Express Scripts 2013 Annual Report Download - page 32

Express Scripts 2013 Annual Report 32
Plaintiffs allege that ESI and the other defendants failed to comply with statutory obligations under California Civil
Code Section 2527 to provide California clients with the results of a bi-annual survey of retail drug prices. On July
12, 2004, the case was dismissed with prejudice on the grounds that the plaintiffs lacked standing to bring the action.
On June 2, 2006, the United States Court of Appeals for the Ninth Circuit reversed the district court's opinion on
standing and remanded the case to the district court. The district court’s denial of defendants’ motion to dismiss on
first amendment constitutionality grounds was appealed to the Ninth Circuit as discussed further below. Plaintiffs
have filed a motion for class certification, but that motion has not been briefed pending the outcome of the appeal. On
July 19, 2011, the Ninth Circuit affirmed the district court’s denial of defendants’ motion to dismiss. On August 16,
2011, ESI filed a petition for rehearing en banc requesting the Ninth Circuit reconsider its ruling on defendants’
motion to dismiss, which was granted on October 31, 2011. On June 6, 2012, an en banc panel of the Ninth Circuit
Court of Appeals issued a decision certifying the question of constitutionality of California Civil Code Section 2527
to the California Supreme Court, requesting the Supreme Court of California to consider the issue and make a ruling.
On July 18, 2012, the California Supreme Court granted the certification request. On December 19, 2013, the
California Supreme Court held that California Civil Code Section 2527 does not infringe upon state constitutional free
speech protections. On December 23, 2013, the Company provided notice of that decision to the United States Court
of Appeals for the Ninth Circuit and requested the Ninth Circuit to decide whether California Civil Code Section 2527
violates the federal constitution’s free speech protections. On January 14, 2014, plaintiffs filed a motion requesting the
Ninth Circuit to strike our request to rule on the federal constitutional issues and instead adopt the California Supreme
Court’s decision. On January 29, 2014, the Ninth Circuit en banc panel issued a ruling vacating the prior panel
opinion and remanded the case to the original Ninth Circuit three-judge panel to either consider the federal
constitutional issues or remand the case to the district court.
• In re: PBM Antitrust Litigation (United States District Court for the Eastern District of Pennsylvania, Civ. No. 2:06-
MD-1782-JF). In August 2003, Brady Enterprises, Inc., et al. v. Medco Health Solutions, Inc. (United States District
Court for the Eastern District of Pennsylvania, Civ. No. 2:03-4730) was filed against Merck & Co., Inc. (for purposes
of this Item 3,“Merck”) and Medco Health Solutions, Inc. (for purposes of this Item 3, “Medco”). Plaintiffs moved for
class certification to represent a national class of retail pharmacies and allege that Medco conspired with, acted as the
common agent for, and used the combined bargaining power of plan sponsors to restrain competition in the market for
the dispensing and sale of prescription drugs. Plaintiffs allege that, through conspiracy, Medco has engaged in various
forms of anticompetitive conduct including, among other things, setting artificially low pharmacy reimbursement
rates. Plaintiffs assert claims for violation of the Sherman Act and seek treble damages and injunctive relief. North
Jackson Pharmacy, Inc., et al. v. Medco Health Solutions, Inc., et al. (United States District Court for the Northern
District of Alabama, Civil Action No. 2:06-MD-1782-JF), consolidated with North Jackson Pharmacy, Inc., et al. v.
Express Scripts, Inc., et al. (United States District Court for the Northern District of Alabama, Civil Action No.
CV-03-B-2696-NE) (filed October 1, 2003). This case purports to be a class action against ESI and Medco on behalf
of independent pharmacies within the United States. The complaint alleges that certain of ESI’s and Medco’s business
practices violate the Sherman Antitrust Act. Plaintiffs seek unspecified monetary damages (including treble damages)
and injunctive relief. Plaintiffs’ motion for class certification against ESI and Medco was granted on March 3, 2006.
ESI filed a motion to decertify the class on January 16, 2007, which has been fully briefed and argued. The case
remained dormant until April 19, 2011, when it was reassigned to a new judge and the parties were ordered to submit
supplemental briefing on the issue of class certification. Supplemental briefing was completed on August 26, 2011.
Oral argument of all the class certification motions was heard on January 26, 2012, and the court took ESI’s motion
under submission. Mike’s Medical Center Pharmacy, et al. v. Medco Health Solutions, Inc., et al. (United States
District Court for the Northern District of California, Civ. No. 3:05-5108) (filed December 9, 2005) was filed against
Medco and Merck. Plaintiffs seek to represent a class of all pharmacies and pharmacists that contracted with Medco
and California pharmacies that indirectly purchased prescription drugs from Merck and make factual allegations
similar to those in the Alameda Drug Company action discussed below. Plaintiffs assert claims for violation of the
Sherman Act, California antitrust law and California law prohibiting unfair business practices. Relief demanded
includes, among other things, treble damages, restitution, disgorgement of unlawfully obtained profits and injunctive
relief. The Brady Enterprises, North Jackson Pharmacy, and Mike’s Medical Center Pharmacy cases were transferred
to the United States District Court for the Eastern District of Pennsylvania before the Judicial Panel on Multi-District
Litigation on August 24, 2006.
• Alameda Drug Company, Inc., et al. v. Medco Health Solutions, Inc., et al. (Case No. CGC-04-428109, Superior Court
of San Francisco, California) (filed January 20, 2004). Plaintiffs filed this lawsuit against Medco and Merck seeking
certification of a class of all California pharmacies that contracted with Medco and that indirectly purchased
prescription drugs from Merck. Plaintiffs allege, among other things, that since at least the expiration of a 1995
consent injunction entered by the United States District Court for the Northern District of California, Medco failed to
maintain an Open Formulary (as defined in the consent injunction), and that Medco and Merck failed to prevent
nonpublic information received from competitors of Medco and Merck from being disclosed to each other. Plaintiffs