Novartis is suing the state of Maryland to block a state law that will ban drugmakers from placing limits on discounts to pharmacies that supply drugs to hospitals serving low-income and uninsured patients.
The 31-page lawsuit, filed Wednesday in the US District Court for the District of Maryland, argued that a Maryland law set to go into effect July 1 goes too far in requiring that drug manufacturers recognize an unlimited number of transactions from contract pharmacies.
The company asserted that the federal 340B statute has been interpreted by the courts to clarify that the law does not require manufacturers to recognize an unlimited number of contract pharmacies. Further, Novartis argued that the Maryland law creates its own state-level 340B enforcement mechanism, which goes against the federal statute.
The 340B program was established in 1992 and has for years been controversial as legislators and manufacturers are worried that some healthcare systems are abusing the program to pay less for drugs, and pharma companies have turned to the courts to seek reforms.
A DC federal appeals court earlier this month sided with drugmakers over 340B restrictions, upholding that the law doesn’t create any requirements around delivery conditions.
But a federal appeals court in Arkansas took a different stance earlier this spring in a suit brought by the industry trade group PhRMA, allowing the state to prevent companies from limiting discounts.
The Novartis lawsuit also argued that the Maryland statute forces drugmakers to provide discounted products before federally established exclusivity periods have run their course.
“H.B. 1056 requires Novartis to make its drugs that are not covered by the federal 340B framework available at heavily discounted prices before those federally protected exclusivity periods have run, undermining the bargain carefully constructed by federal law,” Novartis wrote in the suit. “That frustrates the purposes of Congress.”
Novartis is asserting that it will face irreparable harm from complying with Maryland’s law and requests a preliminary injunction while the court decides on the merits of the case.
Maryland’s Office of the Attorney General declined to comment.
Lawmakers have been floating reforms to the 340B program in recent months. In February, a bipartisan group of senators released a draft bill that included a program to institute user fees for participating pharmacies. The House Energy and Commerce Committee is holding a hearing on Tuesday to discuss how the program is working and what areas need improvement.