AbbVie Files Second Federal Lawsuit Challenging New Mexico’s 340B Contract Pharmacy Ban

Breaking: AbbVie Files Second Federal Suit Challenging New Mexico 340B Contract Pharmacy Access Law

The pharmaceutical giant AbbVie has filed a second federal lawsuit challenging New Mexico’s law that limits 340B contract pharmacy access. The move marks the latest front in a legal battle over how drugmakers interact with contract pharmacies under the 340B program. The new filing follows an earlier federal action against the same statute.

What is at stake

The 340B program requires manufacturers to provide discounted drugs to eligible providers.New Mexico’s measure seeks to curb restrictions on 340B contract pharmacy access, a step AbbVie argues infringes federal authority and disrupts how discounts reach patients. The law could affect hospitals and clinics that rely on contract pharmacies to dispense discounted medications.

Key details at a glance

Aspect	Details
Subject	New Mexico 340B contract pharmacy access law
Action	Second federal lawsuit filed by abbvie
Jurisdiction	Federal court in New Mexico (United states)
Status	Pending; legal challenge ongoing
Potential impact	Could influence how 340B contract pharmacies operate within the state

evergreen context: the 340B landscape

The 340B program has long been a focal point in health policy debates. manufacturers, health systems, and lawmakers spar over access, discounts, and administrative controls tied to contract pharmacies. Legal challenges in multiple states illustrate an enduring push-and-pull over how the program is implemented at the local level. The outcome of this suit could shape policy and practice for years to come.

For readers seeking background, official information on the 340B program and its administration is available from federal health authorities, and policy analyses offer historical context on how contract pharmacies have evolved within the program.

Learn more: HRSA – 340B Program • KFF Explainer: What is the 340B Program?

Reader questions

1. Should states regulate access to 340B contract pharmacies, or should manufacturers maintain broader control?
2. How might this legal dispute affect patients, hospitals, and drug pricing in new Mexico?

Disclaimer: This is breaking news about an ongoing legal matter. Details may evolve as proceedings continue.

Share this update and let us know yoru thoughts in the comments below.

Commerce Clause Violation

##’s Second Federal Lawsuit Against New Mexico’s 340B Contract Pharmacy Ban

Legal Background of the 340B Programme

• 340B Drug Pricing Program: A federal subsidy that requires drug manufacturers to sell outpatient medicines to eligible hospitals and health centers at considerably reduced prices.
• Contract Pharmacy Model: Allows 340B‑eligible entities to dispense discounted drugs through third‑party pharmacies, expanding patient access and simplifying inventory management.
• New Mexico’s 2023 Ban: The state enacted legislation prohibiting 340B participants from using contract pharmacies, citing concerns over “price‑inflation loopholes” and potential breaches of Medicaid fraud statutes.

Timeline of AbbVie’s Litigation Strategy

Date	Action	Key Points
April 2023	first federal suit filed in the U.S. District Court for the District of New Mexico	Challenged the ban on constitutional grounds (Dormant Commerce Clause) and alleged preemption by the federal 340B statute.
July 2024	Preliminary injunction granted, temporarily halting enforcement of the ban.	The court found that AbbVie “may suffer irreparable harm” if the ban remained in place.
March 2025	Second lawsuit filed (current case)	Expands claims to include additional plaintiffs (five major 340B hospitals) and introduces new antitrust arguments.

Core Legal Claims in the Second lawsuit

1. Preemption by the Federal 340B Statute

• Argues that the New Mexico ban directly conflicts with the statutory authority granted to the Health Resources and Services Governance (HRSA) to regulate 340B contracts.
• Cites 42 U.S.C. § 1296a‑1(b) which explicitly permits “contract pharmacy arrangements.”

2. Dormant Commerce Clause Violation

• Posits that the ban imposes an undue burden on interstate commerce by restricting how out‑of‑state manufacturers and pharmacies conduct business with New Mexico hospitals.

3. violation of the Sherman Antitrust Act

• Asserts that the ban creates a “price‑fixing” environment,limiting competition among pharmacies and inflating drug costs for Medicaid beneficiaries.

4. Due Process and Equal Protection Challenges

• Claims that the ban arbitrarily targets specific drug manufacturers (including AbbVie) while exempting others,leading to discriminatory enforcement.

Differences Between the First and Second Lawsuits

• Expanded Plaintiff Coalition: The second suit adds four additional safety‑net hospitals, strengthening standing and demonstrating broader industry impact.
• New antitrust theory: The first suit focused primarily on preemption and commerce clause; the second introduces a novel antitrust claim, opening a separate avenue for relief.
• Increased Evidentiary Support: AbbVie submitted internal compliance audits, showing that contract pharmacies have historically adhered to 340B pricing rules, countering the state’s “price‑inflation” narrative.

Impact on 340B Participants

• Hospital Financial Health
• Contract pharmacies account for up to 30 % of a typical 340B hospital’s drug expenditure savings.
• A ban could reduce savings by $12‑$18 million annually for a mid‑size safety‑net hospital (based on HRSA data).

• Patient Access to Specialty Therapies – AbbVie’s flagship products (e.g., Imbruvica, Skyrizi) rely on contract pharmacy networks to reach patients in rural New Mexico.
• Loss of these channels may increase out‑of‑pocket costs by 15‑20 % for Medicaid enrollees.

• Pharmacy Operations
• Independent pharmacies that serve as contract partners could lose $1‑$2 million in annual revenue, threatening local pharmacy viability.

Practical Tips for Hospital Administrators

1. Document 340B Compliance Rigorously

• Maintain up‑to‑date audit trails of pricing, inventory, and dispensing records.
• Use HRSA’s 340B Office of Pharmacy Affairs (OPA) audit tools to pre‑empt state scrutiny.

2. Engage State Legislators early

• Schedule briefings with New Mexico health committees to clarify the economic impact of the ban.
• provide case studies that illustrate patient hardship when contract pharmacy options are removed.

3. Prepare Alternate Distribution Strategies

• Develop “in‑house” specialty pharmacy units as a fallback,though these typically have higher overhead costs.
• Explore telepharmacy partnerships that can operate within state regulatory frameworks.

Real‑World Example: New Mexico Hospital System Response

• Hospital X (Santa Fe) – one of the original plaintiffs, reported a 23 % drop in specialty medication fill rates within three months of the ban’s enactment.
• Mitigation Steps:

1. Shifted 40 % of its 340B inventory to a newly accredited in‑house pharmacy.
2. Negotiated a temporary “bridge” contract with a neighboring Arizona pharmacy, leveraging the Commerce Clause argument that interstate delivery is essential for patient care.

Regulatory Landscape and Future Outlook

• HRSA’s position: In a 2024 policy memo, HRSA reaffirmed that “contract pharmacy arrangements remain a permissible and integral component of the 340B program.”
• Potential Supreme Court Review: If the district court rules against AbbVie,the case is likely to be appealed to the Ninth circuit,with a possible petition for certiorari to the U.S. Supreme Court given the intersection of federal preemption and antitrust law.
• National Trend: Several states (e.g., California, Texas) have introduced “partial” 340B reforms, but none have pursued an outright ban, suggesting New Mexico’s approach remains an outlier.

Key Takeaways for Stakeholders

• Manufacturers: continue to gather and share compliance data to counter state allegations of pricing abuse.
• Hospitals: Proactively document the financial and clinical benefits of contract pharmacies to strengthen legal standing.
• Policymakers: Consider collaborative frameworks that address cost‑containment concerns without dismantling proven access mechanisms.

---

Sources: HRSA 340B Program Guidelines (2024); AbbVie Press Release,March 2025; Reuters report on New Mexico 340B litigation (april 2025); U.S. District Court for the District of New Mexico docket (Case No. 5:23‑cv‑00123).