The 5th U.S. Circuit Court of Appeals on Feb. 9 upheld Louisiana’s Act 358, a state law requiring drug manufacturers to offer 340B discounts for drugs dispensed at contract pharmacies, rejecting arguments from AbbVie, PhRMA and AstraZeneca.
The court found the law was not preempted by federal statute, did not violate the Fifth Amendment’s Takings Clause or the Contracts Clause and was not unconstitutionally vague, according to court documents. “States regulate pharmacies — and the distribution of drugs to those pharmacies — every day,” the court wrote in its ruling. “Act 358 fits comfortably within that tradition.”
The American Hospital Association filed friend-of-the-court briefs in the case in 2023 and 2024, alongside the Louisiana Hospital Association, Rural Hospital Coalition, 340B Health and the American Society of Health-System Pharmacists. The filings were part of a broader legal defense of state-level 340B protections.
The decision comes days after HHS said it would abandon its proposed 340B rebate pilot, which was blocked by federal courts in December and January. The pilot would have replaced upfront discounts with a reimbursement model, a shift hospital groups said would increase costs and jeopardize access to care for underserved patients.
The AHA praised both outcomes and said it would continue working with the Trump administration on policies to protect access and affordability for safety-net providers, according to a Feb. 9 news release from the organization.
