4/6/2026 – Fourth Circuit Upholds Preliminary Injunction Blocking West Virginia’s Contract Pharmacy Protection Law

In a 2–1 decision, the  Fourth Circuit upheld a lower court’s preliminary injunction blocking West Virginia from enforcing its contract pharmacy protection law (S.B. 325). This decision marks the first federal appellate court to halt enforcement of a state’s contract pharmacy protection law. Two appellate courts and twelve district courts have either upheld or refused to enjoin state contract pharmacy protection laws.

Background

S.B. 325, codified at §60A‑8‑6a, prohibits manufacturers from denying access to 340B drugs at contract pharmacies and from requiring covered entities to submit claims or utilization data as a condition of receiving 340B drugs. §60A‑8‑6a(b)(2). AbbVie, AstraZeneca, Novartis and PhRMA each filed lawsuits challenging the constitutionality of S.B. 358. The U.S District Court for the Southern District of West Virginia granted PhRMA’s motion for a preliminary injunction blocking the enforcement of S.B. 358.  The Fourth Circuit decision is the result of West Virginia’s appeal of the district court decision.

Decision

The majority concluded that S.B. 358 “injects the State [West Virginia] into ‘the relationship between a federal agency and the entity it regulates,’” “spring[ing] obligations on manufacturers specifically by virtue of their participation in a federal program.” The court found that S.B. 358 targets “only manufacturers that participate in the 340B program… [and] imposes restrictions only on drug manufactures when they comply with their end of the 340B program.”  This fact was construed by the court to “reshape the contractual bargain Congress made with private manufacturers,” making S.B. 358 likely preempted by federal law.

In a dissenting opinion, one of the three judges concluded that S.B. 358 is likely not preempted and the district court’s decision should have been reversed to allow S.B. 358 to take effect. The judge noted that the majority made its decision on claims that were not raised or briefed by the parties and created a “different preemption analysis for laws passed under the Spending Clause” of the constitution. The dissent also cited extensively to “the unanimous view of the circuit courts and the consensus view of the district courts that §340B preempts state delivery statutes.”

Final Notes

West Virginia may request a rehearing by the three-judge panel that issued the decision; a rehearing by the full Fourth Circuit; and/or file a petition for review with the U.S. Supreme Court.  Absent any of these actions, the case will return to the district court for a final decision on the merits of the case.

Please contact Powers’ drug pricing team, or your lead Powers attorney, if you have any questions.