White House Backs Pharma Over Pricing Lawsuit

Next week, the US Supreme Court will hear arguments about a highly contentious issue in which hospitals and clinics want the right to file lawsuits against drugmakers, which they believe have overcharged by not offering discounts or reimbursements as part of what is known as the 340B program. This provides access to discounted prescription meds to healthcare entities certified by the US Department of Health and Human Services.

However, 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).

“You can parse the legal issues, as the Justice Department has done,” Sara Rosenbaum, a professor of health law and policy at George Washington University, tells The New York Times. “But the bottom line is that a lot of poor people and a lot of safety-net providers are not getting the discounts they are supposed to receive.” Eight groups, including the Hemopilia Alliance and Planned Parenthood, filed their own amicus brief in support of the right to sue (read the brief here).

The clash stems from a lawsuit filed by by Santa Clara and Santa Cruz Counties in California against AstraZeneca and other drugmakers over allegations they were overcharged for drugs supplied to their hospitals and clinics. Recently, the AIDS Healthcare Foundation filed similar lawsuits against Bristol-Myers Squibb and Johnson & Johnson over the same contention (see here and here).

The Obama administration House filing upset some Democrats. “The administration had a chance to put health care reform into action by defending the discounted drug program,” Congressman Sam Farr of California tells the Times. “Instead, it chose to side with the pharmaceutical companies to preserve a loophole that overcharges providers and undermines the president’s efforts to expand access to affordable health care.”

Since the drugmakers signed agreements with the HHS to provide deep discounts of anywhere up to 50 percent, the counties argue these arrangement constitute contracts, and that as “intended beneficiaries,” the counties are permitted to sue to enforce them based on “a bedrock principle” of contract law, the Times writes, noting the counties also argue their lawsuits “complement federal enforcement efforts.”

But an AstraZeneca spokesman writes us that the contracts with the HHS do not permit an entity that is a not a party to the agreements to file lawsuits against the drugmakers. "The Ninth Circuit decision would allow the county to seek a claim that Congress did not permit in enacting the statute," he writes, adding that the law creating the 340B program did not authorize lawsuits by beneficiaries for any breach between a drugmaker and the HHS. Consequently, drugmakers maintain the lower court decision improperly creates a cause of action under "federal common law" that Congress did not permit.