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Astra USA, Inc. v. Santa Clara County, CA
What’s at stake?
Americans’ ability to obtain reasonably-priced medication.
Americans’ ability to obtain reasonably-priced medication.
Issue:
Whether the intended beneficiary of a contract between the federal government and drug manufacturers may sue for breach of contract when the manufacturers exceed price caps set in the contract.
Whether the intended beneficiary of a contract between the federal government and drug manufacturers may sue for breach of contract when the manufacturers exceed price caps set in the contract.
Decision date:
March 29, 2011
March 29, 2011
Outcome:
8-0 in favor of Astra USA. Justice Ginsberg delivered the opinion; Justice Kagan recused.
8-0 in favor of Astra USA. Justice Ginsberg delivered the opinion; Justice Kagan recused.
What the court held:
The Court held that the federal statute governing contracts between the Department of Health and Human Services (HHS) and drug companies to provide discounted drug prices to safety-net health care providers does not allow those providers to sue the companies when prices exceed contractual caps.
The Court held that the federal statute governing contracts between the Department of Health and Human Services (HHS) and drug companies to provide discounted drug prices to safety-net health care providers does not allow those providers to sue the companies when prices exceed contractual caps.
Federal law instructs HHS to enter into contracts with drug manufacturers to offer discounted prices for medication to “340B entities,” which include public hospitals, community health centers and other safety-net health care providers. Santa Clara County, which operates several of these providers, claimed that drug manufacturers breached their contract by charging them more than the contracts allow. Santa Clara argued that as the intended beneficiaries of the contracts between the government and the drug manufacturers, the healthcare providers should be allowed to sue to enforce the contract. This would ensure lower drug prices in situations where the federal government, for whatever reason, has chosen not to sue to enforce the contract’s terms.
The Court held that the statute, which mandates the contractual price caps, does not provide a private right to enforce the caps. The Court found that Congress intentionally centralized enforcement of the caps within HHS and therefore, allowing private suits to proceed “could spawn a multitude of dispersed and uncoordinated lawsuits by 340B entities.” This would result in a substantial risk of conflicting decisions related to the price caps. The opinion also noted that Congress’s prohibition against disclosure of pricing information regarding particular manufacturers is inconsistent with a private right of action because it is “the very information necessary to determine whether [a private party’s] asserted rights have been violated.
As a result of this decision, drug manufacturers will have less incentive to abide by their contractual obligation to sell medication at a discounted rate.
Learn more:
Merit briefs:
Amicus briefs:
- Brief for Pharmaceutical Research and Manufacturers of America in Support of Petitioner
- Brief for Chamber of Commerce of the United States of America in Support of Petitioner
- Brief for APA Watch in Support of Petitioner
- Brief for the United States in Support of Petitioner
- Brief for the Washington Legal Foundation in Support of Petitioner
- Brief for AARP and the National Senior Citizen Law Center in Support of Respondent
- Brief for Contract Law Professors in Support of Respondent
- Brief for a Coalition of 340B Entity Groups in Support of Respondent
- Brief for Federal Courts Professors in Support of Respondent
- Brief for the States of Kansas, Arizona, Missouri, West Virginia, and the District of Columbia in Support of Respondent
