A U.S. federal judge has rejected challenges by two pharmaceutical manufacturers seeking to block a Maine law that regulates the use of contract pharmacies under the federal 340B drug discount program.

Novartis AG (NYSE:NVS) and AbbVie Inc. (NYSE:ABBV) argued the statute conflicted with federal law and violated constitutional provisions, but the court disagreed.

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The plaintiffs contended the Maine statute was preempted by federal law, infringed on interstate commerce, constituted an unlawful taking, and was unconstitutionally vague. After reviewing written submissions and oral arguments, the court denied the requests for relief.

Thomson Reuters published a copy of the lawsuit online on Tuesday.

Over the years, the program has expanded significantly. According to filings, the number of contract pharmacy sites grew from about 1,300 in 2010 to more than 33,000 in 2024.

Also Read: Sanofi, Eli Lilly, Novo Nordisk, AstraZeneca Face Renewed Claims Of Conspiring To Restrict 340B Discounts

As per a new analysis, the rapid expansion of the federal 340B drug pricing program is significantly affecting Medicaid budgets, particularly in states where managed care plans oversee prescription drug benefits.

Drugmakers, including AbbVie, argue that this expansion has increased the risk of improper claims, double discounting and drug diversion. They point to widespread use of the "replenishment model," which they say makes oversight more difficult.

Tensions heightened in 2020 when some manufacturers, including Novartis, sought to impose limits on deliveries to contract pharmacies. The Department of Health and Human Services' Health Resources and Services Administration (HRSA) initially attempted to curb those restrictions but was largely rebuffed by federal courts. Judges concluded HRSA lacked broad authority to regulate pharmacy arrangements beyond setting price ceilings.

In response, several states, including Maine, enacted statutes prohibiting drugmakers from restricting access to contract pharmacies. Industry groups quickly filed lawsuits challenging those state laws. While outcomes have varied across jurisdictions, multiple courts have sided with states, declining to block enforcement.

The Maine case fits into this broader national landscape. The ruling suggests courts remain cautious about striking down state-level protections for contract pharmacies, even as manufacturers continue to argue that such measures conflict with federal law.

With litigation ongoing in multiple states, the future scope of the 340B program -- and the role of contract pharmacies within it -- remains unsettled. For now, however, Maine's statute stands.

In July, a federal court sided with the U.S. Department of Health and Human Services (HHS), rejecting Johnson & Johnson's (NYSE:JNJ) effort to reshape its participation in the 340B Drug Pricing Program.

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