Supreme Court Rules: 340B Entities Cannot Sue to Enforce Drug Pricing - April 6, 2011

The U.S. Supreme Court on March 29 ruled that 340B entities, including safety net hospitals, do not have third-party beneficiary status to sue drug manufacturers that overcharge 340B entities, in violation of their pharmaceutical pricing agreements (PPAs) with the U.S. Department of Health and Human Services. In the case, Astra USA Inc. v. Santa Clara County, the Ninth Circuit previously ruled that Santa Clara County, which operates several 340B entities, could enforce the PPAs as a third-party beneficiary. Judge Ruth Bader Ginsburg, however, writing for a unanimous Court, determined 340B entities had no statutory right to enforce the PPAs, and because the PPAs merely restated statutory language, allowing 340B entities to enforce them as a third-party beneficiary would effectively give them the right to enforce the statute itself.