Case Explained: AbbVie, Incorporated; Allergan, Incorporated; Durata Therapeutics, Incorporated; AbbVie Products, L.L.C.; Aptalis Pharma US, Incorporated; Allergan Sales L.L.C.; Pharmacyclics, L.L.C. Plaintiffs— v. Liz Murrill

Court: United States Court of Appeals for the Fifth Circuit

Filed: 2026-07-06

The Fifth Circuit affirmed the district court’s grant of summary judgment in favor of Louisiana, holding that Act 358 is not preempted by federal law and does not violate the Takings Clause, the Contracts Clause, or the Due Process Clause’s prohibition on vagueness. The court applied a presumption against preemption, reasoning that public health and consumer protection are traditional areas of state police power and that Congress did not clearly manifest an intent to occupy the field of drug distribution logistics or contract pharmacy relationships under the Section 340B Drug Pricing Program (42 U.S.C. § 256b). The court found no conflict preemption because Act 358 regulates conduct distinct from the federal enforcement scheme, and no obstacle preemption because the state law advances the federal goal of ensuring access to discounted drugs for vulnerable populations without altering the statutory price ceiling or the relationship between manufacturers and covered entities. Regarding constitutional challenges, the court held that Act 358 does not effect a physical or regulatory taking because it imposes only a negative obligation of non-interference rather than compelling the transfer of property, and it does not substantially impair contractual obligations under the Contracts Clause because the statute regulates relationships to which the manufacturers were not parties and does not alter the terms of their Pharmaceutical Pricing Agreements. Finally, the court rejected the vagueness challenge, concluding that the term “interfere” is sufficiently clear when read in context with neighboring words like “deny,” “restrict,” and “prohibit.” The practical consequence is that Louisiana’s Act 358 remains in effect, prohibiting drug manufacturers from interfering with covered entities’ use of contract pharmacies to dispense discounted drugs.

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