On February 9, 2026, the United States Court of Appeals for the Fifth Circuit issued a significant decision in AbbVie, Inc. v. Murrill, upholding Louisiana’s Act 358, a state law designed to protect access to discounted prescription drugs for low-income and rural patients.
In 2023, Louisiana enacted Act 358 (“Act 358”) to prohibit manufacturers from denying, restricting, or interfering with the delivery of 340B drugs to contract pharmacies, with violations enforceable under the state’s consumer protection statute. In response, pharmaceutical manufacturers AbbVie and AstraZeneca, along with the Pharmaceutical Research and Manufacturers of America (PhRMA), challenged Act 358 in federal court on preemption and constitutional grounds. The district court ruled against the manufacturers and in favor of the state. The manufacturers appealed to the Fifth Circuit.
Key Takeaways From the Fifth Circuit’s 340B Ruling
- Act 358 Is Not Preempted by Federal Law
The manufacturers argued that federal law preempts Act 358, which the Fifth Circuit rejected. The court held that Act 358 does not regulate the federal 340B Program itself, but rather, the distribution of drugs to patients through pharmacies, a subject the federal statute does not address. Additionally, the court found no conflict, explaining that contract pharmacies merely dispense what covered entities have already purchased at the required discount and that Louisiana’s enforcement of delivery obligations operates in a different lane than the federal government’s enforcement of 340B pricing rules. Finally, the court found that Act 358 advances, rather than obstructs, Congress’s goal of getting discounted medications to the communities that need them most.
- Act 358 Does Not Violate the Takings Clause
The manufacturers also argued that Act 358 amounts to an unconstitutional “taking” of its property by forcing manufacturers to sell 340B discounted drugs to entities not entitled to them. The court disagreed, holding that Act 358 does not compel any transfer of property; it simply prevents manufacturers from blocking a covered entity’s use of a contract pharmacy after the entity has already purchased the drugs at the required price. The court further found that any economic impact was limited, that contract pharmacies have existed for decades (meaning the law was not unexpected), and that Act 358 serves the clear public purpose of ensuring patient access to affordable medications. - Act 358 Does Not Violate the Contracts Clause
The manufacturers argued that Act 358 improperly interfered with their pharmaceutical pricing agreement (PPA) with the federal government. The court rejected this claim because the PPA says nothing about drug delivery to contract pharmacies, meaning Act 358 does not alter its terms in any way. The court added that in a heavily regulated industry, companies cannot reasonably expect that no additional state regulations will arise and that the PPA’s silence on delivery logistics cuts against AstraZeneca’s position. - Act 358 Is Not Unconstitutionally Vague
The manufacturers argued that the word “interfere” in Act 358 is unconstitutionally vague. The court disagreed, holding that because “interfere” appears alongside “deny, restrict, prohibit,” it plainly targets conduct that obstructs drug delivery, not routine communications or lawful auditing.
What the Decision Means for 340B Covered Entities, Contract Pharmacies, and Drug Manufacturers
This decision reinforces the principle that the federal 340B statute does not prevent states from protecting 340B drug delivery through contract pharmacies. The ruling also builds on the Fifth Circuit’s own recent precedent in AbbVie, Inc. v. Fitch, which addressed Mississippi’s nearly identical statute, further solidifying the legal foundation for these state laws.
Notably, however, a potential circuit split has emerged. On March 31, 2026, the Fourth Circuit in Pharmaceutical Research & Manufacturers of America v. McCuskey affirmed a preliminary injunction against West Virginia’s Senate Bill 325, a rule similar to Act 358, holding that the law is likely preempted by federal law. This divergence of circuit court opinions creates a level of uncertainty for covered entities seeking protection under state laws, such as Act 358, and may ultimately require resolution by the Supreme Court.
How Frier Levitt Can Help
Frier Levitt attorneys are experienced in assisting 340B covered entities and contract pharmacies in navigating 340B policies, manufacturer restrictions, and evolving state laws impacting contract pharmacy arrangements. Our team advises stakeholders on compliance strategies, operational risks, and legal challenges related to 340B drug distribution and access. As litigation and regulatory scrutiny surrounding state 340B protections continue to evolve, proactive legal guidance is critical. Contact Frier Levitt to discuss how these developments may impact your organization and how to position your operations for ongoing compliance and risk mitigation.
