The U.S. Court of Appeals for the Third Circuit affirmed a district court's dismissal of a lawsuit challenging drug transaction record practices, ruling that the Drug Supply Chain Security Act does not grant private parties the right to sue for alleged violations.
In *Rxeed LLC v. Caremark LLC* (3d Cir. 2026), the appeals court rejected claims that Caremark violated federal drug tracking requirements when it allegedly refused to accept transaction histories from Rxeed's online pharmaceutical marketplace. The nonprecedential opinion, authored by Circuit Judge Stephanos Bibas, emphasized a fundamental principle of federal litigation: "You cannot sue someone for violating your federal rights unless you have federal rights to violate."
The case centers on the Drug Supply Chain Security Act, which regulates producers and distributors of prescription drugs. Under the law, a drug "dispenser" like a retail drugstore that "transfers ownership" of a drug must "provide the subsequent owner with transaction history" for that drug, according to 21 U.S.C. § 360eee-1(d)(1)(A)(ii). However, the transaction-history requirement does not apply when one dispenser sells a drug "to another dispenser to fulfill a specific patient need."
Rxeed operates a third-party online marketplace that enables retail drugstores to buy and sell drugs, including for specific patient needs. As part of its service, Rxeed requires sellers to provide transaction histories as mandated by federal law. Caremark manages New Jersey's Medicaid prescription-benefits program and processes drugstores' reimbursement claims for serving Medicaid patients.
The dispute arose when retail drugstores seeking reimbursement from Caremark were required to provide drug-purchase histories. Rxeed alleged that Caremark began refusing to accept transaction histories generated through Rxeed's marketplace for reimbursement purposes. The company further claimed that Caremark clawed back reimbursements that had already been made to drugstores using Rxeed's services.
Rxeed filed suit against Caremark, claiming the company's conduct violated the Drug Supply Chain Security Act's transaction history requirements. The plaintiff argued that the federal law granted it rights that Caremark's actions infringed upon.
The U.S. District Court for the District of New Jersey, presiding Judge Michael E. Farbiarz, dismissed Rxeed's claims. The case was then appealed to the Third Circuit, where it was heard by Circuit Judges Stephanos Bibas, Justin R. Porter, and Thomas M. Bove.
In its Feb. 3, 2026 decision, the Third Circuit panel unanimously affirmed the dismissal. Judge Bibas, writing for the court, found that the Drug Supply Chain Security Act contains no language suggesting Congress intended to create private enforcement rights for pharmaceutical marketplace operators like Rxeed.
"Nothing in that law even hints at such rights," Bibas wrote, emphasizing that federal statutes must explicitly or implicitly authorize private causes of action for individuals or companies to pursue enforcement through the courts.
The ruling reflects established precedent regarding implied private rights of action under federal statutes. Courts generally require clear congressional intent to create private enforcement mechanisms, particularly in regulatory schemes where federal agencies are the primary enforcers.
The decision has implications for pharmaceutical industry participants who may seek to enforce federal drug tracking requirements through private litigation. The Third Circuit's ruling suggests that companies believing their competitors or business partners are violating Drug Supply Chain Security Act provisions cannot pursue civil remedies in federal court absent explicit statutory authorization.
The case also highlights ongoing tensions in pharmaceutical reimbursement practices, particularly involving third-party marketplace operators and Medicaid managed care organizations. While Caremark's actions may have economic consequences for companies like Rxeed, the court determined that federal drug safety laws do not provide a litigation pathway for addressing such disputes.
Rxeed's business model depends on facilitating drug transactions between retail pharmacies while ensuring compliance with federal tracking requirements. The company's inability to pursue federal claims against Caremark may force it to explore alternative legal theories or regulatory remedies.
The opinion was designated as nonprecedential under Third Circuit rules, meaning it does not establish binding precedent for future cases. However, the decision provides guidance on how courts may approach similar claims involving private enforcement of pharmaceutical regulations.
Congress enacted the Drug Supply Chain Security Act to enhance the security and integrity of the pharmaceutical supply chain through enhanced tracking and verification requirements. The law primarily relies on federal agency enforcement rather than private litigation to ensure compliance.
The Third Circuit's decision underscores the importance of carefully examining statutory language when determining whether federal laws create private enforcement rights. Courts require clear congressional intent to permit private parties to sue for statutory violations, particularly in complex regulatory frameworks governing industries like pharmaceuticals.
For pharmaceutical companies and marketplace operators, the ruling emphasizes the need to pursue regulatory channels or contractual remedies when addressing alleged violations of federal drug tracking requirements, rather than relying on implied private causes of action under federal statutes.