Ninth Circuit Paves New Road for Private Entities to Litigate Section 340B Disputes in Federal Court

The 340B Drug Pricing Program allows certain providers and grantees (called “covered entities”) to purchase prescription drugs from participating pharmaceutical manufacturers at reduced prices. While pricing disputes are common in this context, long-standing Supreme Court precedent bars private actions under the 340B statute. See Astra USA, Inc. v. Santa Clara Cnty., 563 U.S. 110, 113 (2011). Instead, covered entities are required to litigate disputes via Section 340B’s administrative dispute resolution (ADR) mechanism. But the Ninth Circuit’s decision in Adventist Health System of West v. AbbVie Inc., et al. this past Tuesday has distinguished claims brought under the FCA from that long-standing precedent.

Adventist, a nonprofit health care organization operating medical clinics and facilities across multiple states, brought a qui tam action against several pharmaceutical manufacturers alleging overcharges for 340B drugs. Adventist’s specific FCA theory is that the manufacturers filed false claims to Medicare and Medicaid for the drugs. The district court dismissed the complaint as a private right of action barred by Section 340B, relying on the Supreme Court’s decision in Astra. In reviving Adventist’s claims, the Ninth Circuit distinguished between the situation in which a covered entity seeks recovery for its own losses and the FCA theory brought by Adventist. While Adventist is barred from seeking reimbursement for its own losses, it can step into the shoes of the government to litigate potentially the same overcharges—a novel distinction in the 340B landscape.

The Ninth Circuit further supported this distinction by comparing the specific damages permitted under the statute versus those sought by Adventist under the FCA. While a prevailing entity in the 340B ADR process may be entitled to reimbursement for overcharges akin to compensatory damages, under the FCA, the Ninth Circuit noted the covered entity is entitled “only” to 25–30% of the government’s damages. But given the trebling of damages permitted under the FCA and the record-breaking FCA settlements we saw in 2025, the decision may have significant implications for the future landscape of 340B pricing disputes.