ST. LOUIS – A federal judge in St. Louis has ended a lawsuit in which the country's largest pharmacy benefit manager faced allegations of attempted monopolization and fraud.
District Judge Ronnie White at the Eastern District of Missouri on March 14 issued an opinion dismissing a complaint against Express Scripts, the largest pharmacy benefits manager in the United States. Six retail pharmacies sued Express Scripts - Trone Health Services, Reddish Pharmacy, Jabos Pharmacy, Oak Tree Pharmacy, Apex Pharmacy and Amrut Jal - alleging the company uses mandatory customer information and prescription data to forcibly switch customers from the retailers to its own mail-based pharmacies, all without authorization of the retail pharmacies or customers.
White said agreements between Express Scripts and participating retailer pharmacies make it clear the pharmacies are obligated to provide information needed to verify claim submittals. He further said Express Scripts identifies mail service dispensing as one of its service obligations to plan sponsors.
The pharmacies argued Express Script doesn’t live up to its stated agreement to comply with state and federal patient confidentiality laws, and that switching customers without consent constitutes a breach of the contract, even if those customers have generally agreed to receive drugs in the mail.
The pharmacies said the Health Insurance Portability and Accountability Act stipulates those authorizations must specifically identify what information can be used or disclosed, but White said there’s no private cause of action under HIPAA, even under a contract claim. Further, he said the pharmacies can’t control the use of patient information, only the patient can authorize how that data is used.
White also said the agreements allow Express Scripts to use patient data to administer and manage mail dispensing, and he determined that permission allows the company to fill prescriptions through its own mail order pharmacy.
The monopolization claim failed because the pharmacies didn’t prove specific intent to control prices or predatory or anticompetitive conduct. Although the pharmacies argued Express Scripts quintupled its mail order revenues and quadrupled the number of prescriptions filled by mail in just four years, White said the pharmacies didn’t adequately define the relevant market, in terms of either products or geography, and that “nothing about mail order filling of prescriptions is inherently anti-competitive” or guaranteed to adversely affect customers.
White also said the pharmacies didn’t adequately allege fraud. While the pharmacies alleged fraud by omission, White said that wasn’t in play and they should’ve made detailed statements about the allegedly false representations and what Express Scripts ostensibly gained. He similarly scuttled claims of tortious interference, restating that Express Scripts conducted itself in accordance with the agreements it had with retail pharmacies.
Customer lists and information don’t constitute protectable trade secrets by default, White said, and the pharmacies failed to allege what information Express Scripts controls is justifiably secret.
The pharmacies had named as defendants ESI Mail Order Processing, ESI Mail Order Services and Express Scripts Holding Co., but White dismissed complaints against those divisions because he’d already dismissed everything targeted at the primary corporate entity. He further denied the pharmacies’ request for oral argument as moot.