Health Law Daily Wrap Up, PRESCRIPTION DRUGS—S.D. Miss.: State of Mississippi granted summary judgment in AstraZeneca suit challenging Mississippi’s Defending Affordable Prescription Drug Costs Act, (Aug 27, 2026)

By Donielle Tigay Stutland, J.D.

The drug manufacturer failed to show that the Mississippi law was preempted by the federal 340B program.

The federal district court for the Southern District of Mississippi granted summary judgment in favor of the state of Mississippi, in a legal challenge to a state statute governing prescription drug costs brought by pharmaceutical company AstraZeneca Pharmaceuticals LP (“AstraZeneca”). The court concluded that H.B. 728, which prohibits drug manufacturers from interfering with the delivery of 340B-discounted drugs to contract pharmacies is not preempted by the federal 340B program or patent law. The court also concluded that the Mississippi statute does not violate the Contracts or Takings Clauses. The court found that AstraZeneca has failed to show any conflict between 340B and H.B. 728. In addition, the court found that the Mississippi statute does not expand the scope of the 340B statute. The court held that H.B. 728 is not preempted by federal law, nor does it violate the Contracts Clause or the Takings Clause of the United States Constitution (AstraZeneca Pharmaceuticals, LP v. Fitch, No. 1:24-cv-196-LG-BWR (S.D. Miss. Aug. 21, 2026)).

Background. AstraZeneca Pharmaceuticals LP (“AstraZeneca”) brought a challenge to Mississippi’s “Defending Affordable Prescription Drug Costs Act,” which is commonly referred to as Mississippi H.B. 728 and codified at Miss. Code Ann. § 41-149-1 et seq. In April 2024, Mississippi enacted the law to protect covered entities’ use of contract pharmacies. AstraZeneca sued Mississippi Attorney General Lynn Fitch (in her official capacity), seeking declaratory and injunctive relief. It claimed H.B. 728 is preempted by the 340B statute and federal patent law, and that it violates the Contracts Clause and Takings Clause of the U.S. Constitution.

The 340B program requires drug manufacturers that wish to participate in Medicaid and Medicare Part B to agree to sell certain outpatient drugs to “covered entities” at or below a specified ceiling price. In April 2024, the Mississippi enacted H.B. 728 in an effort to prevent drug manufacturers “from engaging in certain discriminatory actions relating to entities that are participating or authorized to participate in the federal 340B drug discount program.” The statute provides: (1) A manufacturer or distributor shall not deny, restrict, prohibit, or otherwise interfere with, either directly or indirectly, the acquisition of a 340B drug by, or delivery of a 340B drug to, a pharmacy that is under contract with a 340B entity and is authorized under such contract to receive and dispense 340B drugs on behalf of the covered entity unless such receipt is prohibited by the United States Department of Health and Human Services. (2) A manufacturer or distributor shall not interfere with a pharmacy contracted with a 340B entity.

In July 2024, AstraZeneca sought a preliminary injunction on its 340B preemption claim. The court denied that motion and now both the State and AstraZeneca have filed motions for summary judgment.

Related Cases. The court noted that as the parties were briefing their pending motions, several pertinent cases were decided, both by the Southern District of Mississippi in AbbVie Inc. v. Fitch, as well as by the Fifth Circuit in AbbVie Inc. v. Murrill. In AbbVie Inc. v. Murrill, the Fifth Circuit addressed a materially indistinguishable Louisiana statute and rejected 340B preemption and affirmed summary judgment for the state. The Southern District of Mississippi also reached the same result in the companion case AbbVie Inc. v. Fitch.

Preemption. The court began by noting that AstraZeneca only asserts obstacle preemption, which is a form of conflict preemption, as the parties acknowledged that the statutes at issue do not contain an express preemption provision. The court referenced AbbVie, Inc. v. Fitch, and outlined that the Fifth Circuit held that “a presumption against preemption applies to H.B. 728 because it regulates public health and consumer protection.” Moreover, in AbbVie, Inc. v. Murrill, the Fifth Circuit explained that the state statute “does not regulate the 340B Program itself. It regulates the distribution of drugs to patients and the role of pharmacies in this distribution.”

The court rejected the drug maker’s argument that the presumption against preemption does not apply because H.B. 728 “discriminates against drug manufacturers who contract with the federal government, in violation of the well-recognized principle of intergovernmental immunity.” The court rejected AstraZeneca’s argument that the law discriminates against federal contractors, after noting that manufacturers voluntarily participate in 340B and Congress left delivery logistics unregulated. The court also referenced that the Fifth Circuit has already resolved this question when it held that a “virtually identical statute” does not target drug manufacturers because they voluntarily participate in the 340B Program. In Abbvie v. Murrill, the Fifth Circuit explained that “Congress left delivery logistics and contract pharmacies unregulated in § 340B, and [the State] chose to fill that space.”

Relying on Fifth Circuit precedent, the court reasoned that 340B is silent on delivery conditions, that the state law regulates distribution and public health rather than prices or the federal program itself. The court concluded that AstraZeneca did not show that 340B preempts H.B. 728, and that the presumption against preemption applies in this circumstance.

Federal Patent Law. Moreover, the court concluded that there was no preemption by federal patent law. The court determined that the 340B statute does not impose limits on the use of contract pharmacies; rather the statute is silent on that front. The court also cited precedent which has previously determined that “H.B. 728 does not conflict with federal patent law” because it “does not purport to lower prices on any drugs not already discounted under Section 340B.” Novartis Pharms. Corp. v. Fitch, 738 F. Supp. 3d 737, 753 (S.D. Miss. 2024).

The court also cited AbbVie, Inc. v. Jackley, which stressed, “[a]ny allegations concerning the ability of AstraZeneca to profit from its patent due to covered entities utilizing a greater number of contract pharmacies . . . do not stem from interference with the patent right itself and separately have a remedy under the federal 340B Program.”

Contracts Clause. Here the court rejected AstraZeneca’s argument, noting that Pharmaceutical Pricing Agreements (PPAs) between manufacturers and HHS are uniform, non-bargained agreements that recite statutory 340B obligations and contain no delivery terms. The Mississippi statute does not alter the terms, rights, or obligations of PPAs. The court cited to the Fifth Circuit precedent, when it reasoned that: “[t]he absence of delivery terms in the PPAs is dispositive. Because delivery logistics were never part of the federal pricing agreements, a covered entity’s decision to use a contract pharmacy—and [the state statute’s] requirement that manufacturers not interfere with that choice—does not alter the contractual bargain between AstraZeneca and the federal government.”

Takings Clause. The court relied on the Fifth Circuit’s holding in Abbvie, Inc. v. Murrill, in which the court found that the drug maker had not shown that H.B. 728 effectuates a physical taking of its property. “The record indicates that H.B. 728 does not impose on drug manufacturers a positive obligation to directly transfer or sell their drugs to anyone.”

The Case is No.1:24-cv-00196-LG-BWR.

Judge: Guirola, L.

Attorneys: Randolph Simmons Mikell (Daniel Coker Horton & Bell, P.A.) for AstraZeneca Pharmaceuticals LP. George H. Ritter (Wise, Carter, Child & Caraway, PA) for Lynn Fitch.

Companies: AstraZeneca Pharmaceuticals LP

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