Judge won't block Maryland law mandating discounts for hospitals' outside pharmacies
By Brendan Pierson
Sept 6 (Reuters) -The largest U.S. drug industry group and several drug companies have lost a bid to block a Maryland 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 Matthew Maddox in Baltimore on Thursday refused to issue a preliminary order blocking the law while he hears a challenge to it by Pharmaceutical Research and Manufacturers of America (PhRMA), Novartis NOVN.S, AbbVie ABBV.N and AstraZeneca AZN.L.
The judge's written order did not explain his reasoning, but referred to statements he made from the bench at a hearing on Wednesday. Lawyers for the companies, and the office of Maryland Attorney General Anthony Brown, did not immediately respond to requests for comment.
The case is among numerous similar challenges to state laws around the country dealing with companies' obligations under the so-called 340B program, a federal program under which hospitals and clinics serving low-income populations can receive discounts on prescription drugs. Drugmakers must participate in the 340B program in order to receive funds from government health insurance programs like Medicare and Medicaid.
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 recent years, however, drugmakers have begun imposing restrictions on 340B drug sales using contract pharmacies, such as limiting how many they may use or requiring them to be within a certain distance of the provider.
The companies have said that widespread use of 340B contract pharmacies has led to a lack of transparency and made it more likely that some drugs are discounted when they should not be, or that duplicate discounts are applied to the same drug.
In response, Maryland and other states, including West Virginia, Mississippi, Kansas and Louisiana, have passed laws requiring drugmakers to offer 340B discounts through contract pharmacies, and drugmakers have sued to block those laws.
The lawsuits, including the four before Maddox, argue that the state laws conflict with the federal law governing the 340B program.
Drug companies previously prevailed in court against federal guidance that would have required them to extend 340B discounts to contract pharmacies.
The first state law on contract pharmacies, passed by Arkansas in 2021, has already survived a legal challenge by PhRMA in the 8th U.S. Circuit Court of Appeals.
The cases are Novartis v. Brown, No. 1:24-cv-01557; AstraZeneca v. Brown, No. 1:24-cv-01868; AbbVie v. Brown, No. 1:24-cv-01816; and PhRMA v. Brown, No. 1:24-cv-01631, in the U.S. District Court for the District of Maryland.
For Novartis: Catherine Stetson of Hogan Lovells
For AstraZeneca: Allon Kedem of Arnold & Porter Kaye Scholer
For AbbVie: Matthew Owen of Kirkland & Ellis
For PhRMA: Andrew Prins of Latham & Watkins
For Maryland: Assistant Attorney General Howard Feldman
Read more:
Drugmakers prevail in dispute over U.S. discount drug program
Lawsuits pile up over state laws on discounts for hospitals' contract pharmacies
(Reporting By Brendan Pierson in New York)
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