Health Law Advisor

On September 12, 2025, the United States Court of Appeals for the Fifth Circuit, in AbbVie v. Fitch, Case No. 24-60375, (5th Cir. 2025), affirmed a federal District Court’s denial of a preliminary injunction sought by the pharmaceutical manufacturer AbbVie. AbbVie sought to enjoin enforcement of the state of Mississippi’s 2024 law, H.B. 728, which prohibits drug manufacturers from interfering with how a 340B covered entity distributes 340B drugs to eligible patients.

The 340B Program requires drug manufacturers to give discounts to certain categories of safety-net providers under the law – known as "covered entities" – in order to have their drugs covered by Medicaid. Covered entities commonly contract with third-party pharmacies – known as “contract pharmacies” – to dispense drugs to 340B-eligible patients. In recent years, citing concerns relating to the growth of the 340B program, compliance with 340B requirements, and transparency, AbbVie and other manufacturers have implemented restrictions that limit the number of contract pharmacies with which each covered entity can contract. Covered entities counter that these policies undermine the 340B program's intent to serve low-income and uninsured patients and cause hospitals to reduce patient services. AbbVie’s policy restricted covered entities to contracting with a single contract pharmacy within 40 miles of the covered entity.

Clinical laboratories still face uncertainty and the difficult decision of whether to start the work needed to comply with the with Phase 1 expectations under FDA’s Laboratory Developed Tests Final Rule (the “LDT Final Rule”), which remain set to go into effect on May 6, 2025. To be sure, the shift in priorities of the new administration has kept the health care industry on its toes for the last few weeks, especially as the leadership and messaging of the Department of Health and Human Services (“HHS”) has started to come into sharper focus. The theme of ‘deregulation’, particularly when it comes to the activities of the Food and Drug Administration (“FDA”), has sparked interest and discussion among stakeholders in the life sciences industry – including clinical laboratories that are weighing how to approach the upcoming May 6 deadline for compliance.

We discussed the details of the LDT Final Rule in a previous Insight, explaining that as of the May 6, 2025 Phase 1 deadline FDA will expect all laboratories that manufacture LDTs to comply with medical device reporting (“MDR”) requirements, correction and removal reporting requirements, and quality system (“QS”) requirements regarding complaint files.