Safety-Net Health Care Providers File Brief In Major Drug Pricing Case Before the U.S. Supreme Court

News Release December 21, 2010 For Immediate Release

Eight groups representing thousands of safety-net health care providers enrolled in the Public Health Service 340B Drug Discount Program have asked the U.S. Supreme Court to affirm a federal appellate ruling recognizing their right to sue drug manufacturers for potentially millions of dollars in alleged overcharges.

The case, which is scheduled for oral argument on Jan. 19, 2011, is Astra USA Inc. v. County of Santa Clara (Case No. 09-1273). The Dec. 20 friend-of-the-court brief by the groups is available at www.snhpa.org/public/documents/pdfs/santaclarabrief_12-20-10.pdf. It was filed by:

• Hemophilia Alliance
• National Alliance of State and Territorial AIDS Directors
• National Association of Counties
• National Association of Public Hospitals and Health Systems
• National Family Planning and Reproductive Health Association
• National Health Care for the Homeless Council
• Planned Parenthood Federation of America
• Safety Net Hospitals for Pharmaceutical Access

Drug manufacturers that participate in the federal/state Medicaid program must sign agreements with the federal government requiring them to provide deep discounts on their pharmaceuticals to hospitals, health centers and other facilities that serve disproportionately high numbers of indigent, uninsured and otherwise vulnerable patients. These discounts allow providers to stretch scarce federal resources as far as possible and thus serve more patients with improved care. The program is commonly referred to as 340B for the section of the Public Health Service Act under which it is authorized.

The Astra case involves charges by two California counties and their 340B-enrolled providers that nine major drug manufacturers have systematically charged them above statutorily defined 340B ceiling prices over the course of many years. The counties say their facilities spent about $90 million on 340B-covered medicines between 2003 and 2005 alone.

The manufacturers contend that the counties have no right to sue for alleged overcharges because the 340B statute does not expressly grant them such a right. In December 2009, the Ninth U.S. Circuit Court of Appeals ruled that the counties possessed a common law right to sue as the intended beneficiaries of the pharmaceutical pricing agreements between the federal government and the manufacturers.

In their brief, the 340B providers argue that Congress always envisioned lawsuits by 340B covered entities against manufacturers for alleged overcharging as "an integral and indispensable aspect of 340B enforcement."

Moreover, the groups state that the 340B program is "devoid of an effective administrative enforcement mechanism for addressing manufacturer overcharges."

"In actual practice," they say, "manufacturers can overcharge covered entities with impunity."

"The evidence as to the inefficacy of the 340B administrative enforcement process is overwhelming and irrefutable," the groups say. Many providers, they say, have received "no meaningful response" from the federal agency responsible for the program's administration to their requests that it investigate and act on indications of overcharging. The groups note that, until the last few years, the agency has not received direct funding from Congress to administer the 340B program and thus "has had to rely upon fewer than 10 dedicated employees."

"Perhaps for these reasons … [the agency] has often remained unresponsive" to providers' appeals to act on suspected or proven overcharges, the group say.

Congress and the Department of Health and Human Services Office of Inspector General have "identified serious shortcomings in [the] administrative enforcement of the 340B program" and the agency responsible "itself admitted these deficiencies," the groups note. "Yet none of this galvanized the agency to implement more effective administrative measures."

Meanwhile, although 340B providers have been able to "piggyback" on False Claims Act lawsuits by the federal government and whistleblowers alleging that manufacturers have overcharged state Medicaid programs, the providers are not parties to these suits and the resulting settlements have yielded 340B providers "relatively small amounts," the groups observe.

Congress recognized these shortcomings when, in this year's Affordable Care Act, it ordered the creation of a mandatory dispute resolution process for 340B, the groups say. "The changes made by [health care reform] to the 340B enforcement program are not mere tweaks to the prior system," they continue. "Rather, they represent fundamental reforms and are an overt acknowledgement that the existing administrative enforcement system was both inadequate and unacceptable."

Safety Net Hospitals for Pharmaceutical Access (SNHPA), which took the lead in drafting the brief,  is an organization of more than 600 public and private non-profit hospitals and health systems throughout the U.S. that participate in the 340B program. Formed in 1993, it works to increase the affordability and accessibility of pharmaceutical care for the nation's poor and underserved populations. For more information about SNHPA and the 340B program, visit www.snhpa.org.

via snhpa.org

Posted via email from Jack's posterous