AstraZeneca Pharmaceuticals LP v. Bailey et al

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IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
CENTRAL DIVISION
ASTRAZENECA PHARMACEUTICALS 	)
LP, 	)
)
Plaintiff, 	)
)
v. 	) 	Case No. 2:24-cv-04143-MDH
)
CATHERINE HANAWAY, in her official 	)
capacity as the Attorney General of 	)
Missouri, et al., 	)
)
Defendants, 	)
)
And 	)
)
MISSOURI HOSPITAL ASSOCIATION 	)
And MISSOURI PRIMARY CARE 	)
ASSOCIATION, 	)
)
Intervenors. 	)
ORDER
Before the Court is Plaintiff’s Motion to Compel Compliance with Third-Party Subpoenas.
(Doc. 135). Plaintiff filed Suggestions in Support (Doc. 136), nonparties, Mercy Health (“Mercy”)
SSM Health Care Corporation (“SSM”) and the Curators of the University of Missouri
(“University of Missouri”) filed Suggestions in Opposition (Doc. 139); Intervenors and nonparties
Citizens Memorial Hospital District (“Citizens”) and CoxHealth filed Suggestions in Opposition
(Doc. 140); nonparty University Health filed Suggestions in Opposition (Doc. 141); and Plaintiff
filed a Reply. (Doc. 146). The motion is now ripe for adjudication on the merits. For the reasons
stated herein, Plaintiff’s Motion to Compel Compliance with Third-Party Subpoenas is DENIED.
BACKGROUND
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This case arises out of Senate Bill (“S.B.”) 751 which created protections to the delivery
of 340B drugs to contract pharmacies on behalf of “covered entities”. Section 340B incentivizes
pharmaceutical manufactures to provide qualified health care providers, referred to as “covered
entities,” with pricing discounts on certain drugs prescribed to individuals and families whose
income falls below the federal poverty level. Covered entities have contracted with outside
pharmacies or “contract pharmacies,” for the distribution and dispensation of 340B drugs. S.B.
751 protects hospitals, federal qualified health centers (“FQHC”), and their patients from drug
manufacturers’ restrictions on the number of contract pharmacies a hospital or FQHC can use and
still receive discount pricing under 340B plan. Plaintiff is a limited partnership organized under
the laws of Delaware with its principal place of business in Wilmington, Delaware. State
Defendants are all residents of Missouri that are responsible for administering and enforcing the
provisions of S.B. 751. Intervenors Missouri Hospital Association and Missouri Primary Care
Association are Missouri, not-for-profit member organizations.
On September 5, 2025, Plaintiff noticed and issued substantively identical subpoenas to
nonparty covered entries Mercy Health, University of Missouri, SSM Health, University Health,
CoxHealth, and Citizens Memorial (collectively “Third-Party Covered Entities”). Plaintiff seeks
three 	specific 	categories 	of 	documents: 	(1) 	340B 	policy 	and 	procedure 	documents; 	(2)
representative contract pharmacy arrangements; and (3) documents sufficient to show how
Respondents account for and use 340B revenue. All six third-party covered entities objected to the
subpoenas based on relevancy, burden, and confidentiality issues. On November 18, 2025, the
Court conducted a Telephone Conference with the parties and ordered that Plaintiff may file a
motion to compel and directed briefing upon the issue. (Doc. 125). The Court further ruled
recipients of the subpoenas need not comply until the Court adjudicates the issue, and should the
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Court grant Plaintiff’s motion to compel, the Court will extend the discovery deadline in this case.
Id. As the parties have fully briefed the Court, the Court will now evaluate whether to compel
compliance with the third-party subpoenas.
STANDARD
Trial courts have broad discretion in settling discovery disputes. Hofer v. Mack Trucks,
Inc., 981 F.2d 377, 381 (8th Cir. 1992). Federal Rule of Civil Procedure 26 guides the scope of
discovery. The rule states the following.
Unless otherwise limited by court order, the scope of discovery is as follows:
Parties may obtain discovery regarding any nonprivileged matter that is relevant to
any party's claim or defense and proportional to the needs of the case, considering
the importance of the issues at stake in the action, the amount in controversy, the
parties’ 	relative 	access 	to 	relevant 	information, 	the 	parties' 	resources, 	the
importance of the discovery in resolving the issues, and whether the burden or
expense of the proposed discovery outweighs its likely benefit. Information within
this scope of discovery need not be admissible in evidence to be discoverable. Fed.
R. Civ. P. 26(b)(1).
In resolving discovery disputes, the burden is initially on the requesting party to make a threshold
showing of relevance. Burke v. Ability Ins. Co., 291 F.R.D. 343, 349 (D.S.D. 2013). “While the
standard of relevance in the context of discovery is broader than in the context of admissibility…
this often intoned legal tenet should not be misapplied so as to allow fishing expeditions in
discovery.” Hofer at 380. Assuming relevance, then the burden shifts to the resisting party to show
the request is irrelevant, unduly burdensome, overly broad, or otherwise improper. Carlton v.
Union Pac. R. Co., No. 8:05CV293, 2006 WL 2220977, at *2 (D. Neb. Aug. 1, 2006). The resisting
party must do this by laying out specific facts, rather than claiming irrelevance or overbreadth in
conclusory, boilerplate fashion. St. Paul Reinsurance Co. v. Com. Fin. Corp., 198 F.R.D. 508,
511-12 (N.D. Iowa 2000).
DISCUSSION
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I. 	Relevance
Plaintiff argues that the subpoenas seek evidence of substantial impairment. Specifically,
Plaintiff argues that the subpoenas will show evidence that by requiring Plaintiff to offer its drugs
at the 340B price for unlimited contract pharmacy sales, which are not otherwise required by its
Pharmaceutical Pricing Agreement (“PPA”), S.B. 751 expands Plaintiff’s obligations under the
PPA and substantially impairs it. Plaintiff further argues that the subpoenas will show that S.B.
751 serves a legally impermissible purpose of redistributing benefits to third parties, namely
covered entities and the pharmacies, with which they contract. Lastly, Plaintiff asserts that the
subpoenas will show whether S.B. 751 is sufficiently well-tailored to survive constitutional
scrutiny by showing to what extent covered entities pass on discounts to patients and whether
revenue generated from 340B sales is reinvested to serve patient access needs or is instead used
for other purposes.
Intervenors, Citizen’s and CoxHealth argue that Plaintiff’s Contracts Clause claim is
governed by an objective standard that does not turn on non-public information. They argue that
Plaintiff directs its subpoenas to materials having nothing to do with the core components of the
objective test. In support they assert that whether S.B. 751 substantially impairs Plaintiff’s
preexisting contractual relationship depends not on whether S.B. 751 enriches pharmacies and
hospitals at Plaintiff’s expense but on whether Plaintiff’s reasonable contract expectations have
been disrupted. Intervenors, Citizens and CoxHealth argue that none of this information would
come from the Third-Party Covered Entitles, rather, it would come from Plaintiff and its drug
manufacturer peers. Thus Intervenors, Citizen’s and CoxHealth assert that even if Plaintiff was
right that discovery will show that covered entities and contract pharmacies in Missouri agree to
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engage in contract pharmacy sales under S.B. 751 using an accounting mechanism known as the
replenishment model, this fact would do nothing to advance Plaintiff’s Contract Clause claim.
SSM and the University of Missouri concede that they use virtual inventory replenishment
systems with their contract pharmacies, generally as described by Plaintiff. However, SSM and
the University of Missouri argue that the details of replenishment have no impact on Plaintiff or
its PPA. They contend that whether the non-party hospitals have one contract pharmacy or fifty, it
is the wholesaler’s delivery process that is impacted, not Plaintiffs. SSM and the University of
Missouri assert that the only effect on Plaintiff is how many drugs it must sell at 340B discount
prices and any details about replenishment models bear no relevance to the number of discounted
sales Plaintiff would have to make. Further, SSM and the University of Missouri argue that how
contract pharmacies and the non-party hospitals split savings from 340B discounts has no bearing
on what Plaintiff must do under its PPA and that since non-party hospitals are covered entitles
under the 340B program, they are free to decide how to use their savings to continue performing
valuable services for low-income and rural communities.
University Health argues that Plaintiff’s subpoenas do not seek information that bears on
whether S.B. 751 imposes a substantial impairment on pre-existing contractual relationships.
University Health contends that the existence of the parties’ utilization of a virtual inventory model
would have no bearing on whether these arrangements expand the limited range of transactions
that a manufacturer must offer 340B pricing and therefore are in no way relevant to proving its
remaining Contracts Clause claim in this suit. Specifically, University Health argues that the
inventory model does not obligate a manufacturer like Plaintiff to make 340B-discounted sales to
the contract pharmacy, or to any other party not expressly contemplated by the PPA. Further,
University Health argues that Plaintiff’s subpoenas do not request any information that bear on
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whether S.B. 751 advances a significant and legitimate public purpose nor seek material that will
demonstrate whether S.B. 751 is sufficiently well-tailored to survive constitutional scrutiny.
The Contract Clause of the United States Constitution provides that no state shall “pass
any law impairing the Obligation of Contracts.” U.S. Const. art. I, § 10, cl. 1. A three-part test
determines whether state action violates the Contract Clause. First the court asks whether “the state
law has, in fact, operated as a substantial impairment on pre-existing contractual relationships.”
Am. Fed’n of State, Cnty. & Mun. Emps. v. City of Benton, Arkansas, 513 F.3d 874, 879 (8th Cir.
2008) (quoting Equip. Mfrs. Inst. V. Janklow, 300 F.3d 842, 850 (8th Cir. 2002)). The first prong
involves a three-part inquiry: “(1) whether there is a contractual relationship; (2) whether a change
in law impairs that contractual relationship; and (3) whether the impairment is substantial.” Gen.
Motors Corp v. Romein, 503 U.S. 181, 186, 112 S.Ct. 1105, 117 L.Ed.2d 328 (1992). If substantial
impairment existed, the court will determine whether the state has a “significant and legitimate
public purpose behind the regulation.” Educ. Employees Credit Union v. Mut. Guar. Corp., 50
F.3d 1432, 1438 (8th Cir. 1995). If there is no significant and legitimate public purpose, the state
law is unconstitutional under the Contract Clause. See Equip. Mfrs., 300 F.3d at 850. If, however
the state identifies such a public purpose, the court will consider “whether the adjustment of the
rights and responsibilities of contracting parties is based upon reasonable conditions and is of a
character appropriate to the public purpose justifying the legislation’s adoption.” Energy Reserves
Group, Inc. v. Kan. Power & Light Co., 459 U.S. 400, 412, 103 S.Ct. 697, 74 L.Ed.2d 569 (1983).
The Court agrees with Intervenors and the Third-Party Covered Entities. Plaintiff’s first
argument on why the subpoenas should be enforced is that it will show evidence that S.B. 751
expands Plaintiff’s obligations under the PPA and substantially impairs it. However, the
documents Plaintiff requests would have little relevance to that ultimate purpose. Plaintiff can
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satisfy its claim through information that can be gathered through its own PPA and data ascertained
by the wholesaler who supplies Plaintiff’s drugs to the various covered entities and their contract
pharmacies. The establishment of whether a covered entity and its contract pharmacy engage in a
replenishment model type accounting would not further whether the alleged impairment Plaintiff
suffers is substantial and thus has little relevancy. See AbbVie Inc. v. Bailey, No. 4:24-CV-00996-
SRC, 2025 WL 1918948, at *8 (E.D. Mo. July 11, 2025).
Plaintiff’s second argument that the requested information would show that S.B. 751 serves
a legally impermissible purpose of redistributing benefits to covered entities and pharmacies is
likewise lacking in connection to the Contract Clause claim. “Covered entities need not pass these
savings on to patients or their insurers. As a result, covered entities can pocket significant sums
when they buy drugs at the discounted 340B price but get paid by patients or insurers at much
higher prices.” Pharm. Rsch. & Manufacturers of Am. v. McCuskey, 171 F.4th 675, 683 (4th Cir.
2026) (citing Novartis Pharm. Corp. v. Johnson, 102 F.4th 452, 456–57 (D.C. Cir. 2024)).
“Congress apparently hoped that the 340B program would provide covered entities with money to
reach more patients and improve services.” Pharm. Rsch. & Manufacturers of Am. v. McCuskey,
171 F.4th 675, 683 (4th Cir. 2026).
Covered entities need not pass along the 340B savings to patients. Rather covered entities
can choose how to utilize the savings it gets from the 340B program. Even if Plaintiff can show
that the benefits from the cost savings do not go directly back to patients or insurers has no bearing
on whether the state law was enacted for an impermissible reason. Missouri enacted S.B. 751
(codified at Mo. Rev. Stat. § 376.414) in response to Sanofi Aventis U.S. LLC v. United States
Dep’t of Health & Hum. Servs., 58 F.4th 696 (3d Cir. 2023) and Novartis Pharms. Corp. v.
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Johnson, 102 F.4th 452 (D.C. Cir. 2024). AbbVie Inc. v. Bailey, No. 4:24-CV-00996-SRC, 2025
WL 1918948, at *4 (E.D. Mo. July 11, 2025). Specifically, S.B. 751 prohibits:
A pharmaceutical manufacturer, third-party logistics provider, or an agent or
affiliate of such pharmaceutical manufacturer or third-party logistics provider shall
not deny, restrict, or prohibit, either directly or indirectly, the acquisition of a 340B
drug by, or delivery of a 340B drug to, a pharmacy that is under contract with, or
otherwise authorized by, a covered entity to receive 340B drugs on behalf of the
covered entity unless such receipt is prohibited by the United States Department of
Health and Human Services.
Mo. Rev. Stat. § 376.414.2. Covered entities are not required to pass the 340B savings onto patients
or their insurers nor did the state promulgate S.B. 751 with that rationale. The Court finds that the
information Plaintiff hopes to elicit from its subpoenas on Third-Party Covered Entities has little
relevance as to its Contract Clause claim in this action.
Plaintiff’s final argument that the subpoenas will show whether S.B. 751 is sufficiently
well-tailored to survive constitutional scrutiny is likewise unpersuasive. Specifically, Plaintiff
wishes to ascertain to what extent covered entities pass on discounts to patients and whether
revenue generated from 340B sales is reinvested to serve patient access needs or is instead used
for other purposes. As discussed above, this information would have little to do with Plaintiff’s
Contract Clause claim and what it needs to prove to be successful. In sum, the information Plaintiff
requests from nonparty Third-Party Covered Entities in this action does not further the claims it
must prove and thus ultimately is not relevant. For the reasons stated, Plaintiff’s Motion to Compel
Compliance with Third-Party Subpoenas is DENIED.
II. 	Burdensome & Confidentiality
The Court, finding that the information Plaintiff requests is not relevant to the elements it
must prove, will decline to further analyze whether Plaintiff’s request are burdensome or raise
confidentiality concerns.
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CONCLUSION
For the reasons stated, Plaintiff’s Motion to Compel Compliance with Third-Party
Subpoenas is DENIED.
IT IS SO ORDERED.
Dated: April 28, 2026 	/s/ Douglas Harpool______
DOUGLAS HARPOOL
UNITED STATES DISTRICT JUDGE
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