Arkansas Suspends Enforcement of Law Targeting Limited Drug Distribution Networks

The Arkansas Board of Pharmacy voted last week to suspend enforcement of Act 630¹—a bill enacted in April 2025 that restricts manufacturers’ ability to maintain limited drug distribution networks.

The Board’s vote came just two months after a federal court preliminarily enjoined the Board from enforcing the Act against Novartis, finding that the Act is likely unconstitutional under the dormant Commerce Clause for overtly discriminating against out-of-state commerce in favor of in-state pharmacies. 

This alert summarizes the law, court challenges, the Board’s enforcement position, and key takeaways for pharmacies and manufacturers.

Background on Act 630

Act 630 is entitled “An Act to Prohibit Pharmaceutical Manufacturers from Restricting or Limiting Prescription Medications to a Limited Distribution Network of Out-of-State Pharmacies.”

As its name signals, the Act imposes new restrictions on manufacturers that use limited distribution networks for prescription medications covered by state government and public plan sponsors, with the goal of forcing those networks open to pharmacies physically located in Arkansas.

Key provisions include:

• Arkansas Access Mandate. A pharmaceutical manufacturer (or pharmaceutical manufacturer for Medicaid) whose medications are eligible for coverage under a state government or public plan sponsor health benefit plan may not restrict distribution to a limited pharmacy network more than three months after a new product launch without ensuring: (1) local access through public institution academic medical centers; (2) geographic diversity of access within Arkansas; (3) diverse access for local for-profit and nonprofit pharmacies with relevant experience or accreditation; and (4) compliance with FDA guidance for safe storage, handling, monitoring, and patient management services.
• Board Approval. Any manufacturer (or manufacturer for Medicaid) seeking to maintain a restricted distribution network for six months or longer must petition the Arkansas Board of Pharmacy for approval. The Board will evaluate factors including cost, logistics, patient caseload, and rarity of the drug or condition, and must hold a public hearing before granting a permanent restriction. The limited network must allow qualified in-state Arkansas pharmacies to apply to participate and access the medications to meet the needs of patients with same-day access in Arkansas without requiring patients to use mail carriers.
• Payment Prohibition. State government and public plan sponsors are prohibited from paying for prescription drugs from a manufacturer that is noncompliant with the statute, unless the Board has granted a temporary waiver to protect public health and access.
• The Board of Pharmacy is authorized to fine noncompliant manufacturers $10,000 per day of noncompliance.
• Wholesaler Permit. Covered manufacturers must maintain an active wholesale distributor permit in good standing with the Arkansas State Board of Pharmacy.

The Act required covered manufacturers to comply by September 1, 2026.

Legal Challenges to the Act’s Constitutionality

Act 630 was swiftly challenged in federal court on constitutional grounds.

On June 24, 2025, Novartis filed a lawsuit to enjoin Arkansas from enforcing the Act, arguing in part that Act 630 violated the Dormant Commerce Clause as protectionist legislation benefiting in-state pharmacies at the expense of out-of-state competitors. The court agreed. On May 17, 2026, a preliminary injunction was granted only for Novartis.  The court found the Act facially discriminated against interstate commerce by granting Arkansas pharmacies preferential access to limited distribution networks that out-of-state pharmacies do not share.²

Central to the court’s analysis is the Dormant Commerce Clause, which is a doctrine derived from the Constitution’s grant to Congress of the power to “regulate Commerce…among the several States.” The Supreme Court has recognized this contains a “further negative command” that prevents states from adopting protectionist measures and thus preserves a national market for goods and services.³ Under this doctrine, a state law is invalid if it clearly discriminates against interstate commerce in favor of in-state commerce or imposes a burden on interstate commerce that outweighs any benefits received. The Court found that Act 630 violated these standards.

Importantly, the court focused on physical presence rather than corporate residency. Because Act 630 tied participation in a limited distribution network to having a physical location in Arkansas, the court found it drew the same geographic line the Eighth Circuit rejected in Jones v. Gale⁴, favoring in-state dispensers over out-of-state mail-order pharmacies that serve the same patients with the same drugs. The court found that the State’s justifications for the law— patient access, safety, and patient freedom of choice— were unlikely to survive rigorous scrutiny when nondiscriminatory alternatives, such as a direct same-day access mandate or an in-person consultation requirement, were readily available.

The reasoning in this case is not just limited to Arkansas. As legislatures and boards of pharmacy increasingly use licensure conditions, network participation mandates, and Medicaid payment leverage to shift specialty drug distribution and dispensing revenue to local operators, laws that tie benefits to an in-state physical presence remain constitutionally vulnerable. In contrast, requirements built around objective service standards rather than geography are far easier to defend, as the Novartis opinion emphasized.

Following the Novartis injunction, the Board initially took the position that it remained obligated to continue enforcing Act 630 against all manufacturers other than Novartis.⁵ The Board proceeded to approve manufacturer applications under Act 630 at its June 2026 meeting and set a July 15, 2026 deadline for manufacturers to submit applications for approval of limited distribution networks in advance of the September 1 compliance deadline.

Days after the Board’s June meeting, Bristol Myers Squibb (“BMS”) filed its own complaint alleging a host of constitutional violations,⁶ including under the Dormant Commerce Clause. BMS moved for a preliminary injunction on June 26, 2026, arguing that six of its specialty drugs would be subject to Act 630’s mandates, forcing BMS to either dismantle federally compliant REMS distribution networks or face fines and exclusion from Arkansas Medicaid. BMS also sought an administrative stay, citing the Board’s impending July 15 application deadline.⁷ On July 27, the State defendants filed a motion with the court indicating that the parties were engaged in settlement discussions.

One day later, at the Board’s July 28 meeting, the Board heard directly from the Arkansas Attorney General’s Office. The AG’s representatives stated that after vigorously defending Act 630—and in light of the full record—the Act is likely unconstitutional. As a result, the Board voted to pass a resolution declaring that it would not enforce Act 630 and authorizing the AG’s Office to enter settlement agreements with each entity that has sued or threatened to sue over Act 630.

Takeaways

For now, Act 630 is effectively dead. The Board’s non-enforcement vote, coupled with the AG’s concession that the Act is likely unconstitutional, means that manufacturers will not face imminent enforcement regardless of whether a court enters relief in their favor. The September 1 compliance deadline is moot, and manufacturers need not prepare or submit applications or compliance plans.

However, no final judgment has been entered in any of the lawsuits. In addition, the legislature could attempt to cure the constitutional defects by amending the law in a future session. Indeed, the Act’s sponsor—a pharmacist who co-owns several independent community pharmacies—has indicated that the Novartis injunction provides guidance for how to amend the law.⁸ Act 630’s future, if any, remains to be seen.

For more information regarding Arkansas Act 630 and related settlement agreements, pharmaceutical distribution networks, or navigating similar legislation in other states, please contact your Quarles attorney or:

• Susan Trujillo: (602) 229-5318 / susan.trujillo@quarles.com
• Mark Bina: (312) 715-5051 / mark.bina@quarles.com
• Theresa DeAngelis: (202) 372-9522 / theresa.deangelis@quarles.com

END NOTES

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¹ See H.B. 1531 (enacted Apr. 16, 2025), found here. (codified at Arkansas Code § 20-64-105)

² Novartis Pharmaceuticals Corporation v. Griffin et al., Case No. 4:25-cv-00633-LPR (E.D. Ark. May 17, 2026).

³ Id.

⁴ Jones v. Gale, 470 F.3d 1261 (8th Cir. 2006)

⁵ Arkansas State Board of Pharmacy June 16, 2026 Board Meeting (June 16, 2026), found here.

⁶ BMS alleged that Act 630 was preempted by federal law, including Food and Drug Administration REMS regulations, and was “void for vagueness.”

⁷ Bristol Myers Squibb Co. v. Mack, Case No. 4:26-cv-618 (E.D. Ark. filed June 23, 2026).  On July 1, 2026, BMS withdrew its request for a stay “in light of discussions with Defendants regarding implementation of Act 630 and the future course of this litigation.”   

⁸ Tess Vrbin, Arkansas suspends enforcement of law preventing limits on which pharmacies can sell medications, Arkansas Advocate (July 29, 2026), found here.