PhRMA and the state of Arkansas have agreed on a plan that could lead the federal district court in Little Rock to rule sooner than now anticipated on the state’s law protecting 340B contract pharmacy arrangements.

PhRMA and Arkansas Seek Faster Court Ruling on State’s Novel 340B Contract Pharmacy Law

The brand name drug industry and the state of Arkansas have agreed on a litigation plan that could lead to a quicker federal court decision than now anticipated on the state’s one-of-a-kind law protecting 340B contract pharmacy arrangements.

Pharmaceutical Research and Manufacturers of America (PhRMA) and Arkansas’s insurance director and attorney general submitted the proposal to U.S. Senior District Judge Billy Roy Wilson on Tuesday, Jan. 18. It is contingent on Wilson’s approval.

The bulk of State Act 1103 is devoted to stopping alleged discriminatory contracting in the 340B program by commercial insurers and pharmacy benefit managers (PBMs). Arkansas is one of 16 states have passed such laws since 2019.

PhRMA is challenging a section of the law 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.

Backers said during a hearing on the bill that the language stops manufacturers from blocking 340B hospitals and other covered entities from partnering with local pharmacies. PhRMA alleged in its initial federal court filing in September 2021 that for-profit pharmacies including national pharmacies chains “have found illegal ways to leverage the 340B discounts to their financial benefit, often without assisting the vulnerable patient populations that the 340B program was intended to help.”

PhRMA argues that Act 1103 is preempted by the federal 340B statute. “Congress provided no room for states to add onto or have any involvement in 340B drug pricing,” the association said. “Neither the 340B statute nor any regulations promulgated under it authorize state regulation concerning 340B pricing.”

PhRMA also argues that Act 1103 “is a textbook violation” of the U.S. Constitution’s Commerce Clause principle that a state may not regulate commercial transactions wholly outside that state’s borders.

Litigation Plan’s Details

In their court filing this week, PhRMA and Arkansas state officials agreed to move forward initially on the trade association’s preemption arguments and to defer action on its constitutionality claims until after the state issues a regulation implementing the law. The state insurance department “intends to have the proposed rule published for public comment as soon as possible within the next few weeks,” the two sides said in a joint report to Judge Wilson.

“The parties have agreed that the preemption claim is purely legal in nature, requires no factual discovery, and, if successful, may render unnecessary the court’s consideration of the constitutional Commerce Clause claim,” the parties told Wilson.

If the judge agrees, the parties said PhRMA will file a motion for summary judgement on its preemption claim by March 1. The state will file its opposition to PhRMA’s motion by March 31, and PhRMA will file its response to state’s opposition by April 21.

Under the lawsuit’s current schedule, PhRMA would have until Oct. 20 to file its main motion, the state would file its opposition 14 days later, and PhRMA would get in the last word seven days after that. The trial would not take place until Jan. 3, 2023.