Oklahoma asks 10th Circuit to revive state law expanding access to discounted drugs

Pharmaceutical companies sued to block an Oklahoma law expanding where patients can purchase discounted drugs under the federal government’s 340B program.DENVER (CN) — Oklahoma asked the 10th Circuit on Thursday to revive a state law over objections from pharmaceutical companies that expands where patients can obtain discounted drugs that are distributed through the federal government’s 340B program.“Congress said nothing about how 340B drugs get delivered,” argued Oklahoma state attorney Garry Gaskins. “The drug manufacturers’ case asks this court to convert that silence into a prohibition.”Oklahoma lawmakers enacted the 340B Nondiscrimination Act last year to block pharmaceutical manufacturers from limiting delivery options for patients who receive discounted drugs through the federal government’s 340B Drug Pricing Program.In the words of U.S. District Judge Patrick Wyrick, who granted a preliminary injunction blocking Oklahoma’s law, the 340B Program is “the most important drug pricing scheme virtually no one has heard of,” because it was designed “for the direct benefit of healthcare providers rather than their patients.”The inside-baseball drug pricing-and-purchasing scheme was established under the Veterans Health Care Act in 1992 to allow covered health care providers to order discounted medications to provide to patients. Covered entities include black lung clinics, rural referral centers and hospitals serving low-income patients across the country.By purchasing discounted drugs from manufacturers and billing insurers full price, the healthcare providers also use the 340B program to generate money. In its appeal brief, Oklahoma admitted three-quarters of rural hospitals depend on this scheme to stay open.The University of Oklahoma Medical Center, for example, ends up providing medication to patients “in far-flung places” from Orlando to Las Vegas and Puerto Rico. Oklahoma argues medical providers need access to federal discounts no matter where the drugs are picked up.AbbVie LLC, AstraZeneca, and Novartis Pharmaceuticals Corporation each filed separate lawsuits claiming the state law violated the preemption clause and resulted in unconstitutional takings by forcing drug manufacturers to provide more discounted products in more places than before.After holding a hearing in the Novartis case, U.S. District Judge Patrick Wyrick, a Donald Trump appointee, granted a preliminary injunction on Oct. 31, 2025 blocking the state’s new law.Oklahoma appealed. While Wyrick granted relief for three separate lawsuits with one opinion, the 10th Circuit allowed dual arguments on the issue to take place back-to-back at the Byron White U.S. Courthouse in downtown Denver.Senior U.S. Circuit Judge David Ebel drilled Gaskins on how the Oklahoma law burdened businesses.“Does that mean you have to crank up production?” asked the Ronald Reagan appointee. “Would this require someone to build another factory? When they say ‘unlimited amounts,’ they don’t mean ‘within your capacity?’”Under federal law, Gaskins said drug manufacturers that opt into the program already provide as many discounted medications as covered medical providers ask for.“The drug manufacturer is supposed to honor that order at the 340B price,” Gaskins said. “I don’t know what happens if they can’t meet demand.”U.S. Circuit Judge Carolyn McHugh questioned whether expanding availability of drugs necessarily increased demand.“The issue is how you get the drugs to people who need them through these approved entities. As I understand it, there is not an expansion of who is qualified to get these drugs,” the Barack Obama appointee said. “All that is changing is the efficiency of how the drugs get to patients.”On behalf of Novartis, attorney Jessica Ellsworth argued the drugs were available to patients at discounted prices regardless of state law. The dispute instead concerns which sales allow covered health care providers can turn a profit on.“This law does not change patients’ ability to access these drugs,” argued Ellsworth, who practices at Milbank in Washington D.C. “To be clear these drugs are available to the same patients all across the state. The difference is the size of the subsidy that is created when the patient picks up the drug.”Representing AbbVie, attorney Matthew Owen addressed Ebel’s questions about reasonable limitations.“We have to offer them on commercially reasonable terms,” Owen said. “One of them might be we’re not going to build a new factory and the other might be you have to give us claims data, which is not a restriction on distribution.”Senior U.S. District Judge Kathryn Vratil, appointed to the U.S. District of Kansas by George H.W. Bush rounded out the panel. The court did not indicate when or how it would decide the cases.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads