Powers Pyles Sutter & Verville PC represented Adventist Health System in its lawsuit before the Ninth Circuit Court of Appeals, alleging that several drug manufacturers caused false claims to be submitted to federal health care programs by charging prices above the 340B statutory ceiling. The court’s decision allows Adventist to proceed with its False Claims Act (“FCA”) allegations in federal court.
Enacted in 1992, the Section 340B Drug Pricing Program requires participating manufacturers to sell outpatient drugs to covered entities at or below a statutory ceiling price. Under the Health Resources and Services Administration’s (“HRSA”) “penny pricing” policy, manufacturers must charge no more than $0.01 when the calculated ceiling price is at or below zero.
In 2021, Adventist filed a complaint against AbbVie and other drug manufacturers, alleging that the manufacturers failed to comply with the 340B statutory ceiling price, resulting in inflated drug costs paid by federal and state health care programs in violation of the FCA. The U.S. District Court for the Central District of California dismissed the complaint, ruling that covered entities must pursue overcharge claims through HRSA’s ADR process rather than suing manufacturers directly under the FCA.
Adventist appealed, and on March 17, a panel of the Ninth Circuit Court of Appeals unanimously reversed the dismissal, holding that Adventist’s FCA claims are not barred by the 340B statute, and the case now returns to district court for further consideration of the FCA claims. The Department of Justice declined to intervene.
The Powers attorneys representing Adventist Health included Ron Connelly and Bill von Oehsen.
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Powers Pyles Sutter & Verville (“Powers”) is a Washington, DC-based law firm with national practices in healthcare, education, government relations, Indian tribal governments, and nonprofit law. Powers attorneys and professionals are nationally known for their extensive expertise in their practice areas and their commitment to client service. For more information, visit www.PowersLaw.com.