Astra USA, Inc. v. Santa Clara County

Background

Santa Clara County, acting for several health clinics and hospitals that participate in the federal 340B discount program, sued pharmaceutical manufacturers claiming the companies charged prices above statutory ceiling amounts. The manufacturers had signed uniform Pharmaceutical Pricing Agreements (PPAs) with the Department of Health and Human Services (HHS). The Ninth Circuit allowed the covered entities to sue as third-party beneficiaries of those agreements; the Government and HHS argued enforcement belongs to the agency.

Reasoning

The Court examined whether covered entities may enforce the PPAs in court even though the §340B statute gives them no private right to sue. The majority explained that the PPAs simply mirror statutory duties and are nonnegotiable form agreements used for participation in Medicaid and 340B. Allowing thousands of private suits would undermine Congress’s choice to centralize enforcement in HHS and HRSA, conflict with statutory confidentiality rules, and duplicate the administrative scheme. The Court therefore reversed the Ninth Circuit and held such third-party beneficiary suits are incompatible with the statutory regime.

Real world impact

The decision means covered 340B entities generally cannot bring contract lawsuits against manufacturers to recover alleged overcharges. Instead, the opinion points to HHS/HRSA’s existing informal procedures and the Affordable Care Act’s directive to create a formal administrative dispute-resolution process, with agency decisions subject to judicial review under the Administrative Procedure Act.