Novartis Pharmaceuticals Corporation v. Lynn Fitch, Attorney General of Mississippi

In Section 340B of the Public Health Service Act, Congress used its spending power to create a program that requires drug manufacturers to “offer” to sell their “covered outpatient drugs” to a set of healthcare providers called “covered entities” at a steep discount as a condition of having their drugs covered by Medicare Part B and Medicaid. 42 U.S.C. §§ 256b, 1396r-8(a)(1), (5). Congress assigned sole responsibility to the U.S. Department of Health and Human Services (HHS) to administer this 340B Program “on a uniform, nationwide basis.” Astra USA, Inc. v. Santa Clara Cnty., 563 U.S. 110, 120 (2011); see 42 U.S.C. § 256b(a)(5)(D), (d). The program terms are memorialized in an agreement signed by the HHS Secretary and the participating drug manufacturer. Congress directed HHS to administer a dispute resolution process, which allows covered entities to assert claims that a manufacturer improperly limited their purchases of drugs at the 340B discounted price. Unlike cooperative federalism programs, Congress assigned states no role. Yet more than twenty states have enacted laws in the last few years mandating that manufacturers who participate in the 340B Program provide 340B-priced drugs on more expansive terms than federal law requires, and face state enforcement actions. Mississippi’s law, H.B. 728, is one of them. The question presented is: Whether state laws imposing different and more expansive program terms on drug manufacturers who participate in the federal 340B Program violate the Supremacy Clause?