County of Santa Clara v. Astra, et al.


The County of Santa Clara has sued ten major pharmaceutical companies for overcharging public hospitals and other County-operated medical facilities for outpatient drugs. In 2008, the Ninth Circuit Court of Appeals ruled in the Counties’ favor, reversing the district court’s order granting the pharmaceutical companies’ motion to dismiss, concluding that County medical facilities are intended third-party beneficiaries of the pharmaceutical companies’ contract with the federal government to offer specified discounts for drugs sold under the federal 340B drug pricing program, and that the suit should proceed in the district court. On remand, the County of Santa Cruz joined the litigation. In 2009, the Ninth Circuit accepted an interlocutory appeal from a key discovery order barring the counties from obtaining the manufacturers’ underlying pricing data and calculations. Meanwhile, after the district court rejected the defendants’ effort to assert counterclaims, several manufacturers attempted to initiate administrative proceedings against the County of Santa Clara, arguing, among other things, that federal Health Resources and Service Administration guidance should be interpreted in ways that would undermine effective health care delivery by the County’s health and hospital system. The case is ongoing.

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