Jan. 18, 2011 – Safety Net Hospitals for Pharmaceutical Access (SNHPA), which represents more than 600 public and private non-profit hospitals and health systems throughout the U.S. that participate in the Public Health Service 340B Drug Discount Program, issued the following statement today as the U.S. Supreme Court prepares to hear arguments tomorrow, Jan. 19, in Astra USA Inc. v. County of Santa Clara (Case No. 09-1273):

Ten of millions of uninsured and underinsured Americans rely on SNHPA member hospitals for their health care. These hospitals are legally obligated to treat vulnerable patients regardless of their ability to pay. As a result, our members are entitled to, and are heavily dependent upon, the substantial price discounts on pharmaceuticals made available through the federal 340B Drug Discount Program.

Tomorrow morning, the U.S. Supreme Court will hear arguments in Astra USA Inc. v. County of Santa Clara, in which two California counties and their 340B-enrolled providers allege that that nine major drug manufacturers have systematically charged them above statutorily defined 340B ceiling prices over the course of many years. The counties say their facilities spent about $90 million on 340B-covered medicines between 2003 and 2005 alone.

SNHPA hopes the High Court will affirm lower court rulings recognizing our member hospitals' right to seek redress from the judiciary when they believe that they have been overcharged in violation of the nation's laws.

As we noted in a friend-of-the-court brief together with seven other national associations (see www.snhpa.org/public/documents/pdfs/santaclarabrief_12-20-10.pdf), Congress always envisioned judicial remedies for overcharges by manufacturers as an integral and indispensable aspect of 340B enforcement.

Moreover, the 340B program is devoid of an effective administrative enforcement mechanism for addressing manufacturer overcharges. In actual practice, manufacturers can overcharge covered entities with impunity.

Meanwhile, although 340B providers have been able to "piggyback" on False Claims Act lawsuits by the federal government and whistleblowers alleging that manufacturers have overcharged state Medicaid programs, the providers are not parties to these suits and the resulting settlements have yielded 340B providers relatively small amounts.

Congress recognized these shortcomings when, in last year's Affordable Care Act, it ordered the creation of a mandatory dispute resolution process for 340B. The changes made by health care reform to the 340B enforcement program are not mere tweaks to the prior system. Rather, they represent fundamental reforms and are an overt acknowledgement that the existing administrative enforcement system was both inadequate and unacceptable.

It is important to note, however, that it could take months or perhaps even years for the new system to be implemented. Also, this system cannot be used to address allegations of overcharging that occurred prior to health care reform's passage. In addition, the U.S. House is widely expected to vote tomorrow to repeal health care reform in its entirety, including this new 340B dispute resolution system.

Accordingly, because this new dispute resolution process might not be implemented anytime soon, if at all, safety-net health care providers need a judicial remedy for overcharges both before and after the passage of health care reform.

Safety Net Hospitals for Pharmaceutical Access (SNHPA) was formed in 1993 to increase the affordability and accessibility of pharmaceutical care for the nation's poor and underserved populations. For more information about SNHPA and the 340B program, visit www.snhpa.org.