State of Wisconsin v. Abbott Laboratories
| Decision Date | 29 September 2005 |
| Docket Number | No. 05-C-408-C.,05-C-408-C. |
| Citation | 390 F.Supp.2d 815 |
| Parties | STATE of Wisconsin, Plaintiff, v. ABBOTT LABORATORIES, Amgen, Inc., Astrazeneca Pharmaceuticals, LP, Astrazeneca, LP, Aventis Pharmaceuticals, Inc., Aventis Behring, LLC., Baxter International, Inc., Bayer Corporation, Boehringer Ingelheim Corporation, Bristol-Myers Squibb Co., Dey, Inc., Gensia Sicor Pharmaceuticals, Inc., Glaxosmithkline, Inc., Johnson & Johnson, Inc., Pfizer, Inc., Pharmacia, Schering-Plough Corporation, Tap Pharmaceutical Products, Inc., Watson Pharmaceuticals, Inc., Ben Venue Laboratories, Inc., Boehringer Ingelheim Pharmaceuticals, Inc., Immunex Corporation, Ivax Corporation, Ivax Pharmaceuticals, Inc., Janssen Pharmaceutical Products, LP, McNeil-PPC, Inc., Merck & Company, Inc., Mylan Laboratories, Inc., Mylan Pharmaceuticals Corporation, Novartis Pharmaceuticals Corporation, Ortho Biotech Products, LP, Ortho-McNeil Pharmaceutical, Inc., Roxane Laboratories, Inc., Sandoz, Inc., Geneva Pharmaceuticals, Inc., Smithkline Beecham Corporation, Teva Pharmaceutical Industries, Ltd., Warrick Pharmaceuticals Corporation and Watson Pharma, Inc., Defendants. |
| Court | U.S. District Court — Western District of Wisconsin |
Mark A. Cameli, Lynn M. Stathas, Reinhart, Boerner, Van Deuren, S.C., Patrick J. Knight, Gimbel, Reilly, Guerin & Brown, Beth J. Kushner, Von Briesen & Roper, S.C., Brian R. Smigelski, Friebert, Finerty & St. John, S.C., Milwaukee, WI, William M. Conley, Roberta F. Howell, Foley & Lardner, Brian E. Butler, Stafford Rosenbaum, LLP, Stephen P. Hurley, Hurley, Burish & Milliken, S.C., Bruce A. Schultz, Coyne Schultz Becker & Bauer, John W. Markson, Bell, Gierhart & Moore, S.C., Lester A. Pines, Cullen, Weston, Pines & Bach, Daniel W. Hildebrand, Dewitt, Ross & Stevens, Donald K. Schott, Quarles & Brady, Earl H. Munson, Boardman, Suhr, Curry & Field, Steven P. Means, Michael Best & Friedrich, LLP, Michael P. Crooks, Peterson, Johnson & Murray, S.C., David J. Harth, Heller Ehrman LLP, Kim Grimmer, Solheim, Billing & Grimmer, S.C., Madison, WI, Douglas B. Farquhar, Hyman, Phelps & McNamara, Washington, DC, Michael R. Fitzpatrick, Brennan, Steil, Basting & MacDougall, Janesville, WI, for Defendants.
This civil action for monetary and injunctive relief appears for the second time in this court. It is one of a number of lawsuits pending in state and federal courts across the country against pharmaceutical manufacturers. The gravamen of the complaint filed by plaintiff State of Wisconsin is that defendant pharmaceutical companies inflated the average wholesale prices of their drugs, thereby violating several provisions of Wisconsin law.
This action was commenced in the Circuit Court for Dane County in June 2004. Defendants removed it to this court in July 2004, arguing that subject matter jurisdiction existed under the diversity statute, 28 U.S.C. § 1332. I disagreed and granted plaintiff's motion to remand. State of Wisconsin v. Abbott Laboratories, et al., 341 F.Supp.2d 1057 (W.D.Wis.2004). Defendants have removed the case to this court a second time, arguing that a recent Supreme Court decision, Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, ___ U.S. ___, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005), demonstrates that this court has jurisdiction under the federal question statute, 28 U.S.C. § 1331.
Presently before the court are three motions filed by plaintiff: a motion to remand, a motion to supplement the record and a motion to file supplemental authority in support of the motion to remand. Plaintiff's motion to supplement the record and motion to file supplemental authority will be granted. Plaintiff's motion to remand will be granted as well. Although this case involves a substantial and disputed question of federal law, it does not involve a federal interest substantial enough to justify the exercise of federal jurisdiction. In addition, defendants' second notice of removal was not filed timely under 28 U.S.C. § 1446(b). Finally, I will grant plaintiff's request for costs and attorney fees.
According to the notice of removal, plaintiff filed an amended complaint in this case on or about November 1, 2004. Defendants attached a copy of the amended complaint to the notice of removal. Notice of Removal, dkt. # 2, Exh. C. For the sole purpose of deciding this motion, I draw the following facts from the amended complaint.
The market for prescription drugs operates roughly as follows. Defendants manufacture drugs and sell them to hospitals, physicians and pharmacies, collectively known as "providers," who in essence resell the drugs to patients when the drugs are administered or prescribed. Providers pay manufacturers directly for the drugs; after a patient receives a drug, the provider is reimbursed by the patient, his insurance company or a government program such as Medicare or Medicaid, collectively known as "payers."
Insurance companies and government payers calculate the rates at which providers are reimbursed on the basis of a drug's "average wholesale price." Defendants set average wholesale prices for each of their drugs. These prices are compiled and published in medical compendiums and are the only prices made available to providers and the public. If the price paid by a provider to the manufacturer is less than the reimbursement the provider receives from the payer, the provider retains the difference, or "spread," as profit. Because providers have substantial influence in deciding which drugs they will prescribe or administer, drug manufacturers are eager to court them. One of the ways defendants market their drugs to providers is by generating large spreads. Defendants have attempted to maximize the spread by publishing false and inflated average wholesale prices for their drugs.
Defendants have succeeded in their unlawful pricing by concealing their scheme from plaintiff and other payers. They sell their drugs to providers in a manner that hides the true price of their drugs, designate sales agreements with providers as trade secrets, charge different prices to different providers for the same drug and hide the true prices of their drugs by providing free drugs and phony grants to providers as a means of discounting the prices.
By publishing false and inflated average wholesale prices and keeping their actual prices secret, defendants have harmed plaintiff, its citizens and private payers in Wisconsin. Plaintiff is a payer under Medicaid, a joint state and federal health care entitlement program. Reimbursements to pharmacies and physicians for drugs covered by Medicaid are calculated by subtracting a fixed percentage from the average wholesale prices. Thus, publication of inflated prices has caused the state to overpay for the drugs it purchases through its Medicaid program.
In addition, many Wisconsin citizens participate in Medicare, a health insurance program funded by the federal government. Medicare consists primarily of two major components, Part A and Part B. Part B is an optional program that provides coverage for some healthcare services not covered by Part A. It is supported by government funds and by premiums paid by individuals who choose to participate. Part B has a limited drug benefit. The federal government pays 80% of the allowable cost of a drug and participants are responsible for the remaining 20%. Because the allowable costs under Part B are calculated on the basis of defendants' inflated average wholesale prices, participants in Wisconsin have paid higher co-payments for their prescription drugs.
Finally, private, Wisconsin-based organizations that pay the prescription drug costs of their members have overpaid for prescription drugs. Because of the complexity of the prescription drug market, these organizations contract with Pharmacy Benefit Managers to handle their prescription drug reimbursements. Pharmacy Benefit Managers assert that they have the bargaining power needed to negotiate the price of drugs with drug manufacturers. However, plaintiff alleges that they have used their power to obtain benefits for themselves in the form of fees and rebates paid by manufacturers. In addition, Pharmacy Benefit Managers benefit from inflated average wholesale prices because they use them to set the reimbursement rates for the private payers they represent.
Plaintiff brings suit on its own behalf and in parens patriae capacity on behalf of the citizens of Wisconsin against defendant pharmaceutical companies. The amended complaint consists of five counts, all arising under Wisconsin law. Counts I and II allege violations of Wis. Stat. §§ 100.18(1) and 100.18(10)(b), which prohibit making false representations with the intent to sell merchandise. Count III alleges a violation of the Wisconsin Trust and Monopolies Act, Wis. Stat. § 133.05. Count IV alleges a claim for fraud on the Wisconsin Medicaid Program, Wis. Stat. § 49.49(4m)(a)(2). Count V states a common law claim for unjust enrichment.
The Judicial Panel on Multidistrict Litigation has transferred many of the average wholesale price lawsuits filed across the country to the United States District Court for the District of Massachusetts for consolidated pre-trial proceedings. In re Pharmaceutical Industry Average Wholesale Price Litigation, MDL No. 1456. Defendants seek to have this action transferred to that court. On August 12, 2005 this court received a copy of a Conditional Transfer Order transferring this case to the District of Massachusetts pursuant to 28 U.S.C. § 1407. However, Rule 1.5 of the Rules of Procedure of the Judicial Panel on Multidistrict Litigation states that the existence of a conditional transfer order "does not affect or suspend orders and pretrial proceedings in the district court in which the action is pending and does not in any way limit the pretrial jurisdiction of that court." See also Illinois Municipal...
To continue reading
Request your trial
-
Hood v. Astrazeneca Pharmaceuticals
...(E.D.Mo. May 23, 2006) (remanding case seeking damages for allegedly excessive reimbursement of Medicaid funds); Wisconsin v. Abbott Labs., 390 F.Supp.2d 815 (W.D.Wis.2005) (remanding to state court suit by state based on state law claims for, inter alia, Medicaid fraud and false representa......
-
Kentucky ex rel. Conway v. Purdue Pharma, L.P. (In re Oxycontin Antitrust Litig.)
...Litig., 457 F.Supp.2d 65 (D.Mass.2006); Pennsylvania v. Tap Pharm. Prods., Inc., 415 F.Supp.2d 516 (E.D.Pa.2005); Wisconsin v. Abbott Labs., 390 F.Supp.2d 815 (W.D.Wis.2005); Minnesota v. Pharmacia Corp., Civil No. 05–1394, 2005 WL 2739297, 2005 U.S. Dist. LEXIS 27638 (D.Minn.2005).2 Althou......
-
Dudley v. Putnam Inv. Funds
...2006); In re Pharmaceutical Indus. Average Wholesale Price Litig., 431 F.Supp.2d 98, 105-08 (D.Mass.2006); Wisconsin v. Abbott Labs., 390 F.Supp.2d 815, 824-25 (W.D.Wis.2005); Commonwealth v. Tap Pharm. Prods., Inc., 415 F.Supp.2d 516, 526-27 (E.D.Pa. 2005); Morsani v. Major League Baseball......
-
Hawaii v. Abbott Laboratories, Inc.
...denied without prejudice Defendants' Joint Motion to Stay Proceedings Pending Transfer by the JPML. See, e.g., State v. Abbott Labs., 390 F.Supp.2d 815, 819 (W.D.Wis.2005) motion to stay under nearly identical facts). The Magistrate found that "[t]his is the best forum in which to resolve t......
-
Clarity and Clarification: Grable Federal Questions in the Eyes of Their Beholders
...adopting the Holmes view of jurisdiction). 141. Id. at 317 (majority opinion). 142. Id. at 318; see also Wisconsin v. Abbott Labs., 390 F. Supp. 2d 815, 821 (W.D. Wis. 2005) (describing how Grable "backed away from [Merrell Dow's] approach"); cf. id. ("The [Grable] Court stated further that......