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AstraZeneca has become the latest manufacturer to challenge Tennessee’s 340B contract pharmacy law, arguing that the state’s statute effectively prevents it from participating in the HRSA 340B rebate pilot program.
The U.K.-based drugmaker filed a motion on October 23, 2025, in the U.S. District Court for the Middle District of Tennessee, opposing the state’s request to dismiss its lawsuit and asserting that Tennessee’s S.B. 1414 is both unconstitutional and incompatible with federal policy.
At the center of this dispute is the tension between state-level contract pharmacy protections and federal pilot requirements.
Tennessee’s law prohibits drug manufacturers from restricting covered entities’ access to contract pharmacies. While this mirrors similar laws passed in other states, S.B. 1414 includes a unique clause that bars manufacturers from requiring claims data from covered entities or their pharmacies.
AstraZeneca contends this provision makes it impossible to comply with HRSA’s 340B rebate pilot, which depends on data submission to verify eligibility and prevent duplicate discounts.
Under HRSA’s pilot program, manufacturers of the first nine out of ten drugs selected for Medicare price negotiation can offer post-purchase rebates to covered entities instead of the traditional upfront 340B discount.
The pilot is intended to begin January 1, 2026. This rebate change requires manufacturers and covered entities to exchange claims-level data through approved platforms such as Beacon. This data flow ensures rebate accuracy and compliance with both HRSA and manufacturer criteria. For more about this update check out our 340B Rebate Pilot blog.
AstraZeneca’s Farxiga, used to treat Type 2 diabetes and chronic kidney disease, is one of the nine drugs included in the first negotiation round.
Tennessee’s law strikes a unique balance: it bars manufacturers from imposing new 340B contract pharmacy restrictions after July 1, while allowing prior limitations to stand. Notably, it also introduces a separate clause that prohibits manufacturers from requiring claims-level data submissions, a key point now at the center of ongoing litigation.
Tennessee’s law has already weathered one courtroom test. This last June, the federal district court in Nashville refused AbbVie’s attempt to pause enforcement, emphasizing that the law’s claims-data ban likely stands apart from its grandfather clause. AbbVie, undeterred, has refiled an amended complaint to keep the issue alive.
The Pharmaceutical Research and Manufacturers of America (PhRMA) has also filed its own ongoing challenge to the Tennessee statute.
The latest development is from AstraZeneca, who asked a federal judge to block Tennessee’s 340B contract pharmacy law, arguing it prevents the company from joining HRSA’s upcoming 340B rebate pilot. AstraZeneca said the law (S.B. 1414) is unconstitutional and conflicts with federal policy because it bars manufacturers from requiring 340B claims data, a core element of the rebate program.
For now, Tennessee, and other states with similar laws, will still be included in HRSA’s 340B Rebate Pilot beginning January 1, 2026. Covered entities in these states will need to submit claims-level data to receive rebates under the new model.
Legal challenges between states and manufacturers will likely continue, but the rebate program is moving forward. As it stands, all participants should plan to meet HRSA’s data and reporting requirements and begin preparing their systems for the transition ahead.
As manufacturers and states interpret their respective roles in this new rebate framework, state-level contract pharmacy laws may increasingly collide with federal rebate requirements, particularly around data submission and verification. For covered entities, these conflicts could shape how rebate eligibility, claims processing, and payment timelines are managed across different states.
Staying informed, and ensuring systems are aligned with both state and federal expectations, will be essential for maintaining compliance and maximizing 340B savings in the year ahead.
