No Suits Over Cap on Drug Prices, High Court Rules

(CN) - Medical providers that focus on treating the poor cannot sue drugmakers they think are overcharging them while still enjoying participation in state Medicaid programs, the unanimous Supreme Court on Tuesday ruled Tuesday.

If public hospitals and community health centers could sue the pharmaceutical companies, the secretary of the Health and Human Services Department would lose control of the ceiling-price program, known as 340B, that limits how much drug manufacturers can charge medical providers to the poor, according to the nine-page opinion.

Drugmakers that opt into the ceiling-price program must sign a Pharmaceutical Pricing Agreement (PPA), which is also a condition of their eligibility for state Medicaid programs.

Though hospitals have no private right of action to hold drugmakers accountable for exceeding the ceiling on drug prices, they tried to do so as third-party beneficiaries of the pricing agreements.

"If 340B entities may not sue under the statute, it would make scant sense to allow them to sue on a form contract implementing the statute, setting out terms identical to those contained in the statute," Justice Ruth Bader Ginsburg wrote for the court. "Though labeled differently, suits to enforce §340B and suits to enforce PPAs are in substance one and the same."

Section 340bB refers to a provision of the Public Health Services Act.

Santa Clara County had sued Astra USA and eight other pharmaceutical companies, claiming that they were overcharging its medical providers for drugs while still enjoying Medicaid participation though California. After the District Court dismissed the complaint, the 9th Circuit reversed. The Supreme Court on Tuesday ruled that the federal appeals panel was mistaken and reversed again.

Justice Elena Kagan did not participate in the court's consideration or decision of the case.

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