Astra USA, Inc. v. Santa Clara County
131 S. Ct. 1342
| SCOTUS | 2011Background
- Section 340B of the Public Health Services Act imposes ceiling prices on drugs sold to 340B entities; HRSA administers the program.
- PPAs are uniform form agreements that drug manufacturers sign to participate in 340B, incorporating statutory pricing obligations.
- 340B entities have no private right of action under §340B itself for overcharges; enforcement is centralized in HHS/HRSA.
- PPAC (PPACA) adds formal procedures for resolving overcharges, with administrative resolution subject to APA review and potential penalties.
- Santa Clara County sued Astra and others alleging overcharges under the PPAs; district court dismissed, Ninth Circuit reversed allowing third-party beneficiary theories.
- The Supreme Court reversed, holding that suits by 340B entities to enforce ceiling-price contracts with manufacturers are incompatible with the statutory regime.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Private right of action under §340B | County asserts 340B entities may enforce obligations as third-party beneficiaries. | No private right of action exists under §340B itself; enforcement lies with HHS/HRSA. | No, private third-party enforcement is not allowed. |
| Enforceability of PPAs by third parties | PPAs create enforceable rights for 340B entities as beneficiaries. | PPAs merely incorporate statutory obligations with no negotiable terms or independent rights. | PPAs are not enforceable by third-party beneficiaries. |
| Compatibility with statutory regime | Private suits would advance program objectives by ensuring compliance. | Private suits would undermine centralized, uniform administration and enforcement by HHS. | Suits are incompatible with the statutory regime. |
| Impact of PPACA enforcement framework | Administrative procedures are pending but private actions could proceed meanwhile. | PPACA strengthens HRSA enforcement and makes resolutions binding with APA review; private suits conflict with this framework. | Private suits conflict with the PPACA-enforced framework. |
| Disclosure and information access concerns | Private actions would help verify ceiling-price violations by obtaining price information. | Medicaid rebate disclosures prohibit publicly accessible pricing information; private suits would undermine confidentiality. | Private suits would threaten information protection and enforcement integrity. |
Key Cases Cited
- Tenet v. Doe, 544 U. S. 1 (2005) (private-right-of-action analysis hinges on congressional intent)
- Grochowski v. Phoenix Construction, 318 F.3d 80 (2d Cir. 2003) (third-party beneficiary contract enforcement and government contracts)
- Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U. S. 148 (Supreme Court 2008) (limits on private rights based on corporate misleading conduct)
- Virginia Bankshares, Inc. v. Sandberg, 501 U. S. 1083 (1991) (private rights depend on congressional intent to provide a remedy)
- Alexander v. Sandoval, 532 U. S. 275 (2001) (statutory right to sue must be clearly conferred by Congress)
