New Motion Filed in Landmark 340B Overcharging Case

by admin | June 20, 2011 8:37 pm

June 20, 2011—A California county and its safety-net health care providers have asked a federal district judge for permission to give the federal government secret documents and other evidence that they say show that nine major drug companies overcharged them millions of dollars for 340B-discounted medicines.

The June 2 motion in federal district court in San Francisco is an aftershock from the U.S. Supreme Court’s landmark decision in March[1] that 340B providers lack standing to sue drug manufacturers for alleged overcharges. The motion was filed by Santa Cruz County, the other California jurisdiction involved in County of Santa Clara v. Astra USA Inc. Santa Clara did not join Santa Cruz in the new motion.

According to Jeffrey W. Lawrence, the lawyer representing Santa Cruz County, the Supreme Court decision effectively ended the underlying case, which began in 2005. He described the June motion as a collateral matter and declined all further comment.

A drug industry attorney who was involved in the case when it was before the Supreme Court did not respond to a request for comment.

Reliant on Government

The Supreme Court’s ruling meant that 340B-enrolled providers, lacking a right to sue for overcharging on their own, would henceforth have to depend on the U.S. Secretary of Health and Human Services (HHS) to enforce its 340B pharmaceutical pricing agreements with drug companies or on the U.S. Justice Department or whistleblowers to bring False Claims Act actions against drug manufacturers on their behalf.

Santa Cruz County has argued that HHS’s enforcement of 340B’s best price requirement is feeble and that waiting for would-be whistleblowers to turn companies in is no substitute for enforcement of pricing obligations.

In effect, Santa Cruz is seeking to throw the ball into the Justice Department’s court.

The county asked U.S. District Judge William Alsup to let it give the federal government all that it learned under seal during several months of discovery last year about how the drug companies calculated their average manufacture prices and best prices.

“As a result of having obtained and reviewed the discovery … plaintiff now has information in its possession that shows that some of the defendants, with respect to some drugs, have submitted claims to the federal government that are in violation of controlling contracts and regulations,” the county explained in its motion.

“Permitting the limited disclosure here,” it continued, “will allow the government to fairly evaluate the facts [and] allow pricing violations under applicable federal and/or state programs to be prosecuted” while assuring that the manufacturers’ trade secrets will be kept safe.

“Defendants themselves have maintained that the federal government is the proper party to decide whether the defendants’ conduct and, in particular, the manner in which defendants have determined the prices they report and charge, violates their contracts” with the government, the county said. By granting the motion, it said the court “will allow precisely the kind of review defendants acknowledge is the appropriate means to address … pricing violations.”

The companies being sued are expected to oppose the motion in a filing due on June 28. A hearing has been scheduled for July 21.

Source URL: https://340bemployed.org/new-motion-filed-in-landmark-340b-overcharging-case/

---