The US government has told the Supreme Court that hospitals and clinics which treat large numbers of poor people cannot sue drugmakers for allegedly overcharging them.
Only the federal government has the authority to enforce the Public Health Service 340B Drug Discount Program, under which drugmakers agree to provide medicines at deep discounts to “safety-net providers” - more than 15,000 hospitals, health centers and other facilities across the US that serve disproportionately high numbers of indigent, uninsured and otherwise vulnerable patients - according to an amicus curae (friend of the court) brief filed by the Department of Justice with the Supreme Court.
The Court is due to hear oral arguments on January 19 in the case of Astra USA Inc versus County of Santa Clara. In the suit, Santa Clara and Santa Cruz Counties in California claim that, for many years, AstraZeneca and eight other drugmakers have been charging them more for medicines than the 340B programme allows, and that the overcharges amount to millions of dollars. In December 2009, the Ninth US Circuit Court of Appeals in San Francisco upheld this view, but the manufacturers appealed.
The Office of the Solicitor General, which represents the US government in matters of litigation, has asked the Supreme Court for permission to present oral arguments in support of the industry’s position that the 340B supply arrangements, which are agreed between the federal government and drug manufacturers, do not permit safety-net providers to sue. The Pharmaceutical Research and Manufacturers of America (PhRMA) has also filed an amicus brief supporting this view.
However, the Attorneys General of Arizona, Kansas, Missouri, West Virginia and the District of Columbia have also asked the Court for permission to argue in person on January 19 that safety-net providers do have such a right. They are supporting the claim that the 340B agreements represent contracts and that, as the intended beneficiaries, the California counties can sue in order to enforce them.
Another amicus brief, filed by eight groups representing safety-net providers, urges the Supreme Court to back the December 2009 appeal court ruling. The providers note the manufacturers’ argument that the 340B statute does not expressly grant the counties the right to sue but, they say, Congress always envisaged lawsuits against manufacturers for alleged overcharging as “an integral and indispensable aspect of 340B enforcement,” adding that the programme is “devoid of an effective administrative enforcement mechanism for addressing manufacturer overcharges.”
In actual practice, manufacturers can overcharge "with impunity,” while “the evidence as to the inefficacy of the 340B administrative enforcement process is overwhelming and irrefutable,” the providers tell the Court.
Moreover, they add, Congress recognised these shortcomings when, in drafting the Affordable Care Act last year, it included the creation of a mandatory dispute resolution process for 340B.
These changes “are not mere tweaks to the prior system...rather, they represent fundamental reforms and are an overt acknowledgement that the existing administrative enforcement system was both inadequate and unacceptable,” say the providers.