Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Precision Rx Compounding, LLC v. Express Scripts Holding Co.

United States District Court, E.D. Missouri, Eastern Division

August 24, 2016




         This matter is before the Court on the motion of defendants Express Scripts Holding Company and Express Scripts, Inc. (collectively, “Express Scripts”) to dismiss plaintiffs' first amended complaint. Plaintiffs have responded in opposition, and the issues are fully briefed.

         I. Background

         Plaintiffs are six individual compounding pharmacies. Express Scripts is a pharmacy benefit manager (PBM) that contracts with health plan administrators and insurance payors to manage pharmacy benefit plans and to facilitate the delivery of prescription drugs to health plan members and other beneficiaries. The complaint alleges a conspiracy between the nation's four largest PBMs-Express Scripts, CVS Health Corporation, OptumRx, Inc., and Prime Therapeutics, LLC-to jointly boycott compounding pharmacies and eliminate plaintiffs from the market by ending insurance coverage for compounded prescription medications in violation of the Sherman Act, 15 U.S.C. § 1, and state antitrust laws in Florida, Texas and Virginia. Plaintiffs also assert that Express Scripts' conduct constitutes unfair competition and tortious interference with business relations under Florida, Missouri, Texas and Virginia common law.

         To eliminate competition from compounding pharmacies, plaintiffs allege that Express Scripts and its co-conspirators agreed to: (1) engage in a campaign of misleading statements impugning the safety and efficacy of compounded drugs through communications to patients or doctors; (2) drastically reduce the revenues compounding pharmacies would be reimbursed for prescribed compounded drugs by eliminating any coverage or denying claims for compounded medications, even when no changes were made to underlying health plans; (3) orchestrate onerous procedural and administrative obstacles for the compounding pharmacies to fill prescriptions and obtain reimbursement; (4) conduct abusive audits of compounding pharmacies on claims the PBMs had approved many months earlier and then withhold reimbursement payable to compounding pharmacies on unrelated claims; (5) restrict or eliminate the use of mail-order delivery of compounded drugs; and (6) completely remove pharmacies from the networks by terminating the provider agreements without cause or on a pretextual basis. Plaintiffs claim that Express Scripts and its co-conspirators agreed to boycott individual compounding pharmacies so they could shift the fulfillment of compounded prescriptions to pharmacies in which they have an economic interest. Defendants move to dismiss the complaint, contending that plaintiffs have not pled sufficient allegations to support their claims.

         II. Legal Standard

         The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal sufficiency of the complaint. Fed.R.Civ.P. 12(b)(6). The factual allegations of a complaint are assumed true and construed in favor of the plaintiff, “even if it strikes a savvy judge that actual proof of those facts is improbable.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) (citing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 n.1 (2002)); Neitzke v. Williams, 490 U.S. 319, 327 (1989) (“Rule 12(b)(6) does not countenance . . . dismissals based on a judge's disbelief of a complaint's factual allegations.”); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (stating that a well-pleaded complaint may proceed even if it appears “that a recovery is very remote and unlikely”). The issue is not whether the plaintiff will ultimately prevail, but whether the plaintiff is entitled to present evidence in support of his claim. Scheuer, 416 U.S. at 236. A viable complaint must include “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see id. at 563 (stating that the “no set of facts” language in Conley v. Gibson, 355 U.S. 41, 45-46 (1957), “has earned its retirement”); see also Ashcroft v. Iqbal, 556 U.S. 662, 678-84 (2009) (holding that the pleading standard set forth in Twombly applies to all civil actions). “Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.

         III. Discussion

         A. Antitrust Claims

         Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States.” 15 U.S.C. § 1.[1] To maintain a successful § 1 action, plaintiffs must show “(1) that there was a contract, combination, or conspiracy, i.e., an agreement or concerted action toward ‘a common goal, ' (2) that the agreement ‘unreasonably' restrains trade . . . and (3) that the restraint affected interstate commerce.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 632-33 (9th Cir. 1987) (internal citations omitted) (summarizing Supreme Court doctrine). The first element of a § 1 case requires that defendants “had a conscious commitment to a common scheme designed to achieve an unlawful objective.” Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 768 (1984). The second element, unreasonable restraint of trade, can be established under either a per se rule of illegality or a rule of reason analysis. E.g., FTC v. Ind. Fed'n of Dentists, 476 U.S. 447, 457-58 (1986). If a court determines that the challenged behavior falls within the discrete category of conduct that is illegal per se, a plaintiff need not prove its anticompetitive effects. Flegel v. Christian Hosp., Ne.-Nw., 4 F.3d 682, 686 (8th Cir. 1993).

         Defendants argue that plaintiffs have failed to adequately allege that Express Scripts agreed with other PBMs to boycott plaintiffs or other compounding pharmacies. Defendants contend that the alleged parallel conduct of other PBMs following Express Scripts' announcement of its compound management solution is insufficient to support plaintiffs' conspiracy claims. Defendants also claim that the PBMs' common perceptions of the market provide an obvious, non-collusive alternative explanation for their alleged parallel behavior-that the goal and effect of their conduct was to reduce the costs of compounded pharmaceuticals that their third-party payor clients would be forced to bear.

         To state a conspiracy claim under § 1 of the Sherman Act, plaintiffs must allege concerted, as opposed to unilateral, action. Willman v. Heartland Hosp. E., 34 F.3d 605, 610 (8th Cir. 1994). “Proof of concerted action requires evidence of a relationship between two or more legally distinct persons or entities.” Id. (citing Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 769 (1984)). “[T]he antitrust plaintiff should present direct or circumstantial evidence that reasonably tends to prove that the [defendant] and others had a conscious commitment to a common scheme designed to achieve an unlawful objective.” Monsanto, 465 U.S. at 764 (quotations and citation omitted). “[I]t is axiomatic that the typical conspiracy is ‘rarely evidence by explicit agreements, ' but must almost always be proved by ‘inferences that may be drawn from the behavior of the alleged conspirators.'” ES Dev., Inc. v. RWM Enters., Inc., 939 F.2d 547, 553-54 (8th Cir. 1991) (quoting H.L. Moore Drug Exch. v. Eli Lilly & Co., 662 F.2d 935, 941 (2d Cir. 1981)).

         Allegations of parallel conduct and a conclusory assertion of a conspiracy alone will not suffice to state a plausible conspiracy claim under § 1 of the Sherman Act. Twombly, 550 U.S. at 556. However, “[i]t is possible to infer the existence of an agreement from consciously parallel conduct if the parallelism is accompanied by substantial additional evidence-often referred to as the ‘plus factors.'” Minn. Ass'n of Nurse Anesthetists v. Unity Hosp., 5 F.Supp.2d 694, 704 (D. Minn. 1998) (quoting In re Potash Antitrust Litig., 954 F.Supp. 1334, 1350 (D. Minn. 1997)); see Twombly, 550 U.S. at 556-57 (“[W]hen allegations of parallel conduct are set out in order to make a § 1 claim, they must be placed in a context that raises a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action.”). Illustrative plus factors courts have identified include: “(1) a common motive to conspire, (2) evidence that shows that the parallel acts were against the apparent individual economic self-interests of the alleged conspirators, and (3) evidence of a high level of interfirm communications.” Mayor & City Council of Balt. v. Citigroup, Inc., 709 F.3d 129, 136 (2d Cir. 2013); see also In re Musical Instruments & Equip. Antitrust Litig., 798 F.3d 1186, 1194 (9th Cir. 2015) (“[P]lus factors are economic actions and outcomes that are largely inconsistent with unilateral conduct but largely consistent with explicitly coordinated action.”).

         Here, the complaint alleges plus factors in combination with parallel conduct to support an inference that defendants agreed with other PBMs to jointly boycott plaintiffs. As to parallel conduct, the complaint describes a combination of techniques defendants and their co-conspirators allegedly all used for the unified purpose of eliminating plaintiffs and other independent compounding pharmacies from the market. See SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412, 427 (4th Cir. 2015) (“A plaintiff establishes parallel conduct when it pleads facts indicating that the defendants acted ‘similarly.'” (quoting Petruzzi's IGA Supermarkets, Inc. v. Darling-Del. Co., Inc., 998 F.2d 1224, 1243 (3d Cir. 1993))); Hyland v. HomeServices of Am., Inc., 771 F.3d 310, 320 (6th Cir. 2014) (considering whether the defendants' actions were “uniform”). Specifically, plaintiffs allege that, beginning in the summer of 2014, each of the co-conspirators drastically increased the rejection rates for claims submitted for compounded medicines, sent misleading letters to patients and doctors regarding the lack of FDA approval for compounded medicines, created significant, meritless obstacles for compounding pharmacies to receive ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.