In an unpublished opinion issued today, a panel of Judges Richardson, Rushing, and Benjamin vacated the preliminary-injunction denial entered by Judge Matthew James Maddox of the District of Maryland and remanded for reconsideration. The court held that the district court "erred as a matter of law" in light of the Fourth Circuit's recent published decision in Pharmaceutical Research and Manufacturers of America v. McCuskey, which found a materially similar West Virginia 340B law likely preempted by the federal 340B statute.
The challengers are PhRMA, AbbVie, Novartis, and AstraZeneca. They sued to block Maryland H.B. 1056, codified at Md. Code section 12-6C-09.1, which bars 340B manufacturers from directly or indirectly limiting distribution of discounted drugs to pharmacies operating under contract with covered entities, unless federal law requires the limitation.
The federal 340B Drug Pricing Program requires manufacturers that participate in Medicaid and Medicare Part B to sell outpatient drugs at steep discounts to safety-net providers known as covered entities. Many of those providers lack in-house pharmacies and instead use contract pharmacies -- outside retail or specialty pharmacies that dispense drugs on the covered entity's behalf. Without those arrangements, many hospitals and clinics cannot access the 340B discount at scale. Manufacturers have pushed back, arguing they can limit or condition contract-pharmacy sales, citing diversion and duplicate-discount risks.
States including Maryland and West Virginia passed laws attempting to stop manufacturers from restricting contract-pharmacy deliveries. The Fourth Circuit's March 31 McCuskey decision, involving West Virginia's version, held that such laws are likely preempted because they impose obligations on manufacturers solely by virtue of their participation in the federal 340B program. The Maryland panel adopted that reasoning wholesale rather than conducting a standalone merits analysis.
The court did not finally strike down Maryland's law. It vacated and remanded, directing the district court to "determine in the first instance, applying the principles set forth in PhRMA, the propriety of preliminary relief." But the practical effect is significant: the lower court must now reconsider the injunction request under a framework that favors the manufacturers' preemption arguments.
The decision sharpens the circuit-level divide over whether states can force manufacturers to honor 340B contract-pharmacy arrangements, with the Fourth Circuit now firmly aligned with the industry position on preemption.
The consolidated appeals are Nos. 24-1939, 24-1949, and 24-1978.