Pharma Companies Seek to Block State Expansion of Discount Drug Program
On August 7, 2026, Governor JB Pritzker signed into law a Senate Amendment to House Bill 2371, expanding the federal 340B Drug Pricing Program in Illinois. The federal program allows drug manufacturers that participate in Medicaid to offer discounts to participating clinics and hospitals, who, in turn, are expected to use the savings to reduce patient costs, provide charity healthcare, and more. Multiple Illinois drug makers, however, are challenging the state law, arguing Illinois lacks authority to make changes to the program.
HB 2371 prevents drug manufacturers from restricting the number of contract pharmacies that 340B healthcare providers can use, blocking 340B drugs from being delivered to those pharmacies, even if the pharmacy is outside Illinois, and requires contract pharmacies to provide additional data beyond what state or federal law requires.
North Chicago-based AbbVie led a group of drug makers in a lawsuit filed in early August in federal court in the Northern District of Illinois. The drug makers argue that HB 2371 “raises significant constitutional concerns by attempting to impose state-law requirements on a federal program” and drives program value “away from the patients and providers the program was intended to serve.”
They further argue that HB 2371 conflicts with Congress’s intent for the program by loosening restrictions and requiring drug companies to sell their drugs at the statutorily reduced price to safety-net hospitals, clinics, and their chosen contract pharmacies, with no restrictions. Specifically, the suit alleges that HB 2371 is preempted by Section 340B of the federal Public Health Service Act and effectuates an unconstitutional taking of their private property. The companies are urging the Northern District to block the law from taking effect.
The drug makers’ suit is one of many lawsuits nationwide over state laws protecting 340B contract pharmacy arrangements. Most federal appeals courts have sided with the states, allowing states to protect 340B contract pharmacy arrangements. But in March 2026, the Fourth Circuit gave drug companies a win by temporarily blocking West Virginia’s law. The full Fourth Circuit is now reconsidering that decision, as well as a similar case involving a Maryland law. The Eighth and Tenth Circuits are also reviewing similar disputes involving Oklahoma and North Dakota.
State Representative Anna Moeller sponsored the legislation and explained that “changes in how the program operates have created significant challenges for providers across Illinois” and that “federally qualified health centers in Illinois have lost at least $60 million because of restrictions.” HB 2371 would lift those restrictions.
On the other hand, Illinois’ Central Management Services raised concerns that the program’s expansion could increase costs for commercial and state employee health insurance due to lost rebates and high drug markups imposed by manufacturers to offset the expansion. Further, Will May, the senior director of public affairs for the Pharmaceutical Research and Manufacturers of America, said the 340B program is driving up costs for Illinoisans, and PhRMA intends to work with lawmakers to find a better solution.
If you have questions about HB 2371, the federal 340B program, or its implications, contact the qualified attorneys at Rock Fusco & Connelly, LLC.