Article
Two rulings, two directions
On March 31, a divided panel of the 4th Circuit upheld a preliminary injunction blocking West Virginia’s S.B. 325. The law barred drugmakers in the 340B program from restricting deliveries to contract pharmacies or requiring claims data as a condition of delivery. The 2-1 majority found the law likely preempted because it regulates only participants in the federal 340B program, a field it said belongs to Congress. The dissenting judge argued that federal law is silent on delivery and warned of harm to hospitals and low-income patients.
Nine days later, the 5th Circuit went the other way. On April 9 it affirmed two district court decisions refusing to block Mississippi’s contract pharmacy law, rejecting challenges from Novartis and the drug industry trade group PhRMA. The same court had turned away a similar AbbVie challenge in September 2025. The 5th and 8th Circuits have previously upheld comparable laws in Louisiana and Arkansas.
On April 17, the American Hospital Association, the West Virginia Hospital Association, 340B Health and the American Society of Health-System Pharmacists asked the full 4th Circuit to rehear the West Virginia case. They argue the panel adopted a novel test, conflicts with the circuit’s own precedent and departs from most federal courts that have reviewed these laws.
Why it matters for hospital finances
Many hospitals, especially rural and safety-net facilities without large in-house pharmacies, rely on contract pharmacies to reach patients. Since drugmakers began limiting contract pharmacy discounts, state laws have become a key tool for restoring that value. The 4th Circuit ruling now threatens those protections in the states it covers, while hospitals in the 5th and 8th Circuits remain on firmer ground for now.
A clear split between circuits also raises the chance that the Supreme Court will eventually take up the question. That could settle the issue nationally, in either direction.
What finance and pharmacy leaders should do
- Quantify exposure: Calculate how much of your 340B benefit flows through contract pharmacies and how much depends on a state law.
- Run scenarios: Model results if your state law is struck down, upheld or never enacted.
- Strengthen compliance: Clean claims data and strong audit readiness help in disputes with manufacturers.
- Coordinate advocacy: Work with your state hospital association on litigation and on legislation that can withstand challenge.
Archive entry for Apr 18, 2026, added Nov. 11, 2026.