Arkansas files lawsuit against drug companies for limiting affordable access to medications

Drug manufacturers have tried to maneuver around state law that requires them to provide patients with affordable medicines and the state has now filed a lawsuit against those companies, according to Arkansas Attorney General Tim Griffin.

On Wednesday (July 22) Griffin said numerous companies are in violation of Act 1103 of 2021 and have engaged in unconscionable business practices that undermined access to 340B drug discounts in Arkansas.

“Today, I am announcing a lawsuit I have filed against 22 defendants … 13 drug manufacturers, their related entities, and one data management firm,” Griffin said. “Drug manufacturers embarked on a coordinated campaign to limit patient access while blatantly ignoring Arkansas law. I won’t stand for it and am bringing this lawsuit today to ensure Arkansas patients are always put first.”

For nearly 35 years, drug manufacturers that participate in Medicare and Medicaid have been required to sell prescription drugs at substantially discounted prices to certain healthcare providers, known as covered entities, under the federal 340B Drug Pricing Program, according to the lawsuit.

Many Arkansas hospitals and community clinics rely on the savings from 340B to stretch limited healthcare dollars. Those savings help providers keep clinics open, serve uninsured patients, offer specialty services, and expand care in rural communities.

“The 340B program was established in 1992, and as pharmaceutical companies increased drug prices and the 340B program expanded, the discounts required under the 340B program grew larger. Rather than honoring those discounts, many manufacturers adopted a series of restrictions that made it increasingly difficult for healthcare providers to obtain discounted drugs,” he said.

“In response, Arkansas enacted Act 1103 in 2021 … drug manufacturers sued to stop Act 1103, but they lost. Instead of simply following the law, manufacturers developed new restrictions that continued to interfere with providers’ access to discounted drugs and the savings those discounts generate for Arkansas patients and communities. Every dollar lost through these restrictions is a dollar that can’t be used for patient care,” Griffin said.

In 1992, the United States Congress enacted the 340B Drug Pricing Program to improve healthcare access for low-income and uninsured patients. Under that program, certain healthcare providers, known as “covered entities,” are entitled to purchase outpatient drugs from drug manufacturers at substantially discounted prices. The discounted drugs lower costs for covered entities and permit them to stretch their resources to reach more eligible patients and provide greater services.

Over time, as the costs of providing 340B discounted drugs increased, drug manufacturers tried to find ways to circumvent their obligations, and therefore their costs, under the 340B Program. One method numerous drug manufacturers used was refusing to provide 340B discounted drugs to covered entities that use contract pharmacies to deliver drugs to their patients, according to the lawsuit.

Drug manufacturers challenged Act 1103 as unconstitutional and lost, both at the federal district and appellate levels. The companies then sought other ways to restrict covered entities’ access to 340B drugs that were not directly prohibited by Act 1103, such as by requiring covered entities to provide claims data or medical data to receive 340B discounted drugs. Each drug manufacturer adopted similar restrictions with little variance, according to the suit.

These restrictions changed frequently, making covered entities’ compliance with those numerous policies not only burdensome, but practically impossible. Those restrictions directly undermined the public policy embodied in Act 1103.

Arkansas brings this action against 13 drug manufacturers (and related entities) and data management firm Second Sight Solutions, LLC, which assisted these drug manufacturers in their unlawful conduct. The complaint alleges two counts, based on two violations of the Arkansas Deceptive Trade Practices Act.

The drug manufacturers and related entities named in the lawsuit are AbbVie, Inc.; Amgen, Inc.; Amgen Manufacturing, Limited; AstraZeneca LP; AstraZeneca Pharmaceuticals LP; Boehringer Ingelheim Pharmaceuticals, Inc.; Bristol Myers Squibb Company; Eli Lilly and Company; Genzyme Corporation; GlaxoSmithKline LLC; Immunex Corporation; Johnson and Johnson; Merck & Co., Inc.; Novartis Ag; Novartis Pharmaceuticals Corporation; Novo Nordisk A/S; Novo Nordisk, Inc.; Pfizer, Inc.; Sanofi-Aventis U.S. LLC; Sanofi S.A.; and Sanofi US Services Inc.

The first count of the lawsuit alleges that the manufacturer defendants imposed unreasonable and unlawful conditions on Arkansas covered entities to receive 340B discounted drugs, and those conditions harmed the covered entities and their patients. In short, the drug companies engaged in unconscionable trade practices that prioritized profits over patients, Griffin alleged.

The second count alleges that all defendants knowingly facilitated or assisted these unconscionable practices by coordinating and jointly implementing the manufacturers’ individual restrictions through use of a web platform operated by Second Sight Solutions, LLC. The state is seeking civil penalties for each violation of the Arkansas Deceptive Trade Practices Act, injunctive relief prohibiting the continued use of these restrictions in Arkansas, and costs.