Supreme Court: County Cannot Sue Drugmakers for Alleged Overcharges
On Tuesday, the U.S. Supreme Court ruled that Santa Clara County cannot sue large pharmaceutical companies for allegedly overcharging public health care facilities for prescription drugs, the Wall Street Journal reports (Kendall, Wall Street Journal, 3/29).
The county -- which runs several hospitals and health clinics that receive federal funds -- filed the lawsuit in 2005 over purported overcharges dating back to 2001. The county claimed the drugmakers violated a 1992 federal law requiring them to provide federally funded medical facilities with the same discounts used in standard pricing agreements between the companies and the federal government.
A federal judge initially ruled that only the federal government could enforce the discount law. An appeals court disagreed with the decision, ruling that the county could sue because it was a direct beneficiary of the pricing agreements. The court reinstated the lawsuit.
Several drugmakers then appealed the case to the U.S. Supreme Court. The drug companies that filed the appeal included:
- Bristol-Myers Squibb;
- Merck; and
The unanimous Supreme Court decision overturned the appeals court's ruling (Vicini, Reuters, 3/29).
In the decision, Justice Ruth Bader Ginsburg wrote that lawsuits filed by hospitals or clinics over the drug pricing schemes would undermine HHS' efforts to administer Medicaid and health care facilities "harmoniously and on a uniform and nationwide basis." Ginsburg added, "With HHS unable to hold the control reins, the risk of conflicting adjudications would be substantial" (Vesely, Modern Healthcare, 3/29).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.