Legal
Drug Manufacturers Challenge State 340B Contract Pharmacy Laws in Illinois, South Dakota
AbbVie and Novartis filed suit against Illinois on August 7, 2026, seeking to block the state's new 340B contract pharmacy law. Three days later, a federal judge in South Dakota dismissed three separate lawsuits from AbbVie, AstraZeneca, and PhRMA challenging South Dakota's similar law. The legal battles center on state efforts to require drug manufacturers to honor 340B pricing at contract pharmacies. The outcome will determine whether states can enforce 340B contract pharmacy requirements against manufacturer restrictions.
Why it mattersThese cases will determine whether safety-net providers, including many Medicaid-heavy hospitals and FQHCs, can access 340B discounts through contract pharmacies or face manufacturer restrictions that limit drug cost savings critical to sustaining operations in underserved communities.