An Arkansas Insurance Department hearing officer said last week she would decide by Oct. 13 whether to stay enforcement of a state law requiring drug manufacturers to honor 340B contract pharmacy arrangements.

Arkansas Insurance Dept. to Rule Next Month on PhRMA’s Petition to Block Novel 340B Contract Pharmacy Law

An Arkansas Insurance Department hearing officer said last week she would decide by Oct. 13 whether to stay enforcement of a state law requiring drug manufacturers to honor 340B contract pharmacy arrangements pending resolution of a bevy of federal lawsuits over such arrangements.

During a Sept. 10 hearing, department Administrative Analyst/Legal Division Brandy Wedsted set deadlines for legal briefs and for her own opinion on Pharmaceutical Research and Manufacturers of America’s (PhRMA) July 28 petition to pause Arkansas’ first-in-the-nation law. Act 1103 says 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.

The law was supposed to have taken effect on July 28. State Insurance Commissioner Alan McClain stopped the law’s enforcement for 90 days on July 29 to consider PhRMA’s request.

PhRMA said in its petition to the department that a stay of enforcement “is urgently needed” given that “multiple federal courts will likely soon rule on whether federal law requires the use of contract pharmacies.” Because Act 1103 “requires manufacturers to provide 340B drugs to Arkansas-based community pharmacies, the constitutionality and lawfulness of Act 1103 is intimately tied to the outcome of these federal pending cases,” the trade association said.

PhRMA said the state law violates the U.S. Constitution’s supremacy clause and appears to violate the federal constitution’s commerce clause. It clarified, however, that it does not seek a ruling by the state insurance department on those questions because the department is not empowered to make such determinations. “PhRMA expressly reserves the right to have a federal court decide those issues should the need arise,” the trade group said.

State officials representing the insurance department and the attorney general indicated during the Sept. 10 hearing that both agencies will file briefs on PhRMA’s motion. Neither said nor indicated where the two offices stand on PhRMA’s request.

The Arkansas Hospital Association, Arkansas Pharmacists Association, Community Health Centers of Arkansas, and Baxter Regional Medical Center have been allowed to intervene in the proceedings in opposition to a stay.

Wested, the hearing officer, gave PhRMA a Sept. 29 deadline to file its brief in support of its petition for a stay, and gave the state agencies and the intervenors Oct. 8 deadlines for their responses. Wesdted asked the intervenors to file a single joint brief.

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