A federal judge has allowed South Dakota’s new 340B drug‑discount law to remain in effect while a legal challenge from pharmaceutical giant AbbVie moves forward.
AbbVie, the Chicago‑based maker of Botox and Humira, sued the state earlier this year, arguing that Senate Bill 154—approved in March—illegally prevents drug companies from limiting which pharmacies hospitals can use to obtain federally discounted medications.
U.S. District Judge Roberto Lange declined to dismiss AbbVie’s lawsuit but also refused to issue a preliminary injunction, meaning the law will stay in place during the court battle.
The dispute centers on the federal 340B program, which requires drugmakers participating in Medicare and Medicaid to offer steep discounts to hospitals and clinics serving low‑income patients. As eligibility expanded to rural “sole community providers,” drug companies began restricting the number of pharmacies allowed to dispense discounted drugs.
AbbVie argues South Dakota overstepped its authority by regulating interstate pharmaceutical commerce and interfering with a federal pilot program that replaces upfront discounts with rebates.
Judge Lange ruled that the state law does not prevent AbbVie from joining the federal pilot and said broader constitutional questions can be resolved as the case continues.
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