Healthcare providers, covered entities, and pharmacies face a complex landscape of drug pricing litigation in 2026. From challenges to the Medicare Drug Price Negotiation Program to battles over the 340B Drug Discount Program’s contract pharmacy protections and state drug affordability boards, understanding these disputes is essential for organizations seeking to protect their operations and patient access.
Medicare Drug Price Negotiations Under the Inflation Reduction Act
The Medicare Drug Price Negotiation Program, established under the Inflation Reduction Act (IRA), continues to face legal challenges even as its first negotiated prices took effect on January 1, 2026. Drug companies have argued that the program constitutes an unconstitutional seizure of property, contending that the so-called “negotiation” process is coercive rather than voluntary, but courts have largely rejected these claims, finding that manufacturers may withdraw from Medicare if they object to its terms.
In August 2025, three courts delivered significant victories for the federal government within a single week. The Second Circuit dismissed Boehringer Ingelheim’s challenge to the program, while a Texas federal court found it constitutional. The Sixth Circuit was particularly critical of the challenge brought by AbbVie and Pharmacyclics, characterizing it as a “stalking horse” strategy that improperly used a local chamber of commerce to pursue claims in a favorable venue. Earlier, in May 2025, AstraZeneca lost its Third Circuit appeal after the court found the company failed to demonstrate injury from the program or establish a due process violation.
Despite these setbacks, AstraZeneca filed the first Supreme Court appeal from a drugmaker fighting the program, arguing that constitutional concerns will become harder to address as more drugs are added each year. For healthcare providers and pharmacies, the outcome of these challenges will shape the financial landscape for high-cost medications in Medicare Part D for years to come. Providers should monitor developments closely and assess how negotiated pricing may affect reimbursement and formulary decisions.
Most-Favored Nations Pricing and the GENEROUS Model
Separately, the Trump administration is pursuing most-favored nation (MFN) drug pricing through a new approach: the “GENEROUS Model,” which aims to bring MFN pricing to state Medicaid programs via the Center for Medicare and Medicaid Innovation (CMMI). The administration has announced pricing agreements with manufacturers including Pfizer, AstraZeneca, Amgen, and Bristol Myers Squibb. However, questions remain as to whether deploying the model on a nationwide basis may not satisfy the statutory requirement that CMMI programs be “experimental” in nature. If courts find the administration is using CMMI to circumvent standard rulemaking, as occurred when the first Trump administration’s MFN rule was blocked for bypassing public comment requirements, the GENEROUS Model could face similar challenges.
Healthcare providers should pay close attention to how MFN pricing affects drug acquisition costs and Medicaid reimbursement. As states begin to participate in the program, providers may need to reassess purchasing strategies and evaluate the impact on their patient populations.
340B Drug Discount Program: Contract Pharmacies and Rebate Models
The 340B Drug Discount Program remains a focal point of legal activity at both state and federal levels. Many covered entities rely on contract pharmacies to dispense 340B drugs to their patients, but manufacturers have increasingly imposed restrictions on these arrangements, citing concerns about program abuse. For those operating as covered entities, these restrictions have threatened access to critical drug discounts that support safety-net operations.
At the state level, many states have enacted laws to protect covered entities’ access to contract pharmacy arrangements by prohibiting manufacturer restrictions. Manufacturers have challenged these laws in court, but the trend has largely favored the states. In 2024, the Eighth Circuit upheld Arkansas’s 340B contract pharmacy protection law. In September 2025, the Fifth Circuit ruled that Mississippi’s law does not preempt federal law, and a Colorado federal court subsequently rejected AstraZeneca’s effort to block Colorado’s 340B law. However, courts in West Virginia and Oklahoma have issued preliminary injunctions blocking similar state laws, finding them preempted by federal law. Those with contract pharmacy arrangements in those states face continued uncertainty. Appeals in both cases are pending, and the outcomes will help clarify the extent to which states can protect contract pharmacy access.
At the federal level, 340B rebate models have generated substantial litigation. The Health Resources and Services Administration (HRSA) has taken the position that manufacturers cannot implement rebate models without approval, prompting five manufacturer lawsuits now before the D.C. Circuit. Meanwhile, HRSA’s announcement of a “340B Rebate Model Pilot Program” drew a December 2025 lawsuit from the American Hospital Association and others, arguing that the pilot could cost hospitals millions by undermining the upfront discount structure Congress intended.
For covered entities and contract pharmacies, these developments underscore the importance of maintaining robust compliance documentation, monitoring manufacturer policies, and engaging with legal counsel to protect access to 340B savings. The outcomes of pending litigation will shape the future of the program and determine whether safety-net providers can continue to access the benefits Congress intended.
Prescription Drug Affordability Boards
State prescription drug affordability boards (PDABs) are designed to combat rising drug costs by, in some cases, setting upper payment limits on certain medications. Colorado, Minnesota, Washington, and Maryland have authorized their PDABs to set upper payment limits on certain medications.
Amgen has emerged as the lead challenger, suing Colorado’s PDAB over its upper payment limit on Enbrel. A district court dismissed the challenge in March 2025, finding that Amgen lacked standing because it was not “subject to direct regulation,” meaning the upper payment limits affect downstream purchasers rather than the manufacturer directly. Amgen appealed to the Federal Circuit, and the state argued in briefing that the manufacturer is not the regulated party under the law.
The district court allowed Amgen to refile its claims, and in October 2025 the company renewed its arguments that Colorado’s law violates the U.S. Constitution and conflicts with federal patent law. The case is pending, with no oral arguments yet scheduled. Meanwhile, legal challenges to PDABs in other states may develop more slowly, as regulators proceed cautiously under statutes that provide broad but largely untested authority.
Healthcare providers and pharmacies operating in states with PDABs should monitor these legal challenges and consider how upper payment limits may affect reimbursement for affected drugs. As more states move toward active price regulation, the judicial response to Amgen’s challenge will set an important precedent for the viability of these programs nationwide.
How Frier Levitt Can Help
Frier Levitt has extensive experience advising hospitals, health systems, pharmacies, and covered entities on the full spectrum of drug pricing issues. As litigation and regulatory developments continue to reshape the landscape in 2026, our attorneys can help clients navigate uncertainty and protect their interests. We assist clients with 340B program compliance, contract pharmacy arrangements, and strategies for responding to manufacturer restrictions and rebate model requirements. We advise on Medicaid reimbursement and the potential impact of MFN pricing models on drug acquisition and patient access. We monitor and analyze legislative and judicial developments affecting prescription drug affordability boards and state pricing laws. We also represent clients in disputes with manufacturers, PBMs, and regulators, and advocate on their behalf before federal and state agencies.
Our team combines deep experience in healthcare regulation, pharmacy law, and litigation to help clients anticipate challenges and respond effectively. If you have questions about how these drug pricing developments may affect your organization, or need assistance protecting your access to critical programs, contact us to speak with an attorney.
