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Mid Delta Health Center is a member of Community Health Centers of Arkansas, which wants to intervene in PhRMA's lawsuit challenging the state's one-of-a-kind law protecting 340B contract pharmacy arrangements.

Arkansas Health Centers and Community Hospital Want Role in Challenging PhRMA’s Lawsuit Over State’s Novel 340B Contract Pharmacy Law

Arkansas health centers asked a federal court yesterday to let them intervene in the drug industry lawsuit challenging the state’s one-of-a-kind law protecting 340B contract pharmacy arrangements.

Community Health Centers of Arkansas (CHCA) filed the motion yesterday along with Piggott Community Hospital, a 340B-enrolled critical access hospital in the northeast corner of the state.

Arkansas passed a law in May 2021 aimed mainly at stopping alleged discriminatory contracting in the 340B program by commercial insurers and pharmacy benefit managers (PBMs). However, in a novel approach intended to break the contract pharmacy impasse, it includes language that says drug manufacturers shall not:

  • Prohibit a pharmacy from contracting or participating with an entity authorized to participate in 340B drug pricing by denying access to drugs that are manufactured by the pharmaceutical manufacturer; or
  • Deny or prohibit 340B drug pricing for an Arkansas-based community pharmacy that receives drugs purchased under a 340B drug pricing contract pharmacy arrangement with an entity authorized to participate in 340B drug pricing.

No other state has passed such a law. Similar bills were filed in at least five states this year. Backers of Arkansas’ law said it was in response to the wave of drug manufacturers’ conditions on 340B pricing when covered entities use contract pharmacies. Johnson & Johnson this month became the 16th manufacturer to announce such conditions.

Pharmaceutical Research and Manufacturers of America (PhRMA) sued in federal district court in Little Rock, Ark., in September 2021 to have the law struck down as illegal and unconstitutional.

According to the health centers and hospital’s March 28 motion to intervene, the state insurance department late last month published a proposed rule to implement the law’s 340B contract pharmacy non-discrimination language. They told the judge it “appears to substantially narrow” the law’s protections for covered entities, for example, by requiring them to proceed first through the federal 340B administrative dispute resolution (ADR) process before bringing a claim against a manufacturer under the new state law. This requirement appears nowhere in the law.

The health centers and hospital are not challenging the proposed rule’s legality in their motion. They argue, however, that is shows that their interests and the state’s interests are not aligned.

The health centers and hospital said in the motion that they “can provide the court with the unique perspective of community-based 3408 covered entities, the entities that [the law] was enacted to protect.”

They “can explain how access to 340B drugs through bill to/ship to arrangements

impacts the patients they serve” and “provide the Court with the perspective of Arkansas-based 340B covered entities that depend on contract pharmacies, a perspective which neither plaintiff nor defendants can offer because they are not health care providers.”

“Manufacturers are literally making profits on the backs of our most vulnerable and financially burdened patients, CHCA CEO Lanita S. White said in a news release announcing the court filing. “Their actions are making it much more difficult to keep our clinics open. And, they’re doing this in the middle of a pandemic, which is just awful.”

White became the group’s CEO last month. A doctor of pharmacy, she is the former assistant dean for student affairs and an associate professor at the University of Arkansas for Medical Sciences College of Pharmacy.

“PhRMA wants to circumvent the will of the Arkansas legislature and governor. Arkansans deserve better,” said Powers Law partner William von Oehsen, whose firm is representing CHCA and Piggott Community Hospital in the case.

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