The U.S. Court of Appeals for the Ninth Circuit recently allowed a hospital system to go forward with an unusual False Claims Act lawsuit against a group of drugmakers it accused of overcharging a federal drug discount program. The ruling potentially paves the way for a wave of similar cases. Goodwin partner Heath Ingram said the ruling could mark the beginning of a new front in the ongoing battle over the program. “I think it’s a big risk” for drug companies, he said. “I think it can potentially open up an entire new class of relators.” Ingram said that there could be other, less direct ways to bring False Claims Act claims over the 340B program. For example, he said, if a drug company uses its 340B pricing in advertising targeting hospitals, any alleged noncompliance with the program’s requirements could be the basis for a claim. Such claims could even be weaponized among competitors in the drug industry, he said. “There are going to be all kinds of new ways that relators are going to think about how 340B could be manipulated,” Ingram said. To reduce their risk, drug companies should do risk assessments looking at their participation in 340B, and checking their sales against the central federal database of program participants. He also said that some companies might turn to the “nuclear option” of leaving Medicaid to avoid 340B-related risks. “I’m increasingly seeing manufacturers make very difficult strategic decisions not to participate in the Medicaid program,” he said. “I think this Ninth Circuit decision adds fuel to that fire.”
Read the Law.com article for more.