AHF Sues Johnson & Johnson for Cheating on AIDS Drug Pricing

In Advocacy, News by AHF

AHF filed a lawsuit in the Superior Court of the State of California alleging that between 2005-2012, Johnson & Johnson (J&J) failed to provide legally required discounts for HIV drugs, overcharging AHF by as much as $2 million during the seven year period. J&J is bound by contractual obligations to sell drugs, including AIDS drugs, to AHF and others at discounted prices under the 340B federal discount drug program.

The purpose of the 340B Program is to allow safety net providers such as AHF to stretch scarce resources as far as possible, reaching more eligible patients and providing more comprehensive services.

LOS ANGELES (October 31, 2013) AIDS Healthcare Foundation (AHF) filed a lawsuit in California against pharmaceutical giant Johnson & Johnson and its subsidiaries (J&J) alleging that the companies have “…failed to fully satisfy their obligations with respect to the drugs they sold to AHF over a period of many years,” under the 340B Program, a Federal drug discount program designed to stretch scarce Federal resources as far as possible for safety net healthcare providers such as AHF. The J&J Companies include Johnson & Johnson, Janssen Therapeutics and Janssen Biotech. Together, they control a significant portion of the AIDS drug market with drugs that include Prezista, Intelence, Endurant and Procrit.

AHF’s lawsuit against J&J was filed Wednesday in the Superior Court of California, County of Los Angeles, Central District [case #BC526253]. The action against J&J includes claims of “Violation of California Unfair Competition Law; Breach of Contract—Third Party Beneficiary; Negligence; Unjust Enrichment and Breach of Covenant of Good Faith and Fair Dealing.”

“AHF made the Johnson & Johnson Companies aware that we were wrongly charged the non-discounted prices before filing this lawsuit, but the J&J Companies have refused to reimburse AHF for the excess amounts it paid for J&J’s drugs,” said Michael Weinstein, President of AHF. “As a result, J&J has now forced AHF to seek judicial intervention to obtain the critically needed discounted drug pricing to which AHF is—and was—entitled.”

“AHF is entitled to this relief based on several legal grounds, including statutory, contractual and equitable theories,” said Laura Boudreau, Chief Counsel for Operations for AIDS Healthcare Foundation. “But at bottom, we believe, and our lawsuit asserts, that J&J should not be permitted to effectively refuse to comply with their legal and contractual obligations with respect to 340B Program covered drugs without consequence and thereby deprive AHF of funds that it would use to benefit the vulnerable safety net population it serves.”

About the 340B Program

340B is a Federal program overseen by the Health Resources and Services Administration’s (HRSA) Office of Pharmacy Affairs (OPA) that requires drug manufacturers to provide outpatient drugs to eligible health care organizations/covered entities such as AHF at significantly reduced prices. The program enables covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.

Under the 340B Program (42 U.S.C. § 256b(i)(1)), manufacturers are required to ensure that Covered Entities pay no more for any product than the statutorily set, discounted 340B ceiling price.

“Given the profits Johnson & Johnson has made on these lifesaving drugs, the fact that they will not extend the legally required drug pricing discounts to a safety net care provider like AHF is shameful,” added Weinstein.

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