On January 24, 2024, RWC-340B sent a letter of support in connection with a False Claims Act case that, if successful, could clear a pathway for Ryan White clinics (RWCs) and other covered entities to recoup 340B overpayments from manufacturers for purchases as far back as 2016 or earlier.  The whistleblower suit was brought by a 340B health system in California called Adventist West.  Adventist West alleges in its complaint that four manufacturers – AbbVie, AstraZeneca, Novartis and Sanofi – overcharged covered entities on a wide range of drugs that, under the 340B ceiling price formula, should not have cost more than a penny.  These penny price overcharges, according to Adventist West, extended back to 2016 and earlier.  The manufacturers responded to the complaint by filing a motion to dismiss.  The motion relies in large part on a procedural argument that, under a special provision within the False Claims Act, the federal government is allowed to block.  The purpose of RWC-340B’s letter of support is to ask the Department of Justice (DOJ) to exercise its veto authority so that the court can rule on the merits of Adventist West’s overcharge claims.

If the DOJ agrees to exercise its veto authority and the court rules in favor of Adventist West, then covered entities, including RWCs, will have a strong precedent for pursuing their own overcharge claims against manufacturers going back to 2016 and earlier.  HRSA has long taken the position that covered entities can only seek recoupment of 340B overpayments that occurred in 2019 and later because its rule implementing the 340B ceiling price formula did not go into effect until January 2019.  HRSA would likely be forced to abandon that interpretation and to allow covered entities to seek recoupment for pre-2019 overcharges if Adventist West prevails in its lawsuit.  Covered entities will have to utilize the administrative dispute resolution (ADR) process to pursue their overcharge claims and, because the ADR rule is currently being amended, HRSA is not processing any ADR petitions right now.  It should not be long, however, before HRSA begins accepting and processing overcharge petitions because the final ADR rule is expected to be published at any time.  RWC-340B is hopeful that its letter of support will increase the chances of a victory in Adventist West’s lawsuit which, in turn, should lay a foundation for RWC-340B members and other covered entities to recoup overpayments from manufacturers for many more 340B overcharges than would otherwise be available.

Powers will keep RWC-340B apprised of the outcome of Adventist West’s whistleblower lawsuit.