Arkansas accuses pharma companies of plot to undermine federal drug discount program

(CN) — Arkansas Attorney General Tim Griffin sued major drug manufacturers Tuesday, accusing them of conspiring to block healthcare providers from participating in a federal program designed to provide discounted medications for underserved communities.

340B is a federal law that requires drug companies participating in Medicaid and Medicare to provide discounted out-patient drugs for certain hospitals and clinics, known as covered entities, that provide care for vulnerable populations, including low-income and uninsured patients and rural communities.

In a complaint filed in Polk County Circuit Court, Griffin accuses pharmaceutical companies — including industry giants like Johnson and Johnson, Eli Lilly, Pfizer and AstraZenaca — of coordinating with each other to enact a series of shifting and burdensome requirements that are designed to make it difficult for covered entities to receive discounted drugs through 340B.

“Defendants exploited their superior market and economic power to impose conditions that covered entities had no meaningful ability to resist,” Griffin writes in the complaint. “They forced Arkansas safety-net providers into an impossible choice: comply with burdensome and unlawful demands or forfeit access to the discounted drugs that are essential to their operations and their patients’ care.”

Griffin says that by making it more difficult for covered entities to utilize the 340B program, drug companies have exacerbated an already existing healthcare crisis in the state.

“Many Arkansas hospitals and community clinics rely on the savings from 340B to stretch limited healthcare dollars. Those savings help providers keep clinics open, serve uninsured patients, offer specialty services, and expand care in rural communities,” Griffin said in a statement announcing the lawsuit.

Part of the restrictions at issue limit the use of contract pharmacies, which Griffin says many covered entities rely on to dispense medications.

In 2021, Arkansas passed a law prohibiting pharmaceutical companies from blocking covered entities from using contract pharmacies to dispense medications under 340B.

Major drug manufacturers filed a lawsuit seeking to block the law, arguing Arkansas was unlawfully seeking to dictate how a federal program should operate.

The Eighth Circuit upheld the law in 2024, but Griffin claims that Big Pharma has nonetheless enacted restrictions that seek to circumvent the law’s protections, such as by prohibiting covered entities from using contract pharmacies if they have an in-house pharmacy, restricting covered entities without in-house pharmacies to only one contract pharmacy and restricting covered entities to using contract pharmacies within 40 miles of them.

“Drug manufacturers sued to stop Act 1103, but they lost. Instead of simply following the law, manufacturers developed new restrictions that continued to interfere with providers’ access to discounted drugs and the savings those discounts generate for Arkansas patients and communities. Every dollar lost through these restrictions is a dollar that can’t be used for patient care,” the attorney general said in a statement.

In doing this, Griffin argues, the drug makers have violated Arkansas consumer protection law.

He brings claims against 13 major pharmaceutical companies as well as Second Sight Solutions, which operates a digital platform covered entities use to share information with pharmaceutical companies regarding 340B claims.

Griffin claims this platform facilitates the restrictions imposed by the drug manufacturers.

He is seeking billions of dollars in civil penalties, as well as an injunction prohibiting the defendants from imposing restrictions on covered entities’ access to 340B discounts.

The defendants did not immediately respond to requests for comment on the lawsuit.