Astra USA, Inc. v. Santa Clara County
Supreme Court of the United States
131 S. Ct. 1342 (2011)
The Public Health Services Act (the statute), 42 U.S.C. § 256b, limits the prices that participating drug manufacturers may charge for medications sold to public hospitals and community health centers, known as covered entities. In order to participate in state Medicaid programs, drug manufacturers must opt into the drug-pricing program by signing a Pharmaceutical Pricing Agreement (PPA). The PPAs are form documents that recite the obligations under the statute. The statute does not provide a private right of action to covered entities who are overcharged under the program. The statute is enforced by the Department of Health and Human Services (HHS). Santa Clara County (the county) (plaintiff), a covered entity, sued Astra USA, Inc. and eight other pharmaceutical companies (the companies) (defendants) for overcharging facilities in violation of the companies’ PPAs. The district court dismissed the complaint. The United States Court of Appeals for the Ninth Circuit reversed, finding that a covered entity could maintain an action as a third-party beneficiary to the PPAs. The Supreme Court granted certiorari.
Rule of Law
Holding and Reasoning (Ginsburg, J.)
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