A Ninth Circuit ruling that allows two of the most contentious laws in healthcare to work in concert in a fraud case amplifies the legal risk drugmakers face in a program that provides deeply discounted drugs to safety-net hospitals. In a novel decision on March 17, a Ninth Circuit panel revived a whistleblower complaint by the hospital chain Adventist Health System, which accuses four major drug companies of violating the False Claims Act by overcharging for medication provided under the federal 340B Drug Pricing Program (340B). William Jackson, a partner at Goodwin and co-chair of its Healthcare practice, said the decision “will likely open a flood of litigation against drug manufacturers.” The decision may send ripples beyond the courthouse. Most big drugmakers, of course, participate in 340B because it’s required as a condition for having their medications covered by Medicaid. But smaller companies are increasingly asking whether it’s worth it, said Heath Ingram, a regulatory partner at Goodwin. The new case law adds “another degree of uncertainty for the manufacturers” as they weigh whether to participate in the 340B program, he said.
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