Arkansas lawsuit accuses drugmakers of undermining access to discount program

Arkansas Attorney General Tim Griffin sued multiple major drugmakers Tuesday, alleging they undermined healthcare providers’ access to a federal drug discount program.

The 22 defendants include 13 drug manufacturers, their related corporate entities and data management firm Second Sight Solutions.

The complaint filed in Polk County Circuit Court claims the defendants, among them Pfizer and Bristol Myers Squibb, engaged in deceptive business practices and violated Arkansas’ 2021 law requiring drugmakers that participate in Medicaid to sell discounted drugs to contract pharmacies.

Arkansas was the first state to pass such a law, and several other states have followed suit. The Pharmaceutical Research and Manufacturers of America, known as PhRMA, challenged Arkansas’ law in federal court. 

Drug manufacturers lose appeal of Arkansas law on discounts to hospitals using outside pharmacies

That litigation ended in 2024 when the U.S. Supreme Court declined to hear PhRMA’s appeal of a lower court ruling that federal law does not preempt Arkansas law.

Griffin said Wednesday the defendant drug companies have since put rules in place that are “so burdensome and so prohibitive” that the 340B drug discount program can’t function as intended.

Under the 340B program, established in 1992, pharmaceutical companies that participate in Medicaid must sell outpatient drugs at discounted prices to clinics, community health centers and hospitals that primarily serve low-income patients. The federal government expanded the program in 2010 to allow independent pharmacies to dispense drugs on behalf of hospitals and clinics.

Drug companies illegally limited how many independent pharmacies they work with and required data reporting for healthcare organizations to receive the program’s benefits, Griffin said.

“They’re looking for a way to be in the program, to have access, but to limit their downside financially,” Griffin said at a news conference. “They sort of want to have their cake and eat it too.”

AstraZeneca, one of the defendants, declined to comment on ongoing legal proceedings. Pfizer, Bristol Myers Squibb and Eli Lilly all did not respond to emails requesting comment.

Three of the defendants — Eli Lilly, Sanofi and Novo Nordisk — faced a 2022 lawsuit from then-Attorney General Leslie Rutledge, accusing them of conspiring with the three largest pharmacy benefit managers to inflate the cost of insulin. Last year, the Pulaski County Circuit Court case was grouped into multi-state litigation from 444 lawsuits over insulin prices.

Pharmacy benefit managers serve as middlemen to negotiate prescription benefits among manufacturers, distributors, pharmacies and health insurance providers. Arkansas passed a first-of-its-kind law last year to ban PBMs from holding a permit to operate a drugstore. A federal judge temporarily blocked the law before it could go into effect.

The suit asks for the court to find the defendants liable for violating the Arkansas Deceptive Trade Practices Act and fine them $10,000 per offense. If the court grants the state’s request, the defendants should pay the state more than $1 billion, Griffin said.