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Analyzing Preemption: Arkansas's Victory in Pharmaceutical Regulation



Arkansas Appellate Court Decision 3.24
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340b-sanofi-covered-entity-letter
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Introduction: In the realm of

2024 EMDS AR Covered Entity Communication
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pharmaceutical regulation, the delicate balance between state and federal laws often leads to legal battles over preemption. A recent case before the United States Court of Appeals for the Eighth Circuit, Pharmaceutical Research

AR Novartis CE Letter March 18 2024
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and Manufacturers of America v. Alan McClain, sheds light on this complex issue, particularly within the context of Arkansas-specific legislation.



Background: Arkansas, like many states, heavily relies on federal programs such as the Section 340B Program to ensure access to essential healthcare services for underserved communities. Against this backdrop, the state's response to challenges within the pharmaceutical industry becomes paramount.


The Challenge: Pharmaceutical Research and Manufacturers of America (PhRMA) challenged Arkansas's Act 1103, alleging that it conflicted with federal statutes governing drug pricing and distribution. Act 1103 was enacted in response to manufacturers limiting covered entities' ability to contract with outside pharmacies for the distribution of 340B drugs.


Legal Analysis:

  1. Field Preemption: PhRMA argued that the federal 340B Program occupied the regulatory field, thus preempting Act 1103. However, the court disagreed, recognizing the longstanding tradition of states in regulating pharmacy practices and asserting Arkansas's authority in this realm.

  2. Obstacle Preemption: PhRMA contended that Act 1103 created obstacles to federal objectives. However, the court found no evidence supporting this claim, highlighting Act 1103's alignment with federal goals of ensuring access to affordable medications for vulnerable populations.

  3. Impossibility Preemption: PhRMA argued that Act 1103 conflicted with the FDCA's REMS Program, making compliance impossible. Yet, the court rejected this argument, emphasizing that Act 1103 did not compel manufacturers to violate REMS requirements but rather aimed to safeguard access to medications.

Arkansas's Victory: The court's affirmation of Act 1103 represents a significant triumph for Arkansas and its commitment to protecting the healthcare interests of its residents. By upholding the state's authority to regulate pharmaceutical practices within its borders, the decision reinforces Arkansas's autonomy in addressing critical healthcare challenges.


Manufacturers' Responses: In response to the court's decision and in compliance with Act 1103, pharmaceutical manufacturers such as Novartis and Sanofi have adjusted their policies regarding the 340B Program in Arkansas. Odalys Caprisecca, VP of Managed Markets Finance at Novartis Pharmaceuticals Corporation, announced modifications to their 340B Contract Pharmacy Policy, allowing Arkansas hospital covered entities to order products and place "Bill to/Ship to" replenishment orders with Arkansas-based community pharmacies. Similarly, Gerald Gleeson, Vice President of US Market Access Shared Services at Sanofi, outlined updates to their 340B Integrity Initiative, exempting certain covered entity hospital types in Arkansas from certain policy restrictions.


Implications: These adjustments by pharmaceutical manufacturers signify a collaborative effort to ensure compliance with Arkansas's legislation while continuing to support the core mission of the 340B Program: increasing access to outpatient drugs for uninsured, low-income, and vulnerable patients. The proactive response from manufacturers underscores the importance of state-specific legislation in shaping pharmaceutical practices and highlights the potential for positive collaboration between states and industry stakeholders.


Conclusion: Arkansas's victory in Pharmaceutical Research and Manufacturers of America v. Alan McClain marks a significant milestone in the state's healthcare governance. As the pharmaceutical regulatory landscape evolves, the decision sets a precedent for states nationwide, emphasizing the importance of balancing state and federal laws to promote equitable access to essential medications for all residents. Through collaborative efforts between states, manufacturers, and other stakeholders, the healthcare system can continue to evolve, ensuring the well-being of communities across the country.

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