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Aids Healthcare Found. v. Douglas

United States District Court, C.D. California

May 3, 2013

AIDS HEALTHCARE FOUNDATION, Plaintiff,
v.
TOBY DOUGLAS, Director of the California Department of Health Care Services, Defendant

As Amended June 18, 2014.

Page 1056

For Aids Healthcare Foundation, Plaintiff: Laura R Boudreau, Thomas Andrew Myers, LEAD ATTORNEYS, Haseeb Omar, AIDS Healthcare Foundation, Los Angeles, CA; Andrew F Kim, Michelman and Robinson LLP, Encino, CA.

For David Maxwell-Jolly, Director of the California Department of Health Care Services, Defendant: Eric D Bates, CAAG - Office of Attorney General of California, Los Angeles, CA; Leslie P McElroy, Malinda Lee, CAAG - Office of Attorney General, California Department of Justice, Los Angeles, CA.

Page 1057

AMENDED FINDINGS OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW IN SUPPORT OF JUDGMENT

MANUEL L. REAL, UNITED STATES DISTRICT JUDGE.

INTRODUCTION

Plaintiff Aids Healthcare Foundation (" Plaintiff" or " AHF" ) initiated this action against Defendant Toby Douglas, Director of the California Department of Health Care Services (" Defendant" or the " Department" ), in response to Section 14105.46 of the California Welfare and Institutions Code (" Section 14105.46" ), which imposed new requirements on prescription drug providers that participate in the 340B program of Section 602 of the Veterans Health Care Act of 1992, codified at Title 42 U.S.C. § 256b. The parties filed cross motions for summary judgment on the Plaintiff's remaining claims. The Court granted, in part, and denied, in part, each party's motion. The Ninth Circuit remanded this case in light of the January 30, 2014 approval of the State Plan Amendment by the Centers for Medicare and Medicaid Services (" CMS" ). Having considered the 2014 CMS approval, in support of its Judgment, the Court makes the following amended findings of fact and conclusions of law:

FINDINGS OF UNCONTROVERTED FACT

1. Plaintiff AHF is a California nonprofit corporation that voluntarily participates in Medi-Cal's 340B program as a provider of health care services and, among other things, furnishes outpatient prescription drugs to Medi-Cal patients.
2. Plaintiff AHF obtains savings on purchases of drugs as a participant of the 340B program.
3. The Department is the single state agency that administers California's Medicaid program, known as Medi-Cal.
4. On July 28, 2009, the Governor signed into law Assembly Bill X4-5 (the Special Session healthcare trailer bill).
5. Section 40 of Assembly Bill X4-5 added Section 14105.46 to the Welfare and Institutions Code.

Page 1058

6. Section 14105.46 requires 340B safety net providers to dispense to Medi-Cal beneficiaries only drugs purchased through the 340B Program.
7. Prior to the enactment of Section 14105.46, 340B safety net providers who also participated in Medi-Cal had the option of purchasing drugs dispensed to Medi-Cal beneficiaries through the 340B program or on the open market.
8. Before Section 14105.46, safety net providers that dispensed 340B drugs for their Medicaid patients would be reimbursed under Welfare & Institutions Code § 14105.45.
9. Under Welfare & Institutions Code § 14105.45(b), pharmacy providers are reimbursed the lower of the estimated acquisition cost of the drug plus a dispensing fee or the pharmacy's usual and customary charge as defined in Welfare and Institutions Code § 14105.455.
10. Welfare & Institutions Code states that pharmacy providers shall be paid at the lesser of their usual and customary charges or the reimbursement rate established under Welfare & Institutions Code § 14105.45(b).
11. The amount reimbursed by Medi-Cal to pharmacy providers under Welfare & Institutions Code § 14105.455 does not depend on the actual acquisition cost of the drugs to pharmacy services providers.
12. Section 14105.46 requires providers that participate in the 340B drug pricing program to dispense only 340B ...

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