Specialty Drug Portion of ESI-Medco Antitrust Suit Survives, Plaintiffs Amend Claims

Although many of the anticompetitive claims levied against the ESI-Medco merger did not survive a recent United States District Court ruling, the claim regarding the sale of specialty pharmaceuticals remains intact.

Although many of the anticompetitive claims levied against the ESI-Medco merger did not survive a recent United States District Court ruling, the claim regarding the sale of specialty pharmaceuticals remains intact.

United States District Judge Cathy Bissoon dismissed most of the items presented as anticompetitive in a suit brought by the National Association of Chain Drug Stores (NACDS), National Community Pharmacists Association (NCPA), and 9 retail pharmacies from the state of Pennsylvania against Express Scripts Inc (ESI) and Medco. One of the only claims Bissoon did not dismiss in the 23-page ruling involved unfair market domination for specialty pharmacy medications.

The plaintiffs in the case allege that the PBM’s designation of a drug as specialty “excludes retail community pharmacies from selling this drug to a beneficiary of the defendants’ plans” and it would force a beneficiary to receive this prescription through the defendant’s mail-order service. Additionally, the plaintiffs allege that exclusive distribution agreements would further “create high barriers to new competitors seeking to enter this field.” Judge Bissoon wrote in her ruling, “This product market allegedly becomes even more inaccessible due to Defendant’s ability to use its claims adjudication process to block competitors from filling prescriptions for specialty drugs.”

Judge Bissoon noted that the plaintiff’s definition of “Clinical Specialty Drugs” as “drugs that should be dispensed and managed through a specialty pharmacy because they require specialized storage, control and security, handling, administration, and patient monitoring” is sufficient, even though the definition was challenged by the defendants. She also noted that the other claims from the plaintiff about the effect of the merger on the product market for specialty drugs are valid as well, and let stand the pharmacies' claim that the merger could effectively end competition for the dispensing of specialty drugs that require special handling.

The NCPA and several other independent pharmacies re-filed their complaints on September 10, 2012, which was the last day to submit amended claims. “In addition to including amended claims, the complaint also includes a specialty claim, which is virtually unchanged and which has already survived a motion to dismiss,” said Kevin Schweers, NCPA vice president of public affairs, in an email. “NCPA and the other plaintiffs believe that this merger poses such significant competitive problems for small business community pharmacies and the patients that they serve, that NCPA and the other plaintiffs felt compelled to further pursue the litigation.”

NACDS, as well as 6 of the other original plaintiffs in the suit, are suspending participation in the lawsuit challenging the ESI-Medco merger. “Formally, NACDS filed a Notice of Voluntary Dismissal without Prejudice in the United States District Court for the Western District of Pennsylvania. With this filing, NACDS and member companies preserve their rights to file future claims,” stated an email from NACDS. “NACDS will remain vigilant in evaluating the ramifications of the merger for patient care and for industry competitiveness, and will take any necessary actions to address them.”

To read the amended complaint, click

here.