Hospitals serving vulnerable patient populations often rely on the savings generated by their participation in the 340B Drug Pricing Program to provide much needed access to care. For many of these hospitals, the ability to use contract pharmacies is the lifeblood of their operations and critical to providing patients with much needed prescription drugs. This support system is now under increasing pressure as drug manufacturers continue their refusal to honor existing arrangements between hospitals and their contract pharmacies, putting critical savings and resources at risk.
While some states have tried to protect hospitals through new laws that are designed to avoid disruptions to existing contract pharmacy arrangements, recent court decisions have started to weaken those protections, creating growing uncertainty and raising significant concerns among hospitals that depend on these arrangements to ensure financial stability.
In the latest challenge to hospitals’ rights to use contract pharmacies, drug manufacturers targeted a Maryland law that barred them from restricting shipments of 340B drugs to contract pharmacies. In a disappointing turn for hospitals, the Fourth Circuit sided with the manufacturers and overturned a lower court ruling that had favored the state, clearing the way for the manufacturer’s unilateral restrictions to potentially move forward. This ruling contrasts earlier decisions issued by other courts, which had generally favored states who had issued laws similar to that enacted by Maryland. For hospitals that depend on contract pharmacies as part of their 340B programs, it adds yet another obstacle in an already ongoing battle to preserve access to critical savings.
The decision also highlights the growing tension between state laws that have been aimed at protecting hospitals and federal preemption. With courts now divided, the issue may ultimately head to the U.S. Supreme Court—where the outcome could have significant implications for the future of the 340B program as well as the hospitals that rely on the program’s resources to serve their patients.
Should you have any questions regarding these recent developments impacting the 340B program and whether a specific state has issued any legislation on this issue, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].