Healthy Skepticism Library item: 19435

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Electronic Source

Silverman E
Drugmakers Cannot Be Sued For Overcharging
Pharmalot 2011 Mar 29
http://www.pharmalot.com/2011/03/drugmakers-cannot-be-sued-for-overcharging/

Full text:

The US Supreme Court ruled today that Santa Clara County cannot proceed with a lawsuit alleging its hospitals and clinics were overcharged for prescription meds by various drugmakers, which failed to offer discounts as part of what is known as the 340B program. This offers access to discounted drugs to healthcare entities certified by the US Department of Health and Human Services.
The 8-to-0 decision overturned a federal appeals court ruling of a lawsuit filed in 2005 against Pfizer, AstraZeneca, Bayer, GlaxoSmithKline, Bristol-Myers Squibb, Merck and Sanofi-Aventis, among others. The county had filed suit after the HHS Office of Inspector General found the drugmakers had violated pricing ceilings between 2001 and 2005.
The dispute centered on the rights of 14,500 health providers that spend about $4 billion a year on outpatient drugs. The 2006 HHS OIG report found the hospitals and clinics overpaid by $3.9 million during one month. A federal appeals court ruled the providers were allowed to sue to enforce a contract between the drugmakers and the federal government, but the drugmakers argued federal law governing the discount program did not authorize private lawsuits.
The 2008 ruling by the Ninth US Circuit Court of Appeals in San Francisco was the first in the nation to find that counties have the right to sue manufacturers under a 1992 law requiring companies supplying medicines to the Medicaid program – called Medi-Cal in California – to sell them to public hospitals at a specified percentage of their average nationwide price.
Earlier, a federal judge in San Francisco had dismissed the lawsuit, ruling that only the government, which signed the Medicaid agreements with the companies, had the right to enforce compliance. The appeals court disagreed, saying the government’s pricing contracts with manufacturers are intended to benefit counties, which can sue when the contracts are violated (back story).
The White House recently filed an amicus brief siding with the pharmaceutical industry over concerns that its administration will get mired in an unending number of lawsuits, even though this position is at odds with the notion that the 340B program is designed to ensure underprivileged patients get access to needed meds (read the brief here). Justice Elena Kagan did not participate in the case, because she previously served as US Solicitor General.
The Supreme Court disagreed. “Recognizing the county’s right to proceed in court could spawn a multitude of dispersed and uncoordinated lawsuits” by 340B entities, or outside parties, Justice Ruth Bader Ginsburg wrote. The court also noted that if lawsuits were allowed to proceed, secret pricing info could be revealed in violation of federal law governing Medicaid. “This ban on disclosure is a further indication of the incompatibility of private suits with the statute Congress enacted,” she wrote (read the opinion here).
An AstraZeneca spokesman send us this comment: “This is an important decision that ensures that the proper role for enforcing Public Health Service medicine pricing requirements remains where Congress intended – with the federal government.”