USDC Central District of California building with Great Seal of the United States
The 340B prime vendor Apexus asked the federal district court in Los Angeles to dismiss AIDS Healthcare Foundation's claims that Apexus failed and refused to negotiate sub-ceiling discounts on HIV/AIDS drugs.

340B Prime Vendor Apexus Asks Court to Dismiss AIDS Healthcare Foundation’s Breach of Contract Suit

Apexus, the federally contracted 340B prime vendor, asked a federal district judge in Los Angeles on Friday to dismiss AIDS Healthcare Foundation’s lawsuit alleging that Apexus has failed and refused to negotiate sub-ceiling 340B discounts on HIV/AIDS prescription drugs pursuant to its contract with the government.

U.S. District Judge Percy Anderson of the Central District of California has scheduled an April 10 hearing on Apexus’s motion to dismiss.

AHF, the nation’s largest provider of HIV/AIDS medical care, alleges that Apexus’ failure to negotiate sub-ceiling 340B discounts on HIV/AIDS drugs cost it millions of dollars and hurt its ability to deliver safety-net healthcare. AHF asked the court for compensatory damages, and to order Apexus to fulfill is contractual obligations “fairly, in good faith, and without discrimination.”

Apexus’ March 10 reply lists four reasons why Anderson should dismiss AHF’s case:

  • The U.S. Supreme Court’s 2011 decision in AstraZeneca v. Santa Clara held that covered entities like AHF have no right to sue on their own behalf under the 340B statute and that they are not third-party beneficiaries of 340B program agreements such as the 340B prime vendor program agreement between the federal government and Apexus.
  • AHF’s own contract with Apexus, governing AHF’s ability to purchase drugs under 340B, expressly says that Apexus “shall not be liable to [AHF] for any act, or failure to act, in connection with” the 340B prime vendor program agreement.
  • AHF failed in its complaint to offer facts supporting its assertion that Apexus did not provide negotiating services under the 340B prime vendor program agreement and “has instead asserted mere conclusions that are not supported by any alleged facts.”
  • “Even if AHF had a right of action, the court could not grant relief based on Apexus’s alleged failure to negotiate more effectively. Rather, it could only issue an improper advisory opinion and speculate as to alleged harm.”

Nothing in the 340B prime vendor program agreement “obligates Apexus to negotiate prices for [HIV/AIDS] drugs or any particular drug,” Apexus told the court. “AHF’s purported dissatisfaction with Apexus’s negotiating services is not actionable—Apexus is not a guarantor of prices, nor could AHF so allege, and AHF pleads nothing to support its conclusion that Apexus failed to negotiate adequately.”

“AHF effectively asks for a vague advisory opinion that Apexus should ‘do better.’ That is not allowed,” Apexus said.

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