* Appeals court revives whistleblower lawsuit

* AbbVie ( ABBV ), AstraZeneca ( AZN ), Novartis, Sanofi are the

defendants

* Adventist Health says Medicare and Medicaid were

overcharged

By Jonathan Stempel

March 17 (Reuters) - A U.S. appeals court on Tuesday

revived a whistleblower lawsuit accusing four large drugmakers

of defrauding the federal and state governments out of hundreds

of millions of dollars by overcharging on medications for

low-income and uninsured patients.

In a 3-0 decision, the 9th U.S. Circuit Court of Appeals in

Pasadena, California said AbbVie ( ABBV ), AstraZeneca ( AZN ),

Novartis and Sanofi must defend against

claims they violated the federal False Claims Act through their

involvement in the Section 340B Drug Pricing Program.

Created by Congress in 1992, the program lets medical

providers buy drugs at discounted prices, and at no more than

$0.01 -- known as "penny pricing" -- when the drugs' statutory

ceiling prices fall below zero.

Adventist Health System/West, a Roseville, California-based

nonprofit with more than 440 hospitals and clinics, said many

years of overcharges by the four drugmakers caused Medicare and

Medicaid to pay inflated reimbursements.

It said this stopped when the U.S. Department of Health and

Human Services decided in 2019 to impose large civil fines for

Section 340B pricing violations.

Circuit Judge Roopali Desai wrote for the appeals court that

while Section 340B does not give medical providers a private

right to sue drugmakers for overcharges, they can sue under the

False Claims Act to recover damages for alleged fraud that

causes "financial loss" to the government.

Adventist's claims "belong to the government," and "it does

not matter" that Adventist cannot sue on its own behalf, Desai

wrote.

AbbVie ( ABBV ), AstraZeneca ( AZN ), Novartis, Sanofi and their respective

lawyers declined to comment. Lawyers for Adventist did not

immediately respond to similar requests.

The appeals court returned the case to U.S. District

Judge Dale Fischer in Los Angeles, who dismissed it in March

2024.

The False Claims Act lets whistleblowers sue on behalf of

the government, and share in recoveries.