Three major pharmaceutical companies and their national lobbying organization are suing Missouri to Enforcement of a new state law They must grant healthcare providers unrestricted access to reduced-price medicines for their pharmacies.

In four federal lawsuits filed last month, Novartis, AstraZeneca, Abbvie and PhRMA, the pharmaceutical industry’s lobbying arm, argue that Missouri lawmakers unconstitutionally interfered with interstate commerce in The law was passed this year.

The law requires drug manufacturers to accept orders to supply drugs to suppliers who are eligible for rebates. the 340B programnamed after the section of law in which it is authorized. The bill allows eligible providers to enter into an unlimited number of contracts with pharmacies to fill their prescriptions for drugs purchased under the program.

“Under the Supremacy Clause of the U.S. Constitution, Missouri has no authority to determine who has access to drugs priced at $340B,” says the lawsuit, which PhRMA filed last week in the Western District of Missouri.

The law takes effect on Wednesday. Plaintiffs in each case have sought a preliminary injunction to prevent enforcement, but no hearings have been scheduled on the motions and only one case, filed by Novartis on Aug. 2, has seen enough activity for the judge to schedule a hearing.

Abbvie was the first to file its lawsuit in the Eastern District on July 22 – 10 days after Governor Mike Parson refused to sign the bill and instead made it law despite his concerns. The other three cases are filed in the Western District, which includes Jefferson City.

The lawsuits name Attorney General Andrew Bailey and members of the state’s Pharmacists Association, which is responsible for enforcing the law. The association has the authority to investigate violations of the law, and the attorney general has enforcement powers through the state’s Merchandising Practices Act.

“It is difficult to argue convincingly that complying with the requirements of a federal program causes irreparable harm,” wrote Maria Lanahan, assistant attorney general in the Office of the Attorney General, in a brief arguing against a preliminary injunction in the lawsuit against Novartis. “On the contrary, if Novartis complies with SB 751, it will help the covered entities that serve vulnerable populations.”

Bailey’s office did not respond to an email seeking comment on the cases.

The board is relying on Bailey to respond to the lawsuit. The law is self-enforcing, and the board could set rules on how to follow it, said Executive Director Kimberly Brinston.

“The board has no timetable for announcing rules and has not yet made a decision on whether to announce rules,” she said.

The Missouri Hospital Association and the Missouri Primary Care Association have asked to intervene in the lawsuit against Novartis and are likely to join the other three, hospital association spokesman Dave Dillon said Monday.

“We are reviewing each case and intend to amplify the work of the General Assembly on behalf of Missouri hospitals, other providers and the communities they serve,” Dillon said.

The 340B program was created in 1992. It had two components: drug manufacturers had to supply their products to eligible providers at a discounted price, and eligible providers were only allowed to use the program to write prescriptions to patients they treated directly.

Eligible providers included children’s hospitals, hospitals that were the only providers in their community or were classified as “critical access hospitals” because they offered care that would not otherwise be available to them, and those that served a large number of patients in need, so-called “disproportionately high-needs hospitals.”

Other providers who qualify include federally qualified health centers — clinics that receive grants to support their operations so they can charge their fees based on their ability to pay — as well as clinics that treat AIDS patients, patients with pneumoconiosis and patients with other debilitating diseases.

The use of contract pharmacies began in 1996, when the U.S. Department of Health and Human Services began allowing one contractor per provider in recognition that many providers did not have their own pharmacies. But a change allowing unlimited contract work increased the number of contract pharmacies from 2,321 in 2010 to 205,340 in 2024, according to data from PhRMA provided to The Independent in June.

National pharmaceutical manufacturers sold nearly $100 billion worth of drugs at discounted prices in 2021 and 2022. The discounts would average 60 percent compared to regular wholesale prices, the lobby organization said.

Pharmaceutical companies focus their criticism on the disproportionate share of hospitals, which often contract with for-profit pharmacies to dispense the drugs. These hospitals are responsible for about 80% of all drugs purchased through the 340B program, $41.8 billion in 2022 and $34.3 billion the year before.

Pharmaceutical companies complain that discounts are rarely passed on to patients. Instead, insurers and consumers pay retail prices and the additional profit is often split between the pharmacy and the provider.

“Make no mistake, the contract pharmacy boom was fueled by the prospect of inflated profit margins on 340B-rebate drugs,” AstraZeneca’s lawyers wrote in the lawsuit filed last week. “In short, the widespread proliferation of contract pharmacy arrangements since 2010 transformed the 340B program from a program designed to help vulnerable patients into a multibillion-dollar arbitrage scheme.”

Pharmaceutical companies have fought the expansion of contract pharmacies in a variety of ways. In 2020, when Novartis tried to limit contracts to pharmacies within 40 miles of an eligible provider, the U.S. Department of Health and Human Services issued a notice saying it viewed the restriction as a violation of the program’s rules.

A Expert opinions on contract matterswhich was later withdrawn, stated that the 340B program required delivery to a pharmacy on the “lunar surface, in low Earth orbit, or in a neighboring area…”

The 3rd U.S. Circuit Court of Appeals in Pennsylvania ruled in January 2023 in a case against the federal agency that pharmaceutical companies could set limits the number of pharmacies they would allow to purchase the discounted medicines.

Following the 2023 ruling, Novartis tightened its rules, allowing only one contract pharmacy per covered provider, but only if the provider did not have its own pharmacy. Other manufacturers have introduced deviations from Novartis’ guidelines.

Efforts by states to circumvent these restrictions have increased over the past two years. Missouri is one of eight states that have passed laws requiring pharmaceutical companies to supply their drugs to contract pharmacies at discounted prices.

Arkansas was one of the first states to do so. In March, the 8th Circuit Court of Appeals in St. Louis upheld Arkansas’ law requiring pharmaceutical companies to allow their customers an unlimited number of contract pharmacies.

In its motion to dismiss Novartis’ lawsuit, the Missouri Attorney General’s Office relied heavily on that ruling, writing that it showed that federal law does not prevent Missouri from passing a similar law.

The four lawsuits use a variety of legal theories to attack Missouri’s new law. In addition to allegations that it interferes with interstate commerce and regulates in an area reserved for federal law, the Abbvie lawsuit argues that the company’s proprietary rights are being violated.

“This abuse of the federal 340B program is obviously a cause for concern because the U.S. Constitution prohibits the government from forcing the transfer of property at confiscatory prices to private individuals for their own benefit,” the lawsuit states.

In their motion to intervene in the Novartis case, the hospitals and primary care associations argued that revenue from profits on 340B drugs was critical to their operations.

“Restricting access to these savings,” the filing states, “means that hospitals are no longer able to finance vital but underfunded services.”