In a unanimous and concise fashion, the U.S. Supreme Court last week upheld in Astra USA Inc. v. Santa Clara County the federal government’s supremacy over the Medicaid contracting process.   The Justice Ginsburg-penned opinion reversed the U.S. Court of Appeals for the Ninth Circuit, holding that neither Section 340B of the Public Health Services Act (PHS Act) nor the Pharmaceutical Pricing Agreement (PPA) signed by Medicaid program participants empower health care facilities to sue drug companies for alleged overcharging. Only the federal HHS Secretary possesses law enforcement powers in such situations, the Court found.

The Court’s ruling obviously has significant direct impacts on Medicaid participants and the pharmaceutical companies who would have been subject to endless federal court challenges had the Ninth Circuit’s decision been upheld.  But Astra USA advances several important principles which resonate beyond the immediate case: