Mar 13, 2024 - Health

Pharma dealt a loss over drug discount program

Illustration of a price tag shaped and colored like a prescription pill bottle

Illustration: Annelise Capossela/Axios

Pharmaceutical interests lost a closely watched battle over the federal drug discount program on Tuesday when a federal appeals court ruled that Arkansas can block manufacturers from limiting the availability of discounted drugs at certain pharmacies.

Why it matters: The decision from the 8th U.S. Circuit Court of Appeals could encourage look-alike state laws that take aim at restrictions on when providers can use discounts from the 340B program.

Go deeper: The dispute centered on contract pharmacies that dispense discounted drugs to hospitals, community health centers and other safety net providers covered by the program.

  • As 340B costs have grown, drugmakers have placed restrictions on where hospitals and clinics can use their program discounts.
  • The providers say the policies threaten patient access while pharmaceutical companies maintain the limits ensure 340B program integrity.

The trade group PhRMA challenged Arkansas' law, saying it was preempted by federal law and improperly empowered a state agency to penalize manufacturers who refuse to distribute to contract pharmacies.

  • But Judge Michael Melloy wrote that states have some leeway to set requirements since federal 340B law does not mention pharmacies or the delivery of drugs by pharmacies to patients.
  • "Pharmacy has traditionally been regulated at the state level, and we must assume that absent a strong showing that Congress intended preemption, state statutes that impact health and welfare are not preempted," Melloy wrote.

What they're saying: A spokesperson for PhRMA said the group disagreed with the decision but didn't indicate whether it would ask the full 8th Circuit or the Supreme Court to review it.

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