The law and subsequent lawsuit are the latest developments in what has become a nationwide battle between abortion-rights opponents and Planned Parenthood.
Federal and state law prohibit taxpayer money from funding abortions, but conservatives who oppose the practice have taken the charge a step further, targeting Planned Parenthood's Medicaid funding for birth control and cancer screenings in several states.
The Susan B. Anthony List, a leading anti-abortion campaign committee, blasted the group on Tuesday as part of an "abortion industry."
"Arizona taxpayers ... do not want their tax dollars going to abortion businesses like Planned Parenthood," said SBA List President Marjorie Dannenfelser in a statement.
The group helped to author the Arizona law that would block Planned Parenthood's funding — the Whole Woman's Health Funding Priority Act (HB 2800).
In a statement, the SBA List said that nine states, including Arizona, have cut Planned Parenthood's public funding by more than $61.7 million since 2011.
Planned Parenthood says that abortions account for only 3 percent of its services — out of 11,003,366 individual services rendered to patients in 2010, 329,445 were abortions, according to its annual report.
"This law is politically driven," Howard said on a conference call with reporters. "It is damaging because it works against women who are trying to take charge of their lives and their health."
The group has won injunctions against laws similar to Arizona's in five other states.
—This post was updated at 4:40 p.m.