AHF: GSK SUED FOR CHEATING ON PRICING OF AIDS DRUGS

In News by AHF

AHF filed suit in the Superior Court of the State California alleging that GlaxoSmithKline
has failed to provide legally required discounts for HIV drugs.

Drug giant is bound by contractual obligations to sell drugs, including AIDS drugs, to AHF at discounted rates under the 340B federal discount drug program. The purpose of the 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 (September 10, 2013) AIDS Healthcare Foundation (AHF) filed a lawsuit in California against pharmaceutical giant GlaxoSmithKline (GSK) alleging that the company “…failed to fully satisfy its obligations with respect to discounts for drugs it sold to AIDS Healthcare Foundation 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 community healthcare providers such as AHF.

AHF’s lawsuit was filed yesterday in the Superior Court of California, County of Los Angeles, Central District [case #BC520642]. The action against GSK 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.”

According to the lawsuit, AHF is seeking to, “…force GSK to refund/disgorge the money that AHF overpaid it for drugs that should have been furnished to AHF at discounted rates, but were not. AHF is entitled to this relief based on several legal grounds, including statutory, contractual and equitable theories. GSK should not be permitted to effectively refuse to comply with its respective obligations under the law with respect to 340B Program covered drugs without consequence and thereby deprive AHF of funds that it would use to benefit the needy patients it serves.”

“GSK is bound to dispense qualifying drugs to covered entities such as AHF at discounted rates under 340B—something GSK has refused to do for many, many years,” said Michael Weinstein, President of AIDS Healthcare Foundation. “As a safety net provider that serves HIV and AIDS patients, AHF has a right to discounted pricing for the critically needed HIV drugs that keep our patients alive. Federal drug pricing law says so, and manufacturers have legal obligations under law and contract to extend that price to safety net providers like AHF. More recently, GSK has ignored AHF’s attempt to obtain that pricing for drugs that AHF purchased between 2005 and 2013, leaving AHF with a loss of over $2 million—money that should be used to meet the federal drug pricing law’s goal of enabling safety net providers to stretch scarce government resources as far as possible, reaching more eligible patients and providing more comprehensive services.”

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.

“Given the profits GSK has made on these lifesaving drugs, the fact that GSK will not extend legally required discounts to a safety net provider like AHF is intolerable,” added Weinstein.

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