Park Irmat Drug Corp. v. Express Scripts Holding Co.
Decision Date | 21 February 2018 |
Docket Number | Case No. 4:17–CV–0979 RLW |
Citation | 310 F.Supp.3d 1002 |
Parties | PARK IRMAT DRUG CORP., Plaintiff, v. EXPRESS SCRIPTS HOLDING COMPANY and Express Scripts, Inc., Defendants. |
Court | U.S. District Court — Eastern District of Missouri |
Elizabeth Taras, Pro Hac Vice, David Scupp, Matthew L. Cantor, Constantine Cannon LLP, New York, NY, Richard B. Korn, Fox Galvin, LLC, St. Louis, MO, for Plaintiff.
Christopher A. Smith, Jason Husgen, Sarah C. Hellmann, Husch Blackwell, LLP, St. Louis, MO, Evan R. Kreiner, Pro Hac Vice, James A. Keyte, Pro Hac Vice, Luke T. Taeschler, Pro Hac Vice, Matthew Michael Martino, Pro Hac Vice, Patrick G. Rideout, Pro Hac Vice, Peter S. Julian, Pro Hac Vice, Robert A. Fumerton, Pro Hac Vice, Skadden and Arps, New York, NY, for Defendants.
This case is before the Court on the motion of Express Scripts Holding Company and Express Scripts, Inc., to dismiss for failure to state a claim the eight-count complaint filed against them by Park Irmat Corp. For the reasons set forth below, the motion will be granted.
Accepting as true the allegations in the complaint, see Tension Envelope Corp. v JBM Envelope Corp., 876 F.3d 1112, 1116 (8th Cir. 2017), the following gave rise to this action.
Express Scripts Holding Company and Express Scripts, Inc. (collectively referred to in the complaint as "Express Scripts") administer pharmacy benefits for third parties and also own and operate a mail-order pharmacy. (Compl. ¶¶ 1, 18; ECF No. 1.) Express Scripts is the largest pharmacy benefits manager ("PBM") in the United States, with over 97 percent of all retail pharmacies participating in its network. (Id. ¶ 17.) A PBM "manage[s] the pharmacy benefits for health plans and self-insured entities, negotiate[s] drug discounts with pharmaceutical manufacturers, and develop[s] ... lists of drugs approved for reimbursement." (Id. ¶ 28.) The decision of which PBM to use is made by patients' health insurance plans, which are usually chosen by patients' employers. (Id. ¶ 29.) "For a pharmacy that is not owned by a PBM to operate successfully, it is essential for the pharmacy to participate in all of the largest PBMs' networks, including Express Scripts'." (Id. ¶ 30.) To do so, independent pharmacies either contract directly with PBMS or indirectly through the pharmacy's agent, usually a Pharmacy Services Administrative Organization ("PSAO"). (Id. ¶ 31.)
Park Irmat Corp. ("Irmat"), a New York-based pharmacy in business since 1978, began concentrating on dermatological pharmaceuticals in 2013. (Id. ¶ 34–35.) "As Irmat's dermatology business began to flourish, Irmat agreed to participate in patient assistance programs sponsored by leading drug manufacturers." (Id. ¶ 36.) Under such a program, the manufacturer covers a portion of the patient's insurance co-payment, thereby "allow[ing] patients to obtain medications that their doctors prescribe without having to make burdensome ... co-payments ...." (Id. ) Participation in these programs provided Irmat with the "opportunity to significantly expand its business." (Id. ) "[The] manufacturers provided Irmat with marketing channels and a potential customer base that extended nationwide." (Id. ¶ 37.) Consequently, (Id. ) "From 2012 to 2015, Irmat's business grew exponentially, both in revenue and geographic scope." (Id. ) Its staff drew from 20 employees in 2012 to a high of 208. (Id. ) Also in 2012, Irma enrolled with a PSAO, AccessHealth, thereby gaining access to over 100 payors' pharmacy networks, including Express Scripts. (Id. ¶ 40.)
(Compl. Ex. 3 at 4, 5, 8, 12.) Irmat was identified in the Agreement as the Pharmacy. (Id. at 3.) No pharmacies were listed on the Exhibit B form. (Id. at 16.)
In July 2015, Irmat was required by ESI to submit a re-credentialing application. (Compl. ¶ 44 & Ex. 1.) This application included eight practice types. (Ex. 1. at 6, 22.) Irmat checked "Open Door Retail/Community" and "Mail Order." (Id. ) The former was 35 percent of its business; the latter was 65 percent. (Id. ) Of the mail order business, 5 percent was local and 95 percent was out-of-state. (Id. ) The application also asked, among other things, the names and license numbers of the pharmacists, the Drug and Enforcement Administration and the Medicaid license numbers of the pharmacy, the hours of operation, whether the pharmacy was an open-door pharmacy that filled prescriptions for walk-in customers, whether the pharmacy had been the subject of any disciplinary or legal action, and whether the pharmacy provided any compounding services. (Id. at 6–12, 22–30.) In response to a question whether the pharmacy had previously participated in an ESI or Medco1 pharmacy network, Irmat replied it had as of June 2013. (Id. at 23.) The completed application was submitted on July 31, 2015. (Id. at 18, 30.)
On August 7, ESI sent Irmat a two-sentence email. (Compl. ¶ 45 & Ex. 2 at 2.) The subject was "Express Scripts credentials approved" and the signatory was "Express Scripts Provider Credentialing." (Ex. 2 at 2.) The first sentence read: "We are pleased to inform you that your recently submitted credentials have been reviewed and you are approved to continue in the Express Scripts Holding Company pharmacy networks." (Id. ) The other sentence read: "To access member and claims information, Payer Sheets and regulatory information register at our Pharmacist Resource Center." (Id. ) It was sent from an email box that did not receive emails but had the name of "Ingrid Dominguez" at the top. (Id. ) There is no indication of what position at Express Scripts Ms. Dominguez held; she did not sign the Agreement. (Id. ; Compl Ex. 1–3 at 14.)
Relying on the first sentence, "Irmat made substantial investments in its mail-order business," including "hir[ing] scores of employees, construct[ing] a multi-million dollar facility in New York," and spending "considerable time and resources to obtain" two pharmaceutical industry accreditations. (Id. ¶ 46.)
In May 2016, "Express Scripts sent Irmat a cease-and-desist letter." (Id. ¶ 47.) The primary infraction allegedly committed by Irmat "was dispensing medications to Express Scripts members by mail." (Id. ) "Express Scripts' letter wrongly claimed that Irmat misrepresented the nature of its pharmacy operations." (Id. ) Other alleged infractions included "fail[ing] to use its best efforts to achieve formulary compliance" and discounting member copayments. (Id. ¶ 48–49.) The latter apparently referred to the co-payment assistance programs Irmat participated in with drug manufacturers. (Id. ¶ 49.) Both allegations were incorrect. (Id. ¶ 48–49.)
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