Pharmaceutical Research and Manufacturers of America v. WeiserPharmaceutical Research and Manufacturers of America v. Weiser
ORDER
The Colorado 340B Contract Pharmacy Protection Act, or Senate Bill 25-071 (“SB25-71“), was enacted in 2025 with the purpose of regulating the ability of drug manufacturers to restrict access to discounted drugs. Plaintiff Pharmaceutical Research and Manufacturers of America (“PhRMA“) claims SB25-71 conflicts with the federal scheme that regulates Section 340B discounted drugs and, thus, is preempted by federal law. Defendants collectively filed the instant Motion to Dismiss, ECF No. 41, seeking dismissal of Plaintiff‘s Complaint for lack of subject-matter jurisdiction under
I. BACKGROUND
A. Section 340B
Section 340B is a federal program that requires drug companies participating in Medicaid and Medicare Part B to offer discounts on certain outpatient drugs to “covered entities,” including public hospitals, community health centers, and other entities providing care for low-income and rural patients.
Manufacturers enter into standard agreements with the Secretary of Health and Human Services (“Secretary“) to set the price for covered outpatient drugs purchased by covered entities.
B. Colorado‘s Act SB25-71
Covered entities rely on the use of contract pharmacies to take full advantage of Section 340B. ECF No. 33 at 5. As covered entities have increased their use of contract pharmacies, pharmaceutical companies have responded by imposing restrictions on covered entities contracting with outside pharmacies. Id. In response, states have enacted gap-filling state laws to ensure that covered entities in their states can still access Section 340B‘s financial resources. Id. at 6. In 2025, the Colorado General Assembly enacted SB25-71, which states “a manufacturer, third-party logistics provider, or repackager . . . shall not, directly or indirectly, deny, restrict, prohibit, discriminate against, or otherwise limit the acquisition of a 340B drug by, or delivery of a 340B drug to, a 340B covered entity, a pharmacy contracted with a 340B covered entity, or a location otherwise authorized by a 340B covered entity to receive and dispense 340B drugs.”
C. Related Cases and Court Decisions
PhRMA and other drug manufacturers have filed lawsuits across the country challenging state laws addressing the issue of affordability and access to prescription drugs.3 In this District alone, AbbVie and AstraZeneca have also challenged Colorado‘s
D. Motion to Dismiss
PhRMA asserts two claims: (1) declaratory/injunctive relief on the basis of preemption under the Supremacy Clause and the Federal 340B statute; and (2) declaratory/injunctive relief based on unconstitutional extraterritorial regulation. ECF No. 1 at 42-56. Defendants contend that PhRMA‘s complaint should be dismissed, because (1) PhRMA has not established standing and, thus, the Court lacks subject matter jurisdiction over its claims; (2) PhRMA has failed to state a plausible preemption claim; and (3) PhRMA has also failed to allege a plausible extraterritoriality claim. ECF No. 41. In his Recommendation, Magistrate Judge Varholak states that the Court lacks Article III
II. LEGAL STANDARD
The Court is required to make a de novo determination of those portions of a magistrate judge‘s recommendation to which a specific, timely objection has been made, and it may accept, reject, or modify any or all of the magistrate judge‘s findings or recommendations.
“[A] party‘s objections to the magistrate judge‘s report and recommendation must be both timely and specific to preserve an issue for de novo review by the district court or for appellate review.” United States v. One Parcel of Real Property, 73 F.3d 1057, 1060 (10th Cir. 1996).
III. ANALYSIS
Defendants moved to dismiss this case under
A. Subject-Matter Jurisdiction Under Fed. R. Civ. P. 12(b)(1)
It is well-established that federal courts are courts of limited jurisdiction and that plaintiffs must have standing before a federal court can reach the merits of a case. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 559-60 (1992). To have standing, “a plaintiff must demonstrate (i) that she has suffered or likely will suffer an injury in fact, (ii) that the injury likely was caused or will be caused by the defendant, and (iii) that the injury likely would be redressed by the requested judicial relief.” Food & Drug Admin. v. All. for Hippocratic Med., 602 U.S. 367, 380 (2024) (citing Summers v. Earth Island Institute, 555 U.S. 488, 493 (2009); Lujan, 504 U.S. at 560-61).
An organization can satisfy the standing requirements of Article III by claiming organizational standing, that “it suffered an injury in its own right,” or asserting associational standing “as the representative of its members.” Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 600 U.S. 181, 199 (2023) (citations omitted). To invoke associational standing, the “organization must demonstrate that (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization‘s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.” Id. (citation omitted). In this case, PhRMA appears to assert associational standing. ECF No. 72 at 7.
PhRMA argues that it has associational standing, because SB25-71 “injures PhRMA‘s members because it forbids them from engaging in conduct in which they would otherwise engage.” ECF No. 76 at 10. PhRMA points to the fact that “[b]efore [SB25-71] was enacted, many PhRMA members individually engaged in conduct that state law now proscribes—namely, limiting the number of contract pharmacies used by covered entities and requiring the provision of claims data as conditions precedent of sales at 340B prices.” ECF No. 76 at 10 (citing ECF No. 1 ¶¶ 84-85). In its complaint, PhRMA stated that its members, “which manufacture and sell pharmaceutical products, participate in the federal 340B program and will thus be forced to supply their drugs at a steeply reduced price under [SB25-71] or otherwise face significant monetary penalties.” ECF No. 1 ¶ 22. According to PhRMA, SB25-71 “forces manufacturers to provide the 340B price on drugs that have not been lawfully ordered as part of the federal 340B program” and “seeks to compel drug manufacturers to make 340B-priced sales in situations and under circumstances that federal law does not require.” Id. ¶ 145 (emphasis original).
Recently, Judge Brimmer found AstraZeneca had standing to bring its action against the same Defendants. Astrazeneca Pharms. LP v. Weiser, No. 25-CV-02685-PAB-STV, ECF No. 87 at 11-12 (D. Colo. Aug. 31, 2026). In its amended complaint, AstraZeneca projected that SB25-71 would increase the cost of participation in Section 340 and result in it losing approximately $600,000 per month. Id. at 11. Judge Brimmer reasoned that, while AstraZeneca‘s estimated losses may ultimately stem from its participation in Section 340B, it was “incentivized to participate in Section 340B because otherwise it cannot participate in Medicaid and Medicare Part B.” Id. Thus, he concluded that making AstraZeneca‘s participation in Section 340B more costly was a concrete and particularized injury that was fairly traceable to SB25-71 and, thus, AstraZeneca had standing. Id. at 11-12.
Judge Martinez came to the same conclusion and determined that AbbVie, too, had standing to bring its claims against these same Defendants. Abbvie, Inc. v. Weiser, No. 25-CV-1847-WJM-KAS, 2026 WL 1678085, at *2-*4 (D. Colo. June 10, 2026). In that case, Defendants did not contest that AbbVie met the injury-in-fact requirement for standing. Id. at *3. The dispute was whether the alleged economy injury was fairly traceable to SB25-71. Id. Judge Martinez determined that AbbVie‘s estimations that “complying with similar state laws in Mississippi and Missouri last year cost AbbVie around $33.1 million and $35 million, respectively” and expectation that Colorado‘s law would similar “cost AbbVie tens of millions of dollars per year (if not more)” were sufficient to establish a concrete and particularized economic injury that is fairly traceable to SB25-71. Id.
Here, PhRMA has not estimated dollar amounts of its economic losses. Instead, PhRMA has generally alleged economic injury by asserting that SB25-71 forces its
B. Failure to State a Claim Under Fed. R. Civ. P. 12(b)(6)
Because PhRMA has associational standing to bring this action, the Court must next determine whether PhRMA has failed to state a claim under
1. PhRMA‘s Preemption Claim
PhRMA‘s first claim seeks declaratory and injunctive relief on the grounds of federal preemption. Defendants argue that PhRMA has failed to state a plausible
In its Order denying PhRMA‘s request for preliminary injunction, the Court analyzed PhRMA‘s field preemption and conflict preemption arguments and concluded that both were unlikely to succeed on the merits. Pharm. Rsch. & Manufacturers of Am., 2026 WL 763970, at *4-*8. With respect to field preemption, the Court followed the Third and Eighth Circuit‘s analysis in determining that Section 340B “is silent about delivery and distribution of pharmaceuticals to patients.” Id. at *5 (quoting Pharm. Rsch. & Manufacturers of Am. v. McClain, 95 F.4th 1136, 1142 (8th Cir. 2024)). The Court agreed with the majority of other courts that have found Congress did not intend for Section 340B to preempt the field. Id. (collecting cases).
In its response to Defendants’ motion to dismiss, PhRMA cites several paragraphs of its complaint that allegedly plead and explain how SB25-71 “impermissibly attempts to rewrite both the substantive and enforcement terms of a federal program.” ECF No. 52 at 13-14 (citing ECF No. 1 ¶¶ 16-17, 48-55, 116-23, 131-32, 137-38, 151-55). “At the
Here, PhRMA directs the Court to explanations in its complaint about Section 340B and SB25-71, but none of these statements persuade the Court to stray from its conclusion at the preliminary injunction stage. First, the Supreme Court has stated that there is a “presumption that state or local regulation of matters related to health and safety is not invalidated under the Supremacy Clause.” Astrazeneca, No. 25-CV-02685-PAB-STV, ECF No. 87 at 14 (citing Hillsborough Cnty., Fla. v. Automated Med. Lab‘ys, Inc., 471 U.S. 707, 715 (1985); Medtronic, Inc. v. Lohr, 518 U.S. 470, 475 (1996)). This case relates to state regulation of health matters and, therefore, the presumption against preemption applies. Second, the Court has already explained that the Supreme Court‘s decision in Astra “did not discuss or contemplate whether there was room in the 340B program itself for state supplementation.” Pharm. Rsch. & Manufacturers of Am., 2026 WL 763970, at *4. Numerous courts across the country have already determined that SB25-71 and similar laws of other states are not targeted or have the purpose of regulating Section 340B. See Abbvie, 2026 WL 1678085, at *9 (collecting cases); see also Astrazeneca, No. 25-CV-02685-PAB-STV, ECF No. 87 at 15 (finding that “AstraZeneca has not plausibly alleged that S.B. 71 is preempted by federal patent laws). Thus, this Court similarly finds that PhRMA has failed to state a field preemption claim upon which relief can be granted.
The Court previously rejected PhRMA‘s conflict preemption argument, finding that (1) the SB25-71 complements Section 340B by helping “accomplish Section 340B‘s mission to help healthcare providers reach more eligible patients and provide more comprehensive services“; (2) SB25-71‘s claims-data restriction, which does not permit manufacturers to require claims data, does not conflict with Section 340B‘s audit requirements; and (3) SB25-71 creates enforcement authority for SB25-71 violations, not Section 340B violations. Pharm. Rsch. & Manufacturers of Am., 2026 WL 763970, at *6-*8. These findings are also relevant here. PhRMA has failed to allege facts that actually describe a conflict, because SB25-71 does not conflict with Section 340B.
In his review of a similar motion to dismiss, Judge Martinez determined that (1) SB25-71 does not conflict with Section 340B‘s pricing regulation, AbbVie, 026 WL 1678085, at *7-*8 (collecting cases); (2) the claims restriction of SB25-71 “carves out an express exception to its claims-data prohibition that permits manufacturers to obtain data
Accordingly, Defendants’ motion to dismiss pursuant to
2. PhRMA‘s Extraterritoriality Claim
Finally, Defendants argue that PhRMA has failed to allege its extraterritoriality claim that SB25-71 violates the constitutional principle that “no state can regulate conduct outside its boundaries.” ECF No. 52 at 27. Indeed, “[t]he Constitution vests Congress with the power to ‘regulate Commerce . . . among the several States.‘” Nat‘l Pork Producers Council v. Ross, 598 U.S. 356, 368 (2023) (quoting
PhRMA contends SB25-71 violates the extraterritoriality doctrine, relying on Ass‘n for Accessible Medicines v. Ellison, 140 F.4th 957 (8th Cir. 2025). This Court is not bound by the decisions of the Eighth Circuit. Even so, the Court does not find that Accessible Medicines is persuasive here. In Accessible Medicines, the state law at issue prohibited drug manufacturers from “impos[ing], or caus[ing] to be imposed, an excessive price increase ... on the sale of any generic or off-patent drug sold, dispensed, or delivered to any consumer in the state.” Id. at 959 (quoting
The circumstances here are different. SB25-71 does not itself set prices and thus cannot have an impermissible extraterritorial effect of controlling prices. SB25-71 merely prohibits a manufacturer from restricting delivery of a Section 340B drug to a contracted
IV. CONCLUSION
For the reasons stated herein, PhRMA‘s objection to the Recommendation, ECF No. 76, is OVERRULED and the Recommendation, ECF No. 72, is ACCEPTED AND ADOPTED on alternative grounds supported in the record. United States v. Winningham, 140 F.3d 1328, 1332 (10th Cir.2013) (“[W]e may affirm the district court on a wholly different basis so long as our decision finds support in the record.“).
DATED: September 1, 2026
BY THE COURT:
REGINA M. RODRIGUEZ
United States District Judge