Optum Rx & NABP DDA Lawsuit Update

Optum Rx’s requirement for their network pharmacies to only purchase prescription drug and diabetic testing supplies from Accredited wholesalers has caused significant disruption and controversy since its implementation in August 2016. The requirement spurred two separate lawsuits. The second lawsuit, which continues in full force, has a recent amended complaint – and Pharma Solutions has unique insight into the lawsuit’s developments.

Lawsuit Background

The second lawsuit against Optum Rx over their NABP®

Drug Distributor Accreditation®

(“DDA,” formerly called VAWD®

) requirement was filed on December 14, 2018. The lawsuit was filed 17 days before Optum Rx’s final extension for non-Accredited wholesalers expired on December 31, 2018. Due to it being temporary injunction, and the inherent general importance of timeliness, the case originally began with expedited discovery.

For more information and background on the history of the Optum Rx requirement, please see here.

Lawsuit Update

The recent shift in the lawsuit is clear – now that two of the three plaintiffs have earned NABP DDA, the primary objective is no longer injunctive relief to vacate/preempt the Optum Rx requirement. Instead, the plaintiffs are now after damages and attorney fees – or in other words, money.

The amended complaint can be found here.

Outstanding Discovery

Due to the change in objective, the discovery will have to be performed again as it was initially expedited. The plaintiff’s discovery against the defendants varies – the discovery to be performed by the plaintiffs on the NABP is limited; however, with Optum Rx, discovery will be much broader to include various aspects of the claims, including, but not limited to, anti-competitive aspects.

The discovery to be performed by the defendant’s on the plaintiff will also be limited as plaintiffs will likely only be updating the amounts for damages and attorney fees.

Next Steps

The NABP will likely be filing a Motion to Dismiss as a reply to the amended complaint; however, per our sources, the judge will most likely deny the motion. Instead, the judge asks that parties perform discovery while the NABP files their Motion to Dismiss (as filing will only “prolong the process”).

Lawsuit Future

The future for the lawsuit (and likely settlement by defendants), at this time, seems promising for the plaintiffs.

NABP Timelines

As two of the three plaintiffs earned NABP DDA (VAWD), it highlights issues that NABP has had with timelines. Extensive anecdotal experiences of applicants demonstrate that companies may have to wait up to three (3) years to work through the Accreditation process.

Second Cause of Action New York Public Health Law § 280-c

The Second Cause of Action of the amended complaint (para. 297, page 71) as follows:

Public Health Law § 280-c permits all New York pharmacies to utilize products from any wholesaler distributor, so long as that wholesaler is licensed by the State of New York. The law prohibits PBMs, including OptumRx, from taking adverse action against pharmacies that source inventory from wholesale distributors that are duly licensed as such by the State of New York, including Plaintiffs.

Optum Rx is likely in violation of New York State law, an important state to the Plaintiffs because sales revenue in New York accounts for a range of between 30% to 67% of total sales. Damages stemming from Optum Rx’s violation of state law may account for compensatory damages (awarded to cover the costs of injury) for actual lost sales revenue AND for preventing the growth of the companies. If successful, the case will create precedence for other wholesalers to also recoup losses against Optum Rx – something that could snowball into tens maybe hundreds of millions of dollars – which squarely puts the plaintiffs in the driver’s seat.

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