Big health industry group sues WA over new drug-pricing law

A national drugmaker group is suing Washington state over a newly approved law that aims to protect patient access to discounted prescriptions.

The complaint, filed last week in the U.S. District Court for the Western District of Washington, is already the third against state Attorney General Nick Brown over the new law. Last month, on the day Washington Gov. Bob Ferguson approved the legislation, two of the world's largest pharmaceutical companies, Novartis and AbbVie, also sued the state, arguing it overstepped its authority with the new law, the Washington State Standard reported.

This most recent lawsuit is brought by the Pharmaceutical Research and Manufacturers of America, or PhRMA, a massive drug industry trade group.

The new state law is meant to protect a decades-old federal program that pushes drugmakers to provide discounted medications to certain hospitals that care for low-income and rural patients. As in the other pending lawsuits, PhRMA says the state shouldn't be allowed to make revisions to a federal program, and accuses the new law of being entirely parasitic" to the nationwide initiative.

"This case is about the constitutional balance between state and federal power," the lawsuit says. "The Court should … prevent Washington State from redefining the contours of a federal spending program in which Congress has given it no role."

Mike Faulk, spokesperson for Brown's office, declined to comment on the pending litigation, but wrote in an email, "We look forward to defending the law."

The complaint also names as a plaintiff Ryan Moran, director of the state Health Care Authority, which runs Medicaid, or Apple Health, in Washington. A spokesperson for the agency declined to comment.

The state's hospital association, which backed the drug-pricing bill this year and is planning to submit an amicus brief in support of the law, has been more vocal in pushing back against opposition to the legislation.

Cassie Sauer, president and CEO of the association, wrote in a February op-ed that the "attacks are led by profit-driven national and international corporations with a direct financial interest in weakening the program to increase their profits."

"Portraying Washington's nonprofit community hospitals as bad actors while defending the interests of multinational for-profit drug companies turns reality upside down," Sauer wrote.

Taya Briley, the hospital association's executive vice president and general counsel, added in an interview Tuesday: "We are optimistic we will prevail."

The federal program, known as the 340B Drug Pricing Program, was created in 1992 to help certain hospitals and health clinics care for low-income and rural patients. If drug manufacturers want to take part in Medicare or Medicaid, they must offer their outpatient medication to participating hospitals and clinics at a significant discount. Hospitals can then charge insurers the standard market price, which is higher than what they pay under 340B. Providers use the difference to help fund their operations.

The goal is to provide support to these safety-net hospitals and clinics, allowing them to expand their care.

The pharmaceutical industry, however, has protested for years that as the program grew, more hospitals were abusing the program by pocketing the savings they earn from federal discounts for other uses, rather than passing the lower costs on to patients. In addition, drugmakers say, there was a sharp increase in providers contracting with outside pharmacies - which they've said leads to duplicate billings, product diversion and ineligible rebates.

There's no question the program has swelled over the years. Sales of 340B drugs in 2024 totaled $81.4 billion, a 23% increase from the year before, according to the Health Resources & Services Administration, which oversees the program.

But while hospitals attribute increased spending to federal policy choices, rising drug prices and more expensive therapies, drugmakers argue providers have tried to game the system by working with third-party pharmacies.

In response, Washington and other states have approved laws that prohibit drugmakers from restricting the practice, which hospital leaders say is important in bringing prescription medicine closer to patients' homes.

"The program is doing exactly what Congress designed it to do: help safety-net providers care for vulnerable patients as drug prices and drug company profits soar," Sauer wrote in the op-ed.

At least 20 other states, including Arkansas, Mississippi, Tennessee and West Virginia, have enacted similar laws to protect contract pharmacy access. Some state policies were met with legal challenges brought by manufacturers and industry groups, but were ultimately upheld by federal judges.

"After more than a decade of congressional inaction, states are stepping in to protect the federal framework that Congress created as manufacturers impose unilateral restrictions that threaten patient access," Sauer wrote.

Briley, also from the state hospital association, noted the new law is important in keeping many of Washington's nonprofit hospitals afloat.

"Hospitals are struggling to keep doors open," Briley said. "They're losing money just trying to deliver the basics of health care.

The attorney general's office has not yet responded in court to the most recent drug-pricing lawsuit. In the other two cases, which have since been consolidated into one lawsuit, Brown succeeded in extending a deadline to respond to late June.

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This story was originally published April 15, 2026 at 6:40 AM.