Novartis Pharmaceuticals Corporation v. Catherine L. Hanaway

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 25-1619
___________________________
Novartis Pharmaceuticals Corporation
Plaintiff - Appellant
v.
Catherine L. Hanaway, in her official capacity as Attorney General of the State of
Missouri; James L. Gray, in his official capacity as President of the Missouri Board
of Pharmacy; Christian S. Tadrus, in his official capacity as Vice President of the
Missouri Board of Pharmacy; Douglas R. Lang, in his official capacity as a
member of the Missouri Board of Pharmacy; Colby Grove, in his official capacity
as a member of the Missouri Board of Pharmacy; Anita K. Parran, in her official
capacity as a member of the Missouri Board of Pharmacy; Tammy Thompson, in
her official capacity as a member of the Missouri Board of Pharmacy; Darren
Harris, in his official capacity as a member of the Missouri Board of Pharmacy
Defendants - Appellees
Missouri Hospital Association; Missouri Primary Care Association
Intervenors - Appellees
------------------------------
American Hospital Association; 340B Health; American Society of Health-System
Pharmacists
Amici on Behalf of Appellee(s)
____________

-- 1 of 24 --

-2-
Appeal from United States District Court
for the Western District of Missouri - Jefferson City
____________
Submitted: January 15, 2026
Filed: July 1, 2026
____________
Before LAVENSKI R. SMITH, BENTON, and ERICKSON, Circuit Judges.
____________
ERICKSON, Circuit Judge.
Section 340B of the Public Health Service Act (“Section 340B” or the “340B
Program”) requires pharmaceutical drug manufacturers participating in federal drug
reimbursement markets to offer covered outpatient drugs (“340B drugs”) to certain
health care providers, called “covered entities,” at a discounted price. Covered
entities often partner with third-party pharmacies, called “contract pharmacies,” to
distribute these medications to their patients. As the number of contract pharmacies
has grown and the volume of medication distributed through the 340B Program has
increased, drug manufacturers have sought to restrict the number of contract
pharmacies authorized to distribute 340B drugs on behalf of covered entities.
In response, several states have passed legislation preventing drug
manufacturers from imposing these restrictions. At issue in this case is Missouri
Senate Bill 751 (“S.B. 751”), which prohibits drug manufacturers from restricting
the delivery of 340B drugs to contract pharmacies that have partnered with a
Missouri covered entity to distribute medication on the covered entity’s behalf.
Novartis Pharmaceuticals Corporation (“Novartis”), one of the world’s largest
prescription drug manufacturers and a participant in the 340B Program, challenged
the constitutionality of S.B. 751 alleging dormant Commerce Clause and preemption

-- 2 of 24 --

-3-
claims. Novartis seeks both declaratory and injunctive relief. The district court1
denied Novartis’s motion for a preliminary injunction, concluding Novartis had not
shown a likelihood of success on the merits of its claims, had not shown it would
suffer irreparable harm without an injunction, and that the balance of equities and
the public interest weighed against preliminary relief. Having jurisdiction to review
the denial of a preliminary injunction under 28 U.S.C. § 1292(a)(1), we affirm.
I. BACKGROUND
In 1992, Congress amended the Public Health Service Act to create the 340B
Drug Pricing Program. See Veterans Health Care Act of 1992, Pub. L. No. 102-585,
§ 602, 106 Stat. 4943, 4967-71 (codified at 42 U.S.C. § 256b). Section 340B
requires drug manufacturers to offer discounts on covered outpatient drugs to
specified health care providers as a condition of the manufacturers’ participation in
Medicaid and Medicare Part B. 42 U.S.C. §§ 256b(a); 1396r-8(a)(1), (5). These
“covered entities” include fifteen types of hospitals and health care centers, many of
which provide safety-net services to low-income patients. Id. § 256b(a)(4).
Drug manufacturers’ participation in the 340B Program is voluntary. To opt
into the program, manufacturers enter a Pharmaceutical Pricing Agreement with the
Department of Health and Human Services (“HHS”) that sets out both parties’
obligations under the program. Manufacturers participating in the 340B Program
must “offer each covered entity covered outpatient drugs for purchase at or below
the applicable ceiling price if such drug is made available to any other purchaser at
any price.” Id. § 256b(a)(1); see also 42 C.F.R. § 10.10(a) (ceiling price formula).
While the actual price of 340B drugs varies based on the pricing formula, covered
entities may be able to obtain medication through the 340B Program for as little as
$0.01. See 42 C.F.R. § 10.10(b) (setting the ceiling price at $0.01 when the formula
results in a price less than $0.01). In exchange for offering 340B drugs to covered
1 The Honorable M. Douglas Harpool, United States District Judge for the
Western District of Missouri.

-- 3 of 24 --

-4-
entities at these steep discounts, drug manufacturers receive access to lucrative
Medicare and Medicaid markets. See 42 U.S.C. § 1396r-8(a)(1), (5).
Covered entities face several restrictions on medication purchased through the
340B Program. Because covered entities purchase 340B drugs at the discounted
ceiling price, they are prohibited from requesting duplicate discounts or rebates for
the same drugs through Medicaid or Medicare Part B. Id. § 256b(a)(5)(A). Covered
entities are also prohibited from distributing 340B drugs to any person who is not a
patient of the covered entity. Id. § 256b(a)(5)(B). Both HHS and drug
manufacturers have the right to audit covered entities’ compliance with Section
340B, and covered entities are subject to penalties for violating the program’s
prohibitions on duplicate discounts and drug diversion. Id. § 256b(a)(5)(C)-(D).
When disputes related to covered entities’ compliance with Section 340B arise,
parties are required to use HHS’ alternative dispute resolution procedures before
initiating litigation. Id. § 256b(d)(3); see also 42 C.F.R. §§ 10.20-24. HHS may
also take direct enforcement action against covered entities that violate Section
340B. 42 U.S.C. § 256b(d)(2)(b)(v).
Even though covered entities can obtain large quantities of 340B drugs at little
cost, covered entities are not required to pass the discounts on to patients through
free or subsidized medication. See Notice Regarding Section 602 of the Veterans
Health Care Act of 1992; Contract Pharmacy Services, 61 Fed. Reg. 43,549, 43,551
(Aug. 23, 1996). Instead, Congress envisioned that covered entities would use 340B
savings “to stretch scarce Federal resources as far as possible, reaching more eligible
patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II),
at 12 (102nd Cong., 2d Sess. 1992). Following Congress’s lead, many covered
entities use the excess revenues from the 340B Program to finance their operations
and expand services. See U.S. Gov’t Accountability Off., Drug Pricing:
Manufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight
Needs Improvement at 17-18 (Sept. 23, 2011) (describing how covered entities use
excess 340B revenue to expand services or maintain services that might otherwise
be cut).

-- 4 of 24 --

-5-
When Section 340B was enacted, less than five percent of covered entities
had in-house pharmacies capable of distributing medication to patients. 61 Fed.
Reg. at 43,550. To ensure these covered entities were still allowed to participate in
the 340B Program, HHS allowed covered entities to partner with third-party contract
pharmacies to distribute 340B drugs on the covered entity’s behalf. See Final Notice
Regarding Section 602 of the Veterans Health Care Act of 1992 Entity Guidelines,
59 Fed. Reg. 25,110, 25,113 (May 13, 1994) (permitting covered entities to use
“purchasing agents”). When a covered entity partners with a contract pharmacy to
distribute 340B drugs, the contract pharmacy acts as an agent of the covered entity.
See 61 Fed. Reg. at 43,554. The covered entity purchases the medication from the
manufacturer and directs that the medication be delivered to the pharmacy. See id.
at 43,553. Contract pharmacies do not purchase the medication and title to the
medication remains with the covered entity. See id. at 43,552.
Recognizing that Section 340B is “silent as to permissible drug distribution
systems,” the Health Resources and Services Administration (“HRSA”) issued
guidance in 1996 allowing covered entities without an in-house pharmacy to partner
with a single contract pharmacy.2 Id. at 43,549, 43,555. The 1996 guidance was
intended to allow covered entities with an in-house pharmacy to distribute 340B
drugs through either their in-house pharmacy or a contract pharmacy, but not both.
Id. at 53,555. But in 2010, HRSA changed course and issued updated guidance
allowing covered entities without in-house pharmacies to partner with an unlimited
number of contract pharmacies. See Notice Regarding 340B Drug Pricing Program-
Contract Pharmacy Services, 75 Fed. Reg. 10,272, 10,277 (Mar. 5, 2010). The 2010
guidance also allowed covered entities with in-house pharmacies to distribute 340B
drugs through both their in-house pharmacy and an unlimited number of contract
pharmacies. Id.
2 The Health Resources and Services Administration is the unit within the
Department of Health and Human Services responsible for administering the 340B
Program.

-- 5 of 24 --

-6-
After the issuance of the 2010 guidance, covered entities saw a significant
arbitrage opportunity. Without the single-contract-pharmacy restriction, covered
entities could partner with multiple contract pharmacies without regard to
geographic proximity and maximize their distribution of 340B drugs. By increasing
the volume of 340B drugs purchased at the ceiling price and sold to patients at full
retail price, covered entities could maximize the profits available through the 340B
Program. As a result, the number of contract pharmacies grew rapidly. See U.S.
Gov’t Accountability Off., 340B Drug Discount Program: Oversight of the
Intersection with the Medicaid Drug Rebate Program Needs Improvement at 2 (Jan.
21, 2020) (“[T]he number of contract pharmacies increased from about 1,300 at the
beginning of 2010 to around 23,000 in 2019.”).
The expansion of contract pharmacies led to a corresponding rise in demand
for drugs acquired through the 340B Program. Because manufacturers are required
to offer 340B drugs to covered entities at the discounted ceiling price, the rise in
demand for 340B drugs led to a proportional reduction in manufacturer profits. In
2022, for example, drug manufacturers sold $53.7 billion in 340B drugs to covered
entities at the ceiling price, but those same drugs carried a market value of $106
billion. Adam J. Fein, EXCLUSIVE: The 340B Program Reached $54 Billion in
2022—Up 22% vs. 2021, Drug Channels (Sept. 24, 2023), https://www.drug
channels.net/2023/09/exclusive-340b-program-reached-54.html. Covered entities
and contract pharmacies, on the other hand, reap the financial gains by charging
patients or their insurance the full retail price.
Even so, covered entities and contract pharmacies must take care that they do
not divert drugs purchased at the ceiling price to anyone who is not a patient of a
covered entity. See 42 U.S.C. § 256b(a)(5)(B). But because pharmacies dispense
the same medications to patients of covered entities and patients of non-covered
entities, pharmacies often lack the ability to determine whether a particular patient’s
medication was purchased at the ceiling price. To maintain compliance with drug
diversion laws, pharmacies typically fill each prescription with medication from
their general drug inventory and use a post hoc analysis to determine how many

-- 6 of 24 --

-7-
drugs were dispensed to patients of covered entities. Pharmacies then replenish their
inventory with the same quantity of drugs purchased by covered entities at the ceiling
price.
Worried that this “replenishment model” was resulting in covered entities
claiming more discounts than they were entitled, drug manufacturers began
restricting covered entities’ use of contract pharmacies. For its part, Novartis
adopted a policy whereunder it would only deliver its medications to a covered
entity’s in-house pharmacy or a single outside contract pharmacy.3 HHS responded
by issuing an advisory opinion stating that “to the extent contract pharmacies are
acting as agents of a covered entity, a drug manufacturer in the 340B Program is
obligated to deliver its covered outpatient drugs to those contract pharmacies and to
charge the covered entity no more than the 340B ceiling price for those drugs.”
Dep’t of Health & Hum. Servs., Off. Gen. Couns., Advisory Opinion 20-06 on
Contract Pharmacies Under the 340B Program at 1 (Dec. 30, 2020). HHS explained
that manufacturers’ policies ignored the principal-agent relationship between
covered entities and contract pharmacies and would “foreclose discounts to the
neediest” covered entities in a manner “inconsistent with [the] purpose of the
Program and common sense.” Id. at 4.
Acting on the advisory opinion, HHS sent violation letters to manufacturers
that had implemented policies restricting the use of contract pharmacies advising
that such policies violated federal law. Drug manufacturers, including Novartis,
subsequently sued to enjoin the advisory opinion. The Third Circuit sided with drug
manufacturers, saying that because no language in Section 340B requires
manufacturers to recognize an unlimited number of contract pharmacies,
manufacturers’ restrictions did not violate the federal statute. Sanofi Aventis U.S.
LLC v. U.S. Dep’t of Health & Hum. Servs., 58 F.4th 696, 704 (3d Cir. 2023). The
D.C. Circuit also agreed with the drug manufacturers, holding that Section 340B’s
3 Novartis initially established a policy restricting delivery of its medications
to contract pharmacies located within 40 miles of a covered entity but later
abandoned that policy in favor of a single contract pharmacy restriction.

-- 7 of 24 --

-8-
silence as to the delivery of medications “preserves—rather than abrogates—the
ability of sellers to impose at least some delivery conditions.” Novartis Pharms.
Corp. v. Johnson, 102 F.4th 452, 460 (D.C. Cir. 2024). Ultimately, HHS withdrew
the advisory opinion. See Dep’t of Health & Hum. Servs., Off. Gen. Couns.,
Withdrawing Advisory Opinion 20-06 on Contract Pharmacies Under the 340B
Program (Issued Dec. 30, 2020) at 1 (June 18, 2021).4
After HHS withdrew its advisory opinion, many states sought to protect
covered entities’ ability to partner with multiple contract pharmacies. To date,
22 states have passed laws prohibiting manufacturers from limiting or restricting the
delivery of 340B drugs to contract pharmacies partnering with a covered entity.5
Missouri S.B. 751 is one such law. S.B. 751 provides:
4 Novartis asks the Court to take judicial notice of a June 9, 2025, HRSA
decision regarding ADR ID 230925-17, in which HRSA concluded that Section
340B does not prevent drug manufacturers from imposing conditions on the delivery
of 340B drugs to contract pharmacies. Novartis contends judicial notice of the
administrative decision is appropriate because the decision is part of the public
record, but a summary of the decision was not posted to HRSA's website within 120
days of issuance. See 89 Fed. Reg. 28,643, 28,654 (Apr. 19, 2024). Since Novartis
filed its motion for judicial notice, HRSA published a summary of its June 9, 2025,
decision. See Health Resources & Servs. Admin., 340B ADR Decision
Summaries, https://www.hrsa.gov/opa/340b-administrative-dispute-resolution/
340b-adr-decision-summaries (last updated May 6, 2026). Because the HRSA
decision has been published as required by regulation, we deny Novartis’s motion
for judicial notice as moot.
5 These 22 States are: Arkansas (Ark. Code Ann. § 23-92-604(c)); Colorado
(Colo. Rev. Stat. § 6-29-105(1)(a)); Hawaii (Haw. Rev. Stat. § 481N-2(a)); Illinois
(H.B. 2371 (104th Gen. Assemb. 2026)); Louisiana (La. Stat. Ann. § 40:2884(A));
Maine (Me. Stat. tit. 24-A, § 7753(1)); Maryland (Md. Code Ann., Health Occ. § 12-
6C-09.1(c)(1)); Minnesota (Minn. Stat. § 62J.96(1)); Mississippi (Miss. Code Ann.
§ 41-149-7(1)); Missouri (Mo. Rev. Stat. 376.414.2); Nebraska (Neb. Rev. Stat.
§ 44-4620(1)); New Mexico (N.M. Stat. Ann. § 26-1-27(B)(1)); North Dakota (N.D.
Cent. Code § 43-15.3-08(3)(b)(1)); Oklahoma (Okla. Stat. tit. 36, § 5403(A));
Oregon (Or. Rev. Stat. § 689.818(2)(a)); Rhode Island (5 R.I. Gen. Laws § 5-19.3-
5(a)); South Dakota (S.D. Codified Laws § 58-29G-2); Tennessee (Tenn. Code Ann.

-- 8 of 24 --

-9-
A pharmaceutical manufacturer, third-party logistics provider, or an
agent or affiliate of such pharmaceutical manufacturer or third-party
logistics provider, shall not deny, restrict, or prohibit, either directly or
indirectly, the acquisition of a 340B drug by, or delivery of a 340B drug
to, a pharmacy that is under contract with, or otherwise authorized by,
a covered entity to receive 340B drugs on behalf of the covered entity
unless such receipt is prohibited by the United States Department of
Health and Human Services.
Mo. S.B. 751 (102nd Gen. Assemb. 2024) (codified at Mo. Rev. Stat. § 376.414.2).
A violation of S.B. 751 constitutes an unlawful trade practice under the Missouri
Merchandising Practices Act. See Mo. Rev. Stat. § 376.414.3.
Simply put, S.B. 751 requires that drug manufacturers participating in the
340B Program deliver 340B drugs to all of a Missouri covered entity’s contract
pharmacies, even if the manufacturer has policies limiting covered entities to a single
contract pharmacy. This requirement conflicts with Novartis’s current policy
restricting the delivery of 340B drugs to a covered entity’s in-house pharmacy or a
single contract pharmacy designated by the covered entity.
In August 2024, Novartis sued the Missouri Attorney General and the
individual members of the Missouri Board of Pharmacy, alleging that S.B. 751 is
preempted by federal patent and drug exclusivity laws, preempted by the federal
340B statutory scheme, and violative of the dormant Commerce Clause of the U.S.
Constitution. Novartis sought declaratory and both preliminary and permanent
injunctive relief.
The Defendants moved to dismiss the Complaint under Federal Rule of Civil
Procedure 12(b)(6), arguing that Novartis failed to state a claim on all counts. The
district court granted the motion in part and dismissed Novartis’s preemption claims.
§ 47-18-136(c)); Utah (Utah Code Ann. § 31A-46-311(2)(a)); Vermont (Vt. Stat.
Ann. tit. 18, § 4682(a)); Washington (2026 Wash. Sess. Laws Ch. 227, § 3(1)); and
West Virginia (W. Va. Code § 60A-8-6a(b)(1)).

-- 9 of 24 --

-10-
The court concluded that S.B. 751 does not conflict with federal drug and patent
exclusivity laws or the federal 340B statutory scheme, and that Eighth Circuit
precedent foreclosed Novartis’s field preemption claim. The court denied the
motion to dismiss Novartis’s dormant Commerce Clause claim, finding that Novartis
had plausibly alleged S.B. 751 discriminates against out-of-state entities and places
an undue burden on interstate commerce.
The district court denied Novartis’s motion for a preliminary injunction,
concluding that Novartis is unlikely to prevail on the merits of its dormant
Commerce Clause claim. The court also analyzed the field and conflict preemption
claims it had dismissed and concluded that, even if the preemption claims had
survived the motion to dismiss, Novartis had not shown a likelihood of success on
the merits of those claims. The district court also found that Novartis had not made
the required showing of irreparable harm, and that the balance of equities and the
public interest weighed against preliminary relief.
II. DISCUSSION6
Novartis contends the district court erred by concluding that Novartis is
unlikely to prevail on the merits of its dormant Commerce Clause and preemption
claims, and that the other preliminary injunction factors do not support preliminary
relief. “We review the district court’s denial of a motion for a preliminary injunction
6 Appellees assert Novartis is challenging 340B’s replenishment model, not
S.B. 751, and thus failed to allege a sufficient injury for Article III standing. See
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992) (identifying Article III
standing requirements). To the contrary, Novartis challenges a statute prohibiting it
from restricting delivery of 340B drugs to contract pharmacies, thereby preventing
it from limiting the number of contract pharmacies in Missouri. Because Novartis
alleges this restriction will cause financial loss, Novartis has standing. See FDA v.
All. for Hippocratic Med., 602 U.S. 367, 382 (2024) (“Government regulations that
require or forbid some action by the plaintiff almost invariably satisfy both the injury
in fact and causation requirements. So in those cases, standing is usually easy to
establish.”).

-- 10 of 24 --

-11-
under the deferential abuse of discretion standard, with the underlying factual
findings examined for clear error and legal conclusions considered de novo.” Lindell
v. United States, 82 F.4th 614, 618 (8th Cir. 2023). When deciding whether to grant
preliminary relief, courts consider the four factors set forth in Dataphase Systems,
Inc. v. C L Systems, Inc., 640 F.2d 109 (8th Cir. 1981): “(1) the threat of irreparable
harm to the movant; (2) the state of balance between this harm and the injury that
granting the injunction will inflict on other parties litigant; (3) the probability that
[the] movant will succeed on the merits; and (4) the public interest.” Id. at 114.
“While no single factor is determinative, the probability of success factor is the most
significant.” Home Instead, Inc. v. Florance, 721 F.3d 494, 497 (8th Cir. 2013)
(citation modified).
A. Dormant Commerce Clause Claim
Novartis contends the district court erred when it concluded Novartis is
unlikely to prevail on the merits of its dormant Commerce Clause challenge. The
Commerce Clause grants to Congress the sole authority to regulate commerce
“among the several states.” U.S. Const. art. I, § 8, cl. 3. “The dormant Commerce
Clause is the negative implication of the Commerce Clause: states may not enact
laws that discriminate against . . . interstate commerce.” S.D. Farm Bureau, Inc. v.
Hazeltine, 340 F.3d 583, 592 (8th Cir. 2003). State laws that “directly control[]
commerce occurring wholly outside the boundaries of a State” are likewise
prohibited by the dormant Commerce Clause. Healy v. Beer Inst., Inc., 491 U.S.
324, 336 (1989). Even if a state law has only incidental effects on interstate
commerce, the law still violates the dormant Commerce Clause if the burdens on
commerce are “clearly excessive in relation to the putative local benefits.” Pike v.
Bruce Church, Inc., 397 U.S. 137, 142 (1970).
1. Extraterritoriality
Novartis first argues that S.B. 751 violates the dormant Commerce Clause
because it regulates wholly out-of-state transactions. “The Commerce Clause . . .

-- 11 of 24 --

-12-
precludes the application of a state statute to commerce that takes place wholly
outside of the State’s borders, whether or not the commerce has effects within the
State.” Edgar v. MITE Corp., 457 U.S. 624, 642-43 (1982). “[A] statute that directly
controls commerce occurring wholly outside the boundaries of a State exceeds the
inherent limits of the enacting State’s authority and is invalid regardless of whether
the statute’s extraterritorial reach was intended by the legislature.” Healy, 491 U.S.
at 336. Even so, states may enact laws that have the practical effect of regulating
out-of-state transactions if those laws have only incidental effects on interstate
commerce. See Nat’l Pork Producers Council v. Ross, 598 U.S. 356, 373-76 (2023).
Novartis contends that S.B. 751 violates the dormant Commerce Clause by
regulating out-of-state transactions between Novartis and its wholesalers who, in
turn, sell 340B drugs to covered entities in Missouri. This interpretation misreads
the statute. S.B. 751 does not purport to regulate transactions between drug
manufacturers and their wholesalers; rather, it regulates only the delivery of 340B
drugs to contract pharmacies that have partnered with a Missouri covered entity.
Even assuming S.B. 751 has some incidental effect on out-of-state transactions, “[i]n
our interconnected national marketplace, many (maybe most) state laws have the
‘practical effect of controlling’ extraterritorial behavior” without violating the
Commerce Clause. Id. at 374.
Given S.B. 751’s merely incidental effects on extraterritorial transactions, it
is distinguishable from the laws invalidated in Styczinski v. Arnold, 46 F.4th 907
(8th Cir. 2022) and Association for Accessible Medicines v. Frosh, 887 F.3d 664
(4th Cir. 2018). In Styczinski, this Court held that a Minnesota statute violated the
dormant Commerce Clause because it regulated transactions with Minnesota
residents that occurred anywhere in the world, even when the transactions took place
entirely outside of Minnesota or involved companies that had never conducted
business in the state. 46 F.4th at 913. Similarly, in Frosh, the Fourth Circuit held
that a Maryland law regulating the wholesale pricing of prescription medications
controlled entirely extraterritorial conduct because the law specifically targeted
upstream transactions between manufacturers and wholesalers even when those

-- 12 of 24 --

-13-
drugs were not later sold or delivered to Maryland consumers. 887 F.3d at 671-72.
Because S.B. 751 applies only to the delivery of 340B drugs to covered entities and
contract pharmacies located in Missouri and does not target out-of-state transactions
between drug manufacturers and wholesalers, the extraterritoriality concerns in
Styczinski and Frosh are not present here.
Instead, S.B. 751 resembles the law upheld in Pork Producers. There,
California enacted a statute “banning the in-state sale of certain pork products
derived from breeding pigs confined in stalls so small they cannot lie down, stand
up, or turn around” even if those pork products were raised and processed outside of
California. 598 U.S. at 363. When out-of-state pork producers challenged the law
under the dormant Commerce Clause, the Supreme Court concluded that even
though the law had some effects on out-of-state conduct, it did not violate the
dormant Commerce Clause because it did not have a specific impermissible
extraterritorial effect. Id. at 374. Accordingly, the Court held that the statute was a
permissible exercise of California’s “legislative power . . . to act upon persons and
property within the limits of its own territory.” Id. at 375.
S.B. 751 operates in a similar manner. While S.B. 751 may incidentally bear
on out-of-state transactions, it does not have a specific impermissible extraterritorial
effect and directly regulates only the delivery of 340B drugs to covered entities and
their contract pharmacies. Because S.B. 751 is consistent with Missouri’s power to
regulate conduct occurring within its borders, Novartis is not likely to prevail on the
merits of its extraterritoriality challenge.
2. Discrimination Against Interstate Commerce
Next, Novartis argues that S.B. 751 violates the dormant Commerce Clause
because it discriminates against interstate commerce. A state law impermissibly
discriminates against interstate commerce when it provides “differential treatment
of in-state and out-of-state economic interests that benefits the former and burdens
the latter.” Jones v. Gale, 470 F.3d 1261, 1267 (8th Cir. 2006) (citing Or. Waste

-- 13 of 24 --

-14-
Sys., Inc. v. Dep’t of Env’t Quality of State of Or., 511 U.S. 93, 99 (1994)). A law
violates the dormant Commerce Clause “if it is discriminatory on its face, if it has a
discriminatory purpose, or if it has a discriminatory effect.” Id.
S.B. 751 does not facially discriminate against interstate commerce because
it does not refer to in-state or out-of-state manufacturers or otherwise indicate a
preference for in-state entities. Compare Mo. Rev. Stat. § 376.414.2 (applying
equally to all pharmaceutical manufacturers, their agents, and affiliates) with Healy,
491 U.S. at 341 (invalidating statute that “applies solely to interstate brewers or
shippers of beer” and not to “brewers and shippers engaging in solely domestic
sales”). Instead, Novartis argues that because no drug manufacturers have a physical
presence in Missouri, the entire burden of S.B. 751 falls on out-of-state commerce.
We disagree. Because Missouri’s entire prescription drug supply comes from out-
of-state, “such claims of disparate treatment between interstate and local commerce
[are] meritless.” Exxon Corp. v. Governor of Md., 437 U.S. 117, 125 (1978)
(holding that a Maryland law prohibiting fuel producers and refiners from operating
retail service stations did not discriminate against interstate commerce when there
were no producers or refiners of gasoline within the state). Without a demonstrated
preference for in-state entities at the expense of out-of-state entities, Novartis fails
to show a likelihood of success on its discrimination claim.
Novartis attempts to avoid this conclusion by arguing that S.B. 751 favors in-
state hospitals and pharmacies at the expense of out-of-state drug manufacturers.
According to Novartis, this discrimination is sufficient to establish a constitutional
violation. This argument misapplies the comparison required under the dormant
Commerce Clause. A “fundamental element” of the dormant Commerce Clause is
that “any notion of discrimination assumes a comparison of substantially similar
entities.” Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328, 342 (2008). Drug
manufacturers, hospitals, and pharmacies, while all part of an interconnected
healthcare system, are not substantially similar such that they can be said to operate
in economic competition with one another. See Pharm. Rsch. & Mfrs. of Am. v.
Cnty. of Alameda, 768 F.3d 1037, 1042 n.1 (9th Cir. 2014) (saying an ordinance

-- 14 of 24 --

-15-
requiring drug manufacturers, but not local pharmacies, to operate and finance a drug
collection and disposal program did not violate the dormant Commerce Clause
because “no ‘actual or prospective competition’ exists between the pharmacies and
[drug] manufacturers”); see also Ford Motor Co. v. Tex. Dep’t of Transp., 264 F.3d
493, 502 (5th Cir. 2001) (concluding that vehicle manufacturers and dealers are not
in competition with one another for purposes of discrimination against commerce).
Novartis again cites Association for Accessible Medicines v. Frosh to suggest
that a state law regulating pharmacies could unconstitutionally discriminate against
drug manufacturers. According to Novartis, Frosh stands for the proposition that
“[t]here is no requirement that the advantaged in-state industry be the ‘same’ as the
disadvantaged out-of-state industry, or that the two groups be substantially similar.”
This argument extends Frosh too far.
In Frosh, the court struck down a Maryland statute that directly regulated drug
pricing, saying the statute “sets prescription drug prices in a way that interfere[s]
with the natural function of the interstate market by superseding market forces that
dictate the price of a good.” 887 F.3d at 673 (internal quotations omitted). The
Frosh court expressly noted that “the dormant commerce clause does not protect[]
the particular structure or methods of operation in a retail market” and emphasized
that Maryland’s law was unconstitutional because it “requires manufacturers and
wholesale distributors to do more than alter their distribution channels.” Id.
(internal quotations omitted).
Unlike the Maryland statute in Frosh, S.B. 751 regulates the distribution of
340B drugs without affecting their price. Once covered entities purchase 340B
drugs at the ceiling price set by federal law, S.B. 751 prevents drug manufacturers
from prohibiting covered entities from directing the delivery of those drugs to its
contract pharmacies. Novartis fails to show how such a policy discriminates against
out-of-state economic interests or affects the price of 340B drugs. Because Novartis
has not shown a discriminatory purpose or effect of S.B. 751, Novartis has not shown

-- 15 of 24 --

-16-
a likelihood of success on its claim that S.B. 751 discriminates against interstate
commerce.
3. Pike Balancing
Finally, Novartis argues that even if S.B. 751 is nondiscriminatory and has
only incidental effects on interstate commerce, it still violates the dormant
Commerce Clause because it fails the Pike balancing test. When a state law
“regulates even-handedly to effectuate a legitimate local public interest, and its
effects on interstate commerce are only incidental, it will be upheld unless the burden
imposed on such commerce is clearly excessive in relation to the putative local
benefits.” Pike, 397 U.S. at 142. Appellees contend that Novartis’s argument fails
as a matter of law because Pork Producers abrogated Pike when the courts lack
judicially comparable standards for balancing economic and noneconomic benefits
and harms.
Contrary to Appellees’ argument, Pike balancing remains a valid approach
when considering dormant Commerce Clause challenges. In Pork Producers, “six
Justices . . . affirmatively retain[ed] the longstanding Pike balancing test for
analyzing dormant Commerce Clause challenges to state economic regulations.”
598 U.S. at 403 (Kavanaugh, J., concurring). But the Court split on whether courts
can balance economic burdens against noneconomic benefits. Compare id. at 380-
81 (plurality) (concluding courts are not “institutionally suited” to draw comparisons
between the economic burdens and social benefits of state legislation), with id. at
392-93 (Sotomayor and Kagan, JJ., concurring in part) (saying the means-ends
analysis required by Pike does not raise incommensurability problems), and id. at
396-97 (Roberts, C.J., with Alito, Kavanaugh, and Jackson, JJ., concurring in part)
(recognizing the “need to weigh seemingly incommensurable values” and
concluding that it is possible for courts to balance economic and non-economic
interests under Pike). Parsing of the various concurring opinions in Pork Producers
shows that a majority of Justices approved Pike balancing even when that analysis
requires balancing economic and noneconomic benefits and costs. See 598 U.S. at

-- 16 of 24 --

-17-
392 (Sotomayor and Kagan, JJ., concurring in part); id. at 396-97 (Roberts, C.J.,
with Alito, Kavanaugh, and Jackson, JJ., concurring in part).
Novartis contends S.B. 751 imposes burdens on commerce by subjecting drug
manufacturers to an ever-expanding patchwork of varying state regulatory regimes
governing the delivery of 340B drugs to contract pharmacies. Because 22 states
have adopted legislation identical or similar to S.B. 751, Novartis argues that it
“must now contend with a patchwork of state laws carving out their own regimes for
the federal 340B system,” and that these various state laws make it more costly for
Novartis to participate in the 340B Program.
The Supreme Court rejected a similar argument in Exxon Mobil Corp. v.
Governor of Maryland. When Maryland enacted legislation prohibiting petroleum
refiners from operating service stations within the state, Exxon challenged the law
under the dormant Commerce Clause arguing that because the petroleum market is
nationwide, the cumulative effect of the legislation had “serious implications for
[Exxon’s] national marketing operations.” 437 U.S. at 128. The Supreme Court
declined to adopt Exxon’s approach, because “[t]he evil that [Exxon] perceive[s] . . .
is not that the several States will enact differing regulations, but rather that they will
all conclude” unfavorable regulations are appropriate. Id.
The same is true here. Various state regulations on contract pharmacies and
their role in the 340B Program will undoubtedly affect the volume of 340B drugs
Novartis delivers in interstate commerce. But the evil Novartis perceives is only
that it “must now contend with a patchwork of state laws” that “will cost it millions
of dollars per year” to comply with. These burdens are insufficient to prevail on
Pike balancing.
Moreover, Novartis contends that no local benefits justify S.B. 751 because
the legislation is nothing more than a “direct cash transfer from out-of-state drug
manufacturers to in-state hospitals and clinics, and for-profit pharmacies.” To
support this argument, Novartis cites to a study showing that “the average profit

-- 17 of 24 --

-18-
margin of [contract] pharmacies on commonly dispensed 340B drugs is . . . 72%,
compared to 22% for non-340B drugs.” Peter J. Pitts & Robert Popovian, 340B and
the Warped Rhetoric of Healthcare Compassion, Food & Drug Law Inst. (Fall 2022).
But the fact that covered entities profit from 340B discounts is consistent with
the purpose of the 340B Program. HRSA recognized that “[c]overed entities could
. . . use savings realized from participation in the program to help subsidize
prescriptions for their lower income patients, increase the number of patients whom
they can subsidize and expand services and formularies.” 61 Fed. Reg. at 43,549.
“While some may pass all or a significant part of the discount to their patients, others
may set the price slightly higher than the actual acquisition cost plus a reasonable
dispensing fee, using the savings to reach more eligible patients and provide more
comprehensive services.” Id. at 43,551. Even if Novartis is correct that some
covered entities do, in fact, pocket the entire profit from the sale of 340B drugs,
many other covered entities use 340B drug revenues to provide better services to
their patients. See Drug Pricing: Manufacturer Discounts in the 340B Program Offer
Benefits, but Federal Oversight Needs Improvement, supra, at 17.
Novartis has not shown, at this stage in litigation, that the burdens of S.B. 751
are excessive in relation to the statute’s potential benefits. Novartis is unlikely to
prevail on its Pike balancing challenge.
* * *
Because Novartis has not shown that S.B. 751 violates the dormant Commerce
Clause by applying extraterritorially, by discriminating against interstate commerce,
or by imposing excessive burdens on interstate commerce, we agree with the district
court that Novartis is not likely to prevail on the merits of its dormant Commerce
Clause claim. The district court did not abuse its discretion in denying Novartis’s
motion for a preliminary injunction.

-- 18 of 24 --

-19-
B. Novartis’s Preemption Claims
Novartis also contends S.B. 751 is preempted by federal law. The Supremacy
Clause provides that “the Laws of the United States . . . shall be the supreme Law of
the Land . . . any Thing in the Constitution or Laws of any state to the Contrary
notwithstanding.” U.S. Const. art. VI, cl. 2. “Under this principle, Congress has the
power to preempt state law.” Arizona v. United States, 567 U.S. 387, 399 (2012).
State law must yield to federal law in at least two circumstances. “First, the States
are precluded from regulating conduct in a field that Congress, acting within its
proper authority, has determined must be regulated by its exclusive governance.” Id.
“Second, state laws are preempted when they conflict with federal law.” Id.
Novartis challenges S.B. 751 under both types of preemption.
1. Jurisdiction
Before reviewing whether Novartis is likely to succeed on the merits of its
preemption claims, we must first consider our jurisdiction to review those claims.
H&T Fair Hills, Ltd. v. Alliance Pipeline L.P., 154 F.4th 899, 901 (8th Cir. 2025)
(“[O]ur first task in any case . . . is to ensure we have jurisdiction over an appeal.”).
Appellees contend we lack jurisdiction over Novartis’s preemption claims because
those claims became moot when the district court partially granted the motion to
dismiss. Novartis contends we have jurisdiction because, notwithstanding the
district court’s dismissal of Novartis’s preemption claims, the district court analyzed
them in its order denying preliminary relief.
While Novartis does not appeal the partial dismissal, we may consider the
preemption claims to the extent the district court analyzed those claims in its order
denying preliminary relief because the preemption claims are “inextricably
intertwined” with the court’s ruling on the preliminary injunction. See Lee v.
Driscoll, 871 F.3d 581, 586 (8th Cir. 2017) (“A pendent appellate claim can be
regarded as inextricably intertwined with a properly reviewable claim on collateral
appeal only if the pendent claim is coterminous with, or subsumed in, the claim

-- 19 of 24 --

-20-
before the court on interlocutory appeal . . . .”). If we disagree with the district court
and conclude that Novartis is entitled to a preliminary injunction on its preemption
claims, that conclusion implies that Novartis has plausibly stated a claim for relief
and the preemption claims were erroneously dismissed. See Polk v. Montgomery
Cnty. Pub. Schs., 166 F.4th 400, 410-11 (4th Cir. 2026) (exercising pendent
jurisdiction over dismissal of claims when the court denied a preliminary injunction
on those same claims and a decision in the plaintiff’s favor “would necessitate
reinstatement” of the dismissed claims).
We have jurisdiction to consider whether Novartis has shown a likelihood of
success on the merits of its preemption claims.
2. Field Preemption
Novartis first contends that S.B. 751 is field preempted. “Field preemption
occurs when federal law occupies a ‘field’ of regulation ‘so comprehensively that it
has left no room for supplementary state legislation.’” Murphy v. Nat’l Collegiate
Athletic Ass’n, 584 U.S. 453, 478 (2018) (quoting R.J. Reynolds Tobacco Co. v.
Durham Cnty., 479 U.S. 130, 140 (1986)); see also AbbVie, Inc. v. Murrill, 166
F.4th 528, 541 (5th Cir. 2026) (describing enforcement preemption as an implied
preemption where federal law vests exclusive enforcement power in the federal
government). “In such situations, Congress has forbidden the State to take action in
the field that the federal statute pre-empts.” Oneok, Inc. v. Learjet, Inc., 575 U.S.
373, 377 (2015) (italics omitted). Novartis argues that Section 340B preempts the
field of 340B regulation because federal law established a standardized market for
340B drugs and vested sole enforcement power in the federal government.
This Court held in Pharmaceutical Research & Manufacturers of America v.
McClain, 95 F.4th 1136 (8th Cir. 2024), that Section 340B does not preempt the
field of 340B regulation and that the 340B Program’s enforcement mechanisms do
not preempt the field of 340B enforcement. Id. at 1143-44. In McClain, this Court
considered whether Arkansas Act 1103, which, like S.B. 751, “prohibits

-- 20 of 24 --

-21-
manufacturers from limiting covered entities’ ability to contract with outside
pharmacies” was field preempted. Id. at 1139. The McClain Court noted that “the
federal government has traditionally regarded state law as a complementary form of
drug regulation and has long maintained that state law offers an additional, and
important, layer of consumer protection that complements [federal] regulation.” Id.
at 1143 (quotations omitted) (citing Lefaivre v. KV Pharm. Co., 636 F.3d 935, 940-
41 (8th Cir. 2011)). Relying on this tradition of parallel state and federal regulation,
the Court concluded that the “Congressional silence on pharmacies in the context of
340B indicates that Congress did not intend to preempt the field.” Id. at 1144.
The McClain Court also held that Section 340B’s enforcement mechanism did
not preempt the field of 340B enforcement. Id. The Court reasoned that Section
340B provides HHS with jurisdiction to enforce Section 340B’s rules on drug
pricing and diversion, while Arkansas’ law established separate state-level
enforcement mechanisms and penalties to ensure manufacturers complied with the
separate state law delivery requirements. Because Congress vested HHS with only
limited enforcement authority and left open the possibility that states would enact
parallel health and welfare laws, the McClain Court concluded that federal law did
not preempt the field of 340B enforcement. Id.
Recognizing that its field preemption argument is foreclosed, Novartis
contends McClain was wrongly decided and should be overturned. We decline
Novartis’s request to reconsider McClain. “It is a cardinal rule in our circuit that
one panel is bound by the decision of a prior panel.” Mader v. United States, 654
F.3d 794, 800 (8th Cir. 2011) (en banc). Because Novartis’s field preemption claims
are foreclosed by McClain, we find no abuse of discretion in the district court’s
denial of Novartis’s motion for a preliminary injunction.
3. Conflict Preemption
Novartis also contends that S.B. 751 is conflict preempted. Even if Congress
has not occupied a field of regulation, a state law is preempted “to the extent it

-- 21 of 24 --

-22-
actually conflicts with federal law, that is, when compliance with both state and
federal law is impossible,” or “when the state law stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress.”
California v. ARC Am. Corp., 490 U.S. 93, 100-01 (1989) (citation modified).
Novartis argues that S.B. 751 is preempted because it stands as an obstacle to
the purpose and objectives of the 340B Program. According to Novartis, Section
340B preserves the ability of drug manufacturers to impose at least some delivery
restrictions, including limiting the delivery of 340B drugs to a single contract
pharmacy, and S.B. 751 conflicts with the federal scheme by requiring drug
manufacturers to recognize an unlimited number of contract pharmacies. Novartis
argues McClain does not apply because it did not consider the obstacle preemption
theory advanced here. Contrary to Novartis’s assertions, McClain reached the
obstacle preemption theory Novartis raises. Just like Novartis in this case, the
plaintiffs in McClain alleged that Arkansas Act 1103 was preempted because the
requirement that manufacturers deliver 340B drugs to an unlimited number of
contract pharmacies conflicts with Section 340B’s prohibition on the diversion of
340B drugs. See Complaint, Pharm. Rsch. & Mfrs. of Am. v. McClain, No. 4:21-
cv-00864, ECF No. 1 ¶¶ 68-72 (E.D. Ark. Sept. 29, 2021).
This Court rejected that argument and said that Act 1103 did “not create an
obstacle for pharmaceutical manufacturers to comply with 340B, rather it does the
opposite[.]” McClain, 95 F.4th at 1144. Because Section 340B is silent on the
delivery of 340B drugs, federal law neither prohibits nor requires the use of contract
pharmacies, nor does federal law fix the number of contract pharmacies a covered
entity may use to distribute 340B drugs on its behalf. See id. at 1143-45. The price
at which 340B drugs are offered to covered entities is set by federal statutory
formula. See 42 C.F.R. § 10.10(a). State laws like Arkansas Act 1103 and Missouri
S.B. 751 do not alter that pricing formula or otherwise set the price of 340B drugs;
rather, these laws provide that, once 340B drugs are offered to covered entities at the
ceiling price, drug manufacturers cannot prevent covered entities from directing the
delivery of those drugs to its contract pharmacies. Because state laws like Arkansas

-- 22 of 24 --

-23-
Act 1103 and Missouri S.B. 751 regulate an area beyond the purview of federal law
and do not pose an obstacle for drug manufacturers to comply with both federal and
state law, such state laws are not conflict preempted. See McClain, 95 F.4th at 1145.
The Fifth Circuit’s recent decisions in AbbVie, Inc. v. Fitch, 152 F.4th 635
(5th Cir. 2025), and AbbVie, Inc. v. Murrill, 166 F.4th 528 (5th Cir. 2026), reinforce
this conclusion. In Fitch, the Fifth Circuit held that AbbVie and other drug
manufacturers were not likely to succeed on the merits of their claim that Mississippi
H.B. 728, which is materially similar to Missouri S.B. 751, is obstacle preempted.
According to the Fifth Circuit, laws requiring manufacturers to deliver 340B drugs
to an unlimited number of contract pharmacies do not pose an obstacle to
manufacturers’ compliance with federal law because these state laws only require
manufacturers to deliver discounted drugs to contract pharmacies insofar as they
have partnered with covered entities, and do not impose drug pricing obligations that
conflict with federal law. Fitch, 152 F.4th at 647.
Similarly, in Murrill, the court affirmed summary judgment upholding the
constitutionality of a materially similar Louisiana statute requiring drug
manufacturers to recognize an unlimited number of contract pharmacies. Citing
McClain, the court concluded that these state laws regulate delivery, not prices.
Murrill, 166 F.4th at 541. Recognizing the silence in Section 340B regarding drug
delivery, the court concluded that “Congress decided not to undertake regulation of
the delivery of 340B drugs or the role of pharmacies in that process—thereby
leaving, absent congressional amendment, those matters to state law.” Id. at 542.
Because state laws like S.B. 751 “operate[] comfortably within that space” and do
“not disturb the federally regulated relationship between manufacturers and covered
entities,” the federal and state laws “work in tandem to advance Congress’s central
aim” in creating the 340B Program. Id.
Because S.B. 751 regulates the delivery of 340B drugs in a manner consistent
with federal law and does not stand as an obstacle to the drug pricing objectives of
Section 340B, Novartis has not shown that it is likely to succeed on the merits of its

-- 23 of 24 --

-24-
conflict preemption claim. The district court did not abuse its discretion in denying
Novartis’s motion for a preliminary injunction.
C. The Remaining Dataphase Factors.
Finally, Novartis contends that the district court erred when it found that the
irreparable harm, balance of equities, and public interest factors weighed against
preliminary relief. Novartis’s claims of irreparable harm are premised on its belief
that S.B. 751 is unconstitutional. Because we conclude that Novartis is not likely to
succeed on the merits of its claims, we agree with the district court that Novartis has
failed to show it would be irreparably harmed in the absence of a preliminary
injunction. See Powell v. Noble, 798 F.3d 690, 702 (8th Cir. 2015) (“[A]s we have
concluded Powell is unlikely to succeed in showing his [constitutional] rights have
been violated, we agree with the district court that Powell has not shown a threat of
irreparable harm that warrants preliminary injunctive relief.”). Because Novartis has
not shown a likelihood of success on the merits or irreparable harm, we do not need
to address the balance of equities or public interest factors. Id.
III. CONCLUSION
The district court’s denial of Novartis’s motion for a preliminary injunction is
affirmed.
______________________________

-- 24 of 24 --