A pharmacist at Mayo Pharmacy in Bismarck, N.D., reviews completed pharmaceutical orders in January 2026. (Photo by Michael Achterling/North Dakota Monitor)
BISMARCK, N.D. (North Dakota Monitor) – A federal judge in North Dakota ruled against a state law intended to protect healthcare access for low-income patients, finding it unconstitutional.
North Dakota U.S. District Court Judge Dan Traynor in a Monday order criticized the 2025 law as “an infringement on federal programs masquerading as state governance.” He said it enriches hospitals and pharmacies at patients’ expense.
House Bill 1473 is intended to make sure North Dakota has unhindered access to medication subsidies under a federal program called 340B.
The 340B program, created by Congress in 1992, directs drug companies to offer discounted products to medical facilities that serve low-income Americans. The program does not require that the discounts be directly passed on to the patient — instead, the idea is that hospitals and clinics can use the subsidies to improve healthcare access in a variety of ways. Drug manufacturers must participate in 340B in order to be a part of Medicaid and Medicare.
The discounts mandated by 340B can be steep. Sometimes the program requires pharmaceutical companies to offer their medications at less than 1% of retail price, Traynor noted in his order.
For this reason, drug manufacturers have started adopting policies that limit the amount of discounted medications they have to sell. Many manufacturers refuse to sell the discounted drugs to more than one third-party pharmacy per hospital, for example.
House Bill 1473 makes these policies — as well as others that restrict access to 340B discounts — a class B misdemeanor in North Dakota. Supporters of the law say it protects healthcare access for low-income, rural communities across the state by ensuring they actually benefit from the federal program.
But Traynor in his order wrote that the law merely allows healthcare facilities and pharmacies to exploit manufacturers.
“A program meant to help American poor is being abused to provide a windfall to hospital conglomerates and participating pharmacies,” he wrote.
The 340B program authorizes manufacturers to add conditions when they offer drugs, Traynor said. He found that North Dakota’s attempt to require otherwise violates the Supremacy Clause of the U.S. Constitution. He also held the law unconstitutionally regulates commerce outside the state of North Dakota.
North Dakota Solicitor General Phil Axt in a March hearing in federal court said House Bill 1473 does not violate the U.S. Constitution, and that the statute fills a regulatory gap in federal law. He also pushed back on the notion that House Bill 1473 doesn’t benefit low-income North Dakotans.
Rural healthcare providers testified to state lawmakers last year that they use 340B subsidies to keep their doors open and pay for services like charity care. They said House Bill 1473 is needed to help North Dakotans in small communities obtain quality healthcare.
House Bill 1473 also forbids manufacturers from requiring hospitals and pharmacies to send them claims data as a condition for providing the discounted drugs. Traynor in his order said the companies use this data to make sure the recipients of 340B subsidies really qualify for them. In this way, North Dakota’s statute makes it harder for companies to comply with federal law, he added.
“This scheme works because no one considers manufacturers as victims,” he wrote. “Manufacturers have money, medication prices are rapidly rising, and they love to litigate. These things may be true, but they do not mean manufacturers should be fleeced by enterprising states and hospital conglomerates that wield power in legislative lobbies.”
By making 340B much more expensive for drug manufacturers, laws like North Dakota’s discourage pharmaceutical companies participating in the program — and by extension Medicaid and Medicare, Traynor said.
His order came as part of a lawsuit involving pharmaceutical manufacturers AbbVie and AstraZeneca and trade association Pharmaceutical Researchers and Manufacturers of America. Each brought separate lawsuits against North Dakota over House Bill 1473 last year, though Traynor combined the suits into one early this year.
Traynor on Monday decided on AbbVie and Pharmaceutical Researchers and Manufacturers of America’s portions of the case. He ordered that House Bill 1473 may not be enforced against either party.
He wrote that because the 340B program does not require patients to see direct benefit from the medication discounts, blocking enforcement of the law won’t harm the public.
North Dakota Deputy Attorney General Claire Ness said Tuesday that the agency hasn’t decided whether it will appeal the decision. She said the Attorney General’s Office didn’t have a statement on Traynor’s decision.
“We’ll let the opinion speak for itself,” she said.
Traynor has not yet made a final decision in AstraZeneca’s part of the suit.
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