Fifth Circuit Reaffirms State Authority to Protect 340B Contract-Pharmacy Distribution: No Preemption, No Extraterritorial Regulation, and “Interfere” Narrowed by Context

Introduction

In Pharmaceutical Research and Manufacturers of America v. Fitch (5th Cir. Apr. 9, 2026) (per curiam, unpublished), the Fifth Circuit affirmed the denial of a preliminary injunction sought by the pharmaceutical industry trade group Pharmaceutical Research and Manufacturers of America (“PhRMA”) against Lynn Fitch, in her official capacity as Mississippi Attorney General. PhRMA challenged Mississippi’s H.B. 728, a statute aimed at preventing drug manufacturers from blocking or constraining the delivery of federally discounted drugs purchased under the federal 340B Program to contract pharmacies.

The appeal presented three central issues: (1) whether H.B. 728 is preempted by federal 340B law under the Supremacy Clause; (2) whether H.B. 728 unconstitutionally regulates out-of-state commerce in violation of the Commerce Clause; and (3) whether H.B. 728 is unconstitutionally vague—particularly through its use of the term “interfere”—under the Due Process Clause.

Because the case arose at the preliminary-injunction stage, PhRMA had to show (among other factors) a substantial likelihood of success on the merits. The Fifth Circuit held it could not, largely because earlier Fifth Circuit decisions had already rejected materially identical challenges.

Summary of the Opinion

The Fifth Circuit affirmed the district court’s denial of a preliminary injunction. Applying de novo review to the legal issues, the court held that PhRMA failed to demonstrate a substantial likelihood of success on:

Preemption: H.B. 728 is neither field-preempted nor conflict-preempted by Section 340B; controlling circuit precedent foreclosed the challenge.
Commerce Clause (extraterritoriality): Mississippi law presumes statutes operate only within the state; H.B. 728 lacks clear extraterritorial intent.
Vagueness: The term “interfere,” read alongside “deny, restrict, [and] prohibit,” targets obstructive conduct, not lawful audits or routine communications.

Analysis

1) Precedents Cited

A. Preliminary-injunction framework

Anibowei v. Morgan and AbbVie, Inc. v. Fitch: cited for the standard of review (abuse of discretion; de novo on legal determinations; clear error on facts).
AbbVie, Inc. v. Fitch and Jones v. Tex. Dep't of Crim. Just.: set out the four-factor test for preliminary injunctions and the “merge” of public-interest and balance-of-harms factors when the government is a party.

B. Supremacy Clause / preemption

Arizona v. United States: cited for core definitions of field preemption and conflict preemption, including the “obstacle” formulation.
Janvey v. Democratic Senatorial Campaign Comm., Inc.: cited for field-preemption principles (pervasiveness and dominant federal interests).
Deanda v. Becerra: supplies the presumption against preemption in areas of traditional state regulation, requiring a “clear and manifest” congressional intent to displace state law.
AbbVie, Inc. v. Fitch: the central controlling precedent holding that Mississippi’s H.B. 728 regulates drug distribution (traditionally state-regulated), while Section 340B is a pricing program that does not comprehensively govern distribution via contract pharmacies.
AbbVie, Inc. v. Murrill: applied AbbVie, Inc. v. Fitch to a materially indistinguishable Louisiana law, reinforcing that these state statutes are not field- or conflict-preempted.
Jacobs v. Nat'l Drug Intel. Ctr.: invoked for the Fifth Circuit “rule of orderliness,” binding later panels to prior panel decisions absent intervening change in law.

C. Commerce Clause (extraterritoriality)

Healy v. Beer Inst., Inc. (quoting Edgar v. MITE Corp.): provides the prohibition on applying a state statute to commerce “wholly outside” the state and frames the “practical effect” inquiry.
Tattis v. Karthans: supplies a Mississippi-law interpretive presumption that state statutes operate only within Mississippi absent clearly expressed extraterritorial intent—used here to cabin the Commerce Clause “practical effect” analysis.

D. Vagueness

United States v. Lanier: cited for the classic vagueness standard (ordinary intelligence must not be forced to guess at meaning and application).
AbbVie, Inc. v. Murrill: controls the interpretation of “interfere” (via contextual reading), and raises the high bar for civil vagueness challenges (“no rule at all”).
Vill. of Hoffman Ests. v. Flipside, Hoffman Ests., Inc.: cited for the proposition that a scienter requirement can mitigate vagueness concerns, especially notice-related concerns.

E. Other appellate practice

Rollins v. Home Depot USA: used to find forfeiture of PhRMA’s Due Process extraterritorial-related argument due to inadequate briefing.

2) Legal Reasoning

A. Why the preemption challenge failed (field and conflict)

The opinion treats AbbVie, Inc. v. Fitch as dispositive. The core move is to define the “field” that Congress regulated through Section 340B: the Fifth Circuit characterizes Section 340B as a program that regulates pricing, eligibility, and compliance restrictions—not the full set of downstream distribution choices by which covered entities get drugs to patients.

Against that background:

No field preemption: Because drug distribution and pharmacy operations fall within traditional state police powers (public health and consumer protection), and Section 340B contains no clear displacement of that authority, the court—following Deanda v. Becerra and AbbVie, Inc. v. Fitch—applies a presumption against preemption. H.B. 728 is framed as regulating distribution mechanics that Section 340B “leaves unaddressed.”
No conflict preemption: The opinion rejects the premise that Section 340B imposes manufacturer obligations regarding contract pharmacies. Under AbbVie, Inc. v. Fitch, manufacturers must “offer” 340B drugs to covered entities at discounted prices; H.B. 728 does not require extra “offers” or extra sales to pharmacies, but instead prevents manufacturers from blocking covered entities’ chosen delivery channels (contract pharmacies).

The court also emphasizes intra-circuit constraint: even if PhRMA sought to re-litigate nuances about contract-pharmacy obligations, Jacobs v. Nat'l Drug Intel. Ctr. requires adherence to AbbVie, Inc. v. Fitch, reinforced by AbbVie, Inc. v. Murrill.

B. Why the Commerce Clause claim failed (no extraterritorial regulation shown)

PhRMA invoked the extraterritoriality principle from Healy v. Beer Inst., Inc.. The Fifth Circuit, however, effectively resolves the claim at the threshold—by interpreting H.B. 728 as not intended to apply beyond Mississippi.

Critically, the panel relies on Tattis v. Karthans to apply a Mississippi presumption against extraterritorial application. Because nothing in H.B. 728’s text “clearly expressed or indicated” an intent to regulate beyond Mississippi, the presumption stands. PhRMA’s argument that “pharmacy” lacked an explicit geographic limitation was deemed insufficient to invert this presumption.

With no extraterritorial intent apparent, the court concludes the Commerce Clause does not bar enforcement.

C. Why the vagueness challenge failed (“interfere” narrowed by surrounding terms and scienter)

Applying United States v. Lanier, the court notes that vagueness doctrine is especially demanding in the civil context, echoing AbbVie, Inc. v. Murrill: the statute must be “so vague and indefinite as really to be no rule at all.”

The key interpretive tool is the contextual canon described in AbbVie, Inc. v. Murrill (“a word is known by its associates”). Read next to “deny, restrict, [and] prohibit,” the term “interfere” is limited to obstructive conduct that impedes acquisition or delivery of 340B drugs through contract pharmacies—rather than “routine communications or lawful auditing practices.”

The court also points to the scienter overlay (liability for “knowing and willful” violations) to mitigate notice concerns under Vill. of Hoffman Ests. v. Flipside, Hoffman Ests., Inc..

3) Impact

Strengthened enforceability of state 340B contract-pharmacy protections in the Fifth Circuit: By treating AbbVie, Inc. v. Fitch and AbbVie, Inc. v. Murrill as controlling, the Fifth Circuit signals that similar state statutes are likely to survive pre-enforcement preemption, extraterritoriality, and vagueness attacks—at least on a preliminary record.
Manufacturers’ contract-pharmacy restriction policies face greater litigation risk: While the decision does not adjudicate enforcement actions on a full record, it reduces manufacturers’ ability to block state enforcement via early injunctive relief.
Guidance on “interfere”: The narrowing construction—“interfere” meaning obstruct the acquisition or delivery—may influence how attorneys general draft complaints and how courts evaluate whether particular manufacturer conduct crosses the line (e.g., refusal-to-ship policies versus audit-related requests).
Doctrinal signal on extraterritoriality challenges: The opinion underscores that, at least where state interpretive presumptions limit a statute to in-state operation, plaintiffs may struggle to show the “practical effect” of controlling out-of-state commerce under Healy v. Beer Inst., Inc..

Complex Concepts Simplified

340B Program: A federal program requiring manufacturers to sell certain outpatient drugs at discounted prices to eligible “covered entities” (e.g., qualifying hospitals and clinics). The statute focuses on pricing and guarding against diversion and duplicate discounts.
Contract pharmacy: A pharmacy that dispenses 340B drugs to a covered entity’s patients under a contractual arrangement, recognized in agency guidance (e.g., Notice Regarding Section 602 of the Veterans Health Care Act of 1992; Contract Pharmacy Services, 61 Fed. Reg. 43549 (Aug. 23, 1996); Notice Regarding 340B Drug Pricing Program-Contract Pharmacy Services, 75 Fed. Reg. 10272 (Mar. 5, 2010)).
Field preemption vs. conflict preemption: Field preemption asks whether Congress “occupied the field” so states cannot regulate in that space at all. Conflict preemption asks whether the state law makes it impossible to comply with federal law or “stands as an obstacle” to federal objectives.
Dormant Commerce Clause (extraterritoriality): Even without a federal statute, states generally cannot regulate commerce occurring wholly outside their borders. Courts look to a statute’s “practical effect,” but here Mississippi interpretive rules presume statutes are in-state only unless clearly stated otherwise.
Void for vagueness: A due process doctrine requiring laws to give fair notice of prohibited conduct and to provide enforceable standards. Civil laws have a higher tolerance for ambiguity; and “knowing and willful” requirements can reduce vagueness concerns.

Conclusion

Pharmaceutical Research and Manufacturers of America v. Fitch consolidates the Fifth Circuit’s emerging 340B-contract-pharmacy jurisprudence: state laws like Mississippi’s H.B. 728 are treated as distribution and consumer-protection measures not displaced by Section 340B’s federal pricing scheme; they are not readily characterized as extraterritorial regulation; and their key operative term (“interfere”) is narrowed by context to reach obstructive conduct, not lawful auditing. Practically, the decision makes preliminary injunctive relief difficult for manufacturers challenging similar statutes in the Fifth Circuit and signals continued judicial acceptance of state efforts to police the distribution pathways by which covered entities deliver 340B drugs to patients.