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In the latest twist in a closely watched legal battle, a U.S. judge ruled Wednesday that a federal agency incorrectly threatened AstraZeneca (AZN) with penalties for curtailing discounts to a controversial prescription drug discount program that serves mostly low-income patients.

At issue is the 340B program, which requires drugmakers to offer discounts that are typically estimated to be 25% to 50% — but could be much higher — on all outpatient drugs to hospitals and clinics that serve low-income populations. There are approximately 12,400 so-called covered entities, including 2,500 hospitals, participating in the program, a number that has grown substantially in recent years.

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