By Brendan Pierson
Dec 19 (Reuters) - U.S. drugmakers have won a court order blocking a West Virginia law that would require them to offer discounts on drugs dispensed by third-party pharmacies that contract with hospitals and clinics serving low-income populations.
West Virginia is one of several states that have passed similar laws in recent years, drawing challenges from the drug industry. The preliminary ruling on Tuesday by U.S. District Judge Thomas Johnston in Charleston, West Virginia, which comes in response to lawsuits by drug industry lobbying group PhRMA, Novartis and AbbVie , marks the first time that a court has blocked enforcement of such a law.
The office of West Virginia Attorney General Patrick Morrisey and the plaintiffs did not immediately respond to requests for comment.
The lawsuits center on the federal 340B drug discount program, which requires drugmakers that receive federal Medicare and Medicaid funds, as virtually all do, to offer discounts on drugs to hospitals and clinics serving low-income populations.
Many hospitals, clinics and other 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.
Drugmakers have argued for years that the widespread use of contract pharmacies in the 340B program leads to a lack of transparency and makes it more likely that some drugs are discounted when they should not be, or that duplicate discounts are applied to the same drug. In 2020, many began imposing restrictions on 340B drug sales using contract pharmacies.
West Virginia and other states, including Arkansas, Mississippi, Kansas and Louisiana, have passed laws forbidding drug companies from limiting the use of contract pharmacies. PhRMA, Novartis and AbbVie said in their lawsuits that West Virginia's law conflicted with the federal law governing 340B.
Johnston agreed. He focused on a provision of West Virginia's law that prevents drug companies from demanding providers' claims data as a condition of providing 340B drugs.
That prevents drugmakers from auditing providers in order to dispute claims, which the federal law explicitly allows, the judge wrote.
Johnston also wrote the West Virginia law's enforcement provisions, including civil fines and criminal liability, necessarily require state authorities to interpret the federal 340B law, conflicting with that law's federal enforcement scheme.
The U.S. Supreme Court earlier this month declined to hear an appeal by PhRMA of a decision upholding Arkansas' 340B contact pharmacy law. A judge in September declined to block Maryland's law while a legal challenge proceeds. Lawsuits are also pending in other states.
The cases are PhRMA v. Morrisey et al, No. 2:24-cv-00271, Novartis Pharmaceuticals v. Morrisey et al, No. 2:24-cv-00272 and AbbVie v. Morrisey et al, No. 2:24-cv-00298, in the U.S. District Court for the Southern District of West Virginia.
For PhRMA: Phil Perry, Andrew Prins and Abid Qureshi of Latham & Watkins and others
For Novartis: Catherine Stetson of Hogan Lovells and others
For AbbVie: Matthew Owen of Kirkland & Ellis, Ashley Parrish of King & Spalding and others
For the state: Timothy Miller of Babst Calland Clements & Zomnir and others
Read more:
US Supreme Court will not hear drug industry challenge to Arkansas contract pharmacy law
Judge won't block Maryland law mandating discounts for hospitals' outside pharmacies
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