State 340B Contract Pharmacy Law Challenges Supported by the Administration

Law360 is reporting that the Administration is backing the pharmaceutical industry against state laws that prevent drug manufacturers from imposing restrictions on the number of contract pharmacies a 340B Covered Entity can work with.  In amicus briefs filed in the First and Tenth Circuits, the administration takes the position that “[t]he Supremacy Clause permits Congress to preempt state law impliedly, by crowding out related state laws” and that the states cannot interfere with a pharmaceutical company that wishes to restrict the number of contract pharmacies they will supply on behalf of a covered entity.  

If the Circuit Courts take the Administration's position, it would be a departure from the opinions of other district and appellate courts that found that because Congress was silent within the 340B statute about contract pharmacies, that the federal law does not preempt these state laws. 

This could lead to uncertainty about the future of state contract pharmacy laws and the ability for hospitals to use more than one contract pharmacy.  This is yet another example of how important it is to keep abreast of the changes around the 340B program.  As noted in our previous article, there is an RFI from HRSA pending about the 340B Rebate Model Pilot Program.