Court rules that county can sue drug maker

SAN FRANCISCO A lawsuit by Santa Clara County, Calif., against drug makers that allegedly charging county hospitals too much for prescription drugs for recipients of California’s Medicaid program will continue, a federal appeals court in San Francisco ruled Wednesday.

The Ninth U.S. Circuit Court of Appeals’ ruling affirms that counties can sue drug makers under a law from 1992 requiring pharmaceutical companies to sell drugs to the Medicaid program for a percentage of their average retail price.

The lawsuit, which Santa Clara County filed in 2005, follows findings by the inspector general of the Department of Health and Human Services that Medicaid programs nationwide paid drug companies $3.9 million more than they should have for drugs, while the federal government had failed to adequately enforce the law. Defendants, including AstraZeneca, have denied the allegations.

The appeals court’s decision overrules the decision by a federal court in San Francisco that had dismissed the county’s lawsuit.