugmakers to do business with contract pharmacies under the 340B program. Following those court victories for the drug industry, Maryland, West Virginia, Mississippi, Kansas and Louisiana passed laws requiring drugmakers to offer 340B discounts on drugs dispensed by contract pharmacies.
The cases are Pharmaceutical Research and Manufacturers of America v. Fitch, No. 1:24-cv-00160, and Novartis v. Fitch, No. 1:24-cv-00164, in the U.S. District Court for the Southern District of Mississippi.
For PhRMA: Abid Qureshi of Latham & Watkins
For Novartis: Cate Stetson of Hogan Lovells
For the state: Special Assistant Attorney General Rex Shannon
Read more:
Lawsuits pile up over state laws on discounts for hospitals' contract pharmacies
Drugmakers prevail in dispute over U.S. discount drug program
(Reporting By Brendan Pierson in New York)
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