Court Finds That Qui Tam Relator Cannot Enforce 340B Program Statute

A recent decision from the Central District of California held that a qui tam relator cannot bring a False Claims Act (FCA) case against pharmaceutical manufacturers to enforce the 340B Drug Pricing Program’s (“340B Program”) statutory requirements.  See United States ex rel. Adventist Health System/West v. AbbVie, No. 21-cv-04249 (C.D. Cal. Mar. 18, 2024). The 340B Program is a federal program that requires pharmaceutical manufacturers to offer discounted prices, called a “ceiling price,” on applicable drugs to certain hospitals and clinics, referred to as 340B “covered entities.”  The relator, Adventist Health System/West, a covered entity under the 340B Program, alleged that the defendant pharmaceutical manufacturers failed to comply with the 340B Program’s requirements related to the “penny pricing” policy, which requires manufacturers to offer drugs at a penny if the ceiling price calculation results in a number at or less than a penny.

In its opinion, the district court analyzed the Supreme Court’s holding in Astra USA, Inc. v. Santa Clara County, 563 U.S. 110 (2011), which held that 340B covered entities cannot sue pharmaceutical manufacturers for failing to comply with 340B Program requirements.  Specifically, Astra rejected an argument that the 340B Pharmaceutical Pricing Agreements, which must be signed by pharmaceutical manufacturers that participate in Medicaid, allow 340B covered entities to sue pharmaceutical manufacturers for noncompliance as third-party beneficiaries of these Agreements.  The district court determined, in a matter of first impression, that Astra’s reasoning applies to the FCA context and similarly prevents a qui tam relator from enforcing the 340B Program’s statutory requirements.

The district court did not opine on whether the pharmaceutical manufacturers did, in fact, violate any 340B Program requirement related to their offer of 340B pricing.  The district court also did not assess whether Astra prevents a qui tam relator from bringing claims alleging fraud exceeding noncompliance with 340B Program requirements, such as submitting falsely certified data.

A copy of the decision can be found here.

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