Mar 192026

Ninth Circuit Opens Door to FCA Liability for Alleged 340B Overcharges

Jaime L.M. Jones, Naomi A. Igra, Matt Bergs and Hannah Zobair

A recent decision from the U.S. Court of Appeals for the Ninth Circuit significantly reshapes the intersection of the False Claims Act (FCA) and the 340B Drug Pricing Program (340B Program). In United States ex rel. Adventist Health System of West v. AbbVie, No. 24-2180 (9th Cir. Mar. 17, 2026), the court reversed the dismissal of a qui tam action alleging that pharmaceutical companies inflated drug prices in violation of the 340B statutory ceiling, holding that such claims may proceed under the FCA notwithstanding the absence of a private right of action under the 340B statute. The decision marks a notable departure from a district court ruling—and from prior assumptions about the scope of the Supreme Court’s decision Astra USA, Inc. v. Santa Clara County, 563 U.S. 110 (2011)—and opens the door to increased FCA exposure tied to 340B Program pricing practices.

The 340B Program requires pharmaceutical companies to sell outpatient drugs to certain healthcare providers (“covered entities”) at or below a statutory “ceiling price.” In some circumstances, manufacturers must offer drugs at a nominal “penny price.” The relator, a covered entity under the 340B Program, alleged that multiple companies engaged in a long-running scheme to charge prices exceeding the statutory ceiling, thereby causing the Medicare and Medicaid programs to overpay. The district court dismissed the complaint, holding that the Supreme Court’s decision in Astra—which held that there is no private right of action for covered entities under the 340B statute—also barred FCA claims premised on alleged violations of 340B Program requirements. We previously posted on that decision here.

The Ninth Circuit reversed, concluding that the absence of a private right of action under the 340B statute does not preclude FCA claims based on alleged overcharges for three reasons. First, the court emphasized that the FCA is “free-standing and independent of” the 340B statute, and that Ninth Circuit precedent establishes that FCA claims may be available even when other statutory causes of action are not. Second, the court determined that Astra is distinguishable because there, the plaintiff sought relief for alleged 340B Program violations on behalf of itself, whereas the relator seeks relief for alleged false claims on behalf of the government. Accordingly, the court concluded that the action is not, like it was in Astra, “in essence a suit to enforce” the 340B statute. Third, precluding the action “would undermine Congress’s express intent for the FCA to reach ‘all types of fraud, without qualification.’”

The Ninth Circuit also determined that the relator adequately pleaded falsity and therefore declined the defendants’ invitation to affirm dismissal on that alternative ground.

A copy of the Ninth Circuit’s opinion can be found here.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Jaime L.M. Jones

Chicago

jaime.jones@sidley.com

Naomi A. Igra

San Francisco

naomi.igra@sidley.com

Matt Bergs

Chicago

mbergs@sidley.com

Hannah Zobair

Chicago

hannah.zobair@sidley.com

You might also like
Ninth Circuit Reboots FCA Suit Based on Radiologist Use of Certain Computer Monitors

A panel of the Ninth Circuit recently issued a 2-1 opinion reversing, in part, a district court’s dismissal of a False Claims Act case premised on a radiology facility’s use of non-medical grade computer monitors for diagnostic readings.  In reviving the case, the majority concluded that the relator sufficiently pled a false certification theory of fraud from which the court drew a “strong inference” that the radiology facility’s use of the computer monitors did not meet Medicare’s “reasonable and necessary” requirement because the allegedly technologically inferior monitors the radiologists used undermined the efficacy of their diagnostic readings.  The decision is notable because the majority relied on tenuous inferences to establish falsity, as detailed by the dissent, and a watered-down materiality analysis to establish materiality.

Ninth Circuit Panel Subtly Back-Pedals Prior Ruling on the Application of the Public Disclosure Bar in the False Claims Act Context

We previously wrote here regarding the Ninth Circuit’s decision in United States ex rel. Silbersher v. Valeant Pharmaceuticals Int’l Inc., 76 F.4th 843 (9th Cir. Aug. 3, 2023) (Valeant).  Earlier this month, the same panel denied Valeant Pharmaceuticals’ petition for a rehearing en banc, but also issued a revised decision, significantly curtailing its original opinion.

Ninth Circuit Excludes Inter Partes Review Proceedings from Public Disclosure Bar and Greenlights Relator’s Qui Tam Claims Based on Patent Activity

In a recent decision, United States ex rel. Silbersher v. Valeant Pharmaceuticals Int’l Inc., 2023 WL 4940429 (9th Cir. Aug. 3, 2023) (“Valeant”), the Ninth Circuit ruled that the False Claims Act’s (“FCA”) public disclosure bar does not apply to inter partes review (“IPR”) proceedings—holding that, unlike patent prosecutions, IPRs are not a qualifying channel for disclosures under the bar.  The panel also ruled that the qualifying disclosures the Valeant defendants did identify did “not disclose a combination of facts sufficient to permit a reasonable inference of fraud.” The panel’s decision reversed a district court’s conclusion that the bar did apply, greenlighting the relator’s lawsuit to proceed to its merits.