News Summary
Novartis Pharmaceuticals has filed a lawsuit against Rhode Island to challenge a new drug-pricing law that affects the 340B Drug Pricing Program. The law, designed to stop discriminatory practices in prescription acquisition, is set to take effect in 2025. Novartis argues that the state lacks authority and claims the law violates the Commerce Clause. Attorney General Neronha believes the law supports healthcare providers reliant on the 340B program. As Novartis appeals the decision, the case’s outcome could impact pharmaceutical companies and healthcare providers significantly.
Rhode Island – Novartis Pharmaceuticals Corporation (NPC) has initiated a federal lawsuit challenging Rhode Island’s recently passed drug-pricing law, which is set to take effect on October 1, 2025. The legal case, titled Novartis Pharmaceuticals Corporation v. Neronha, confronts the law’s implications for the 340B Drug Pricing Program, a federal initiative that allows eligible healthcare providers to purchase prescription drugs at reduced prices.
The new law includes measures to prevent insurers, pharmacy benefits managers, and other payors from applying discriminatory practices against healthcare providers who acquire prescriptions through the 340B program. It was sponsored by Senator Bridget Valverde and Representative Jon D. Brien, aiming to ensure the financial support necessary for safety-net hospitals and clinics that serve low-income populations.
Novartis seeks an injunction to block the law from being enforced and a judicial declaration stating that the state lacks the authority to regulate contract pharmacy relationships that extend beyond federal statutes. The company contends that the new legislation violates the Commerce Clause of the United States Constitution by attempting to impose regulations over interstate commerce.
As one of the largest pharmaceutical firms, Novartis AG reported annual sales of approximately $55.18 billion for the twelve-month period ending June 30, 2025, marking a 13% increase from 2024. By contrast, Rhode Island’s overall budget is about $14 billion.
Amidst rising concerns, the 340B Drug Pricing Program has been on a significant growth trajectory, currently benefitting nearly two-thirds of U.S. hospitals, with sales seeing a tenfold increase since 2010. Proponents of the Rhode Island law argue that it serves a crucial role in securing funding for patient services and nurturing the program’s intent, which they feel has been undermined by recent actions from pharmaceutical companies.
Attorney General Peter Neronha noted that the court’s denial of Novartis’s request for a preliminary injunction represents a significant achievement for healthcare entities that rely on the 340B program. The law also aims to bolster transparency and accountability among entities participating in the 340B program, requiring them to submit annual reports detailing program savings and expenditures. This provision is intended to shed light on how funds are allocated and used to support patient care.
Lawmakers have underscored the need for such legislation in light of what they describe as discriminatory practices by large pharmaceutical companies, which they assert harm vulnerable populations that depend heavily on accessible healthcare services. The bipartisan nature of the law reflects a widespread belief that protecting and enhancing the 340B program is essential for the health infrastructure that aids low-income communities.
Novartis, following the denial of its preliminary injunction request, has escalated its legal efforts by appealing to the U.S. Court of Appeals for the First Circuit. The outcome of this case will likely have significant implications for both pharmaceutical companies and healthcare providers participating in the 340B program.
Deeper Dive: News & Info About This Topic
- GoLocalProv
- Wikipedia: 340B Drug Pricing Program
- Rhode Island Current
- Google Search: Rhode Island Drug Pricing Law
- Providence Journal
- Google Scholar: Novartis Pharmaceuticals Corporation v. Neronha
- Turnto10
- Encyclopedia Britannica: Commerce Clause
- UpriseRI
- Google News: Drug Pricing Laws
Author: STAFF HERE PROVIDENCE WRITER
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