Background
Congress established the Section 340B Drug Pricing Program to provide discounted drugs to covered entities serving low-income and rural patients. While the federal statute does not specify how drugs must be dispensed, Health Resources and Services Administration guidance has permitted covered entities to use contract pharmacies. Some manufacturers restricted this practice, prompting Louisiana to enact Act 358 to ensure continued access to discounted medications through contract pharmacies.
The court’s reasoning
The court held that the federal statute does not explicitly prohibit the use of contract pharmacies and that states have a traditional role in regulating pharmacies and drug distribution. The court found that Act 358 fits within this state regulatory tradition and does not conflict with federal objectives. The court further determined that the statute does not constitute a taking, violate the Contracts Clause, or suffer from unconstitutional vagueness.
We hold that it 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.
AbbVie, Inc. v. Murrill, 24-30645 (5th Cir. 2026)
What it means going forward
The decision validates state laws that protect the ability of covered entities to utilize contract pharmacies, ensuring that vulnerable populations continue to receive discounted medications despite manufacturer restrictions.