Fourth Circuit Sparks Circuit Split on 340B Drug Pharmacy Mandates
The Fourth Circuit ruled states cannot force drugmakers to supply discounted 340B medicines to unlimited pharmacies.
Why it matters: This deepening circuit split raises high-stakes questions for pharmaceutical contract law and compliance teams. In-house counsel and law firm advisers must now grapple with divergent rules on state authority over drug distribution networks, potentially disrupting national strategies.
- On March 31, 2026, the Fourth Circuit upheld an injunction blocking West Virginia’s S.B. 325, which compelled 340B drug supplies to contract pharmacies.
- The Fifth Circuit, on February 9, 2026, upheld Louisiana's Act 358, supporting state power to require those drug discounts.
- Both the Third and D.C. Circuits previously sided with manufacturers’ right to limit contract pharmacy distribution under the 340B program.
- These rulings create a clear federal circuit split that likely leads to Supreme Court review.
The Fourth Circuit’s March 31, 2026 decision blocks West Virginia from enforcing S.B. 325, a law requiring pharmaceutical manufacturers to ship discounted 340B medications to virtually any contract pharmacy partnered with eligible providers. The court found the law is likely preempted by federal statute, marking a position aligned with earlier decisions from the Third and D.C. Circuits.
- The Third Circuit, in January 2023, determined manufacturers are not obligated to extend 340B discounts to an unlimited number of contract pharmacies. (read more)
- In May 2024, the D.C. Circuit agreed that “the 340B statute does not categorically prohibit manufacturers from imposing conditions on the distribution of covered drugs.” (see analysis).
By contrast, the Fifth Circuit’s February 2026 decision upheld Louisiana’s Act 358. The court emphasized that such regulation “fits comfortably within [states’] tradition,” finding no federal preemption and interpreting the state law as consistent with the 340B framework.
This deepening split means pharmaceutical companies, state regulators, and healthcare entities face an uncertain landscape. Uniform national guidance is now unlikely without Supreme Court clarification, and compliance teams must monitor evolving precedents across jurisdictions or risk missteps in pharmaceutical distribution strategies.
By the numbers:
- March 31, 2026 — Fourth Circuit blocks West Virginia's S.B. 325.
- February 9, 2026 — Fifth Circuit upholds Louisiana's Act 358.
- May 2024 — D.C. Circuit allows manufacturer limits on 340B contract pharmacies.
Yes, but: There is no specific Supreme Court review timeline yet, and operational impacts on covered entities remain unclear.
What's next: The circuit split increases the likelihood of the Supreme Court granting certiorari for a definitive national ruling.