Astra Usa, Inc. v. Santa Clara County, California

131 S.Ct. 1342 (2011)

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Nature of the Case

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Facts

To gain payment under Medicaid for covered drugs, a manufacturer must enter a standardized agreement with HHS; in the agreement, the manufacturer undertakes to provide rebates to States on their Medicaid drug purchases. The amount of the rebates depends on the manufacturer's “average” and “best” prices, as defined by legislation and regulation. Calculations of the prices in the agreement are a complex enterprise requiring recourse to detailed information about the company's sales and pricing. HHS is prohibited from disclosing the submitted information “in a form which discloses the identity of a specific manufacturer . . . [or] prices charged for drugs by such manufacturer.” The 340B Program also draws on this same pricing methodology. The 2010 Patient Protection and Affordable Care Act (PPACA), directs the Secretary to develop formal procedures for resolving overcharge claims. P commenced suit against D and eight other pharmaceutical companies, alleging that the companies were overcharging 340B health care facilities in violation of the PPAs to which the companies subscribed. P asserted that the 340B entities and the counties that fund them are the intended beneficiaries of the PPAs. The District Court concluded that the PPAs conferred no enforceable rights on 340B entities. The Ninth Circuit held that covered entities, although they have no right to sue under the statute, could maintain the action as third-party beneficiaries of the PPAs. The Supreme Court granted certiorari.