Calling the defendants’ claims supporting their motions to dismiss “throw away” arguments, the plaintiffs in a class-action alleging that multiple pharmacy benefit managers (PBMs) and drug manufacturers have been operating a kickback and insulin price-fixing scheme filed an opposition to the motions Monday in the District of Delaware.
Plaintiffs FWK Holdings LLC and Professional Drug Company Inc. are the lead plaintiffs in the Nov. 6, 2020, first amended complaint (FAC) of a suit claiming that one group of defendants, the PBMs — which include CVS Health Corporation, UnitedHealth Group Inc., and Optum Inc., among others — solicited kickbacks from the manufacturer defendants — Eli Lilly and Company, Sanofi-Aventis U.S. LLC, and Novo Nordisk Inc. — who paid the PBMs to include insulin drugs Levemir, NovoLog, Lantus, and Humalog on health plan providers’ “formularies.” The formularies “determine whether and to what extent the nation’s health benefit providers pay for their insureds to receive life sustaining insulins,” according to the FAC. The FAC further alleged that the defendants worked in concert to fix the insulin drugs’ prices at “supra-competitive levels,” all in violation of the Sherman Antitrust Act, Robinson-Patman Act, and Racketeer Influenced and Corrupt Organization Act (RICO).
Law Street Media reported that both groups of defendants moved to dismiss on Jan. 14, arguing that the plaintiffs did not sufficiently allege their claims and failed to show causation between the allegations and the purported injury.
In their opposition to the motions to dismiss, the plaintiffs posit that the alleged kickbacks crossed the “buyer-seller line,” which the defendants argued the plaintiffs did not properly plead in the FAC and which is necessary to state a claim under the Robinson-Patman Act.
“In pressing this argument, Defendants ignore the ‘guiding principle of antitrust law … that substance and true competitive function control rather than (the) form’ of the transaction,” the opposition argues, citing Drug Mart Pharmacy Corp. v. American Home Products Corp. “Following this maxim, ‘a chorus of judicial opinion has proclaimed that when insurers purchase health services and pharmaceuticals for the benefit of their members, they are treated like purchasers under the antitrust laws.’”
Supporting their Sherman Act claims, the plaintiffs push back against the defendants’ argument that “competition is as plausible an explanation for Defendants’ conduct as a conspiracy and that parallel price increases, in and of themselves, are not enough from which an antitrust conspiracy can be inferred,” noting that the defendants all were trade association members, allegedly giving them opportunity to conspire, and that “(c)ourts have viewed analogous circumstances as supporting a plausible inference of conspiracy.”
Regarding the causational injury of the defendants’ alleged conduct, the plaintiffs argue that “(p)aying more to purchase a product as a result of an antitrust violation is a ‘quintessential antitrust injur(y).’” On the RICO claims, the defendants also had contended that the plaintiffs did not plead a direct injury, but the plaintiffs disagree, arguing that “the raising of list prices was not an independent action outside of the RICO schemes, but instead was the means of accomplishing the schemes’ goals” and that, like in the alleged kickback scheme, “(t)he direct consequence … was that Plaintiffs and other Class members would pay higher prices,” according to the opposition.
Cohn Lifland Pearlman Herrmann & Knopf LLP, Roberts Law Firm PA, Barrett Law Group PA, NastLaw LLC, Kohn, Swift & Graf PC, the Law Offices of Michael Fishbein, and Neal & Harwell PLC are representing the plaintiffs. The PBM defendants are represented by O’Toole Scrivo LLC, Alston & Bird LLP, Marino, Tortorella & Boyle PC, and Williams & Connolly LLP, and the manufacturer defendants are represented by Reed Smith LLP, Covington & Burling LLP, Walsh Pizzi O’Reilly Falanga LLP, Jones Day, Gibbons PC, and Davis Polk & Wardwell LLP.
