948 F. Supp. 2d 338
S.D.N.Y.2013Background
- This is a RICO/antitrust case involving health insurers and branded drug manufacturers over co-pay subsidy programs for Abilify (aripiprazole).
- BMS and Otsuka allegedly provide co-pay subsidies (Abilify Savings Card) administered by McKesson to reduce patients’ out-of-pocket costs and steer usage toward Abilify.
- Plaintiffs DC 37 and Sergeants pursue claims that the subsidy program undermines insurers’ cost-sharing provisions and increases plan costs, while concealing subsidization from plans and providers.
- The defendants allegedly control price benchmarks (WAC/AWP) and use mail and wires to process subsidies and report prices.
- Complaint asserts three RICO predicate theories (misrepresentation, waiver, benchmark) and a separate Robinson-Patman Act commercial bribery count, all tied to the subsidy scheme.
- Court granted in part and dismissed with prejudice most RICO theories, granting leave to amend the benchmark theory only.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the misrepresentation and waiver theories viable under Rule 9(b)? | DC 37/Sergeants contend misrepresentations/omissions at point of sale and routine waivers defraud. | BMS/Otsuka argue no deception, no contractual duty to disclose, and no fiduciary relationship. | Misrepresentation and waiver theories dismissed with prejudice. |
| Is the benchmark theory (price benchmarking fraud) plead with sufficient particularity? | Plaintiffs allege control of AWP/WAC and misleading benchmarks to inflate payments. | Complaint is vague about WAC/AWP definitions and relationships, lacks specifics. | Benchmark theory dismissed without prejudice; leave to amend within 60 days. |
| Can Plaintiffs maintain a RICO claim based on other predicate acts under mail/wire fraud? | Plaintiffs rely on at least two predicate acts to form a pattern. | Defendants challenge sufficiency and particularity under Rule 9(b). | RICO claims based on mail/wire fraud dismissed; with prejudice as to misrepresentation/waiver; benchmark left open. |
| Does the Robinson-Patman Act commercial bribery claim survive? | Insurers claim subsidies to insureds breach § 2(c) by bribing buyers (insureds). | No fiduciary breach; insureds not agents/intermediaries; no buyer-seller misalignment. | Commercial bribery claim dismissed; no fiduciary/agency relationship; no proper buyer-seller posture. |
Key Cases Cited
- SmileCare Dental Grp. v. Delta Dental Plan of California, Inc., 88 F.3d 780 (9th Cir.1996) (contract focus; waivers exist but not here; not per se fraud.)
- Kennedy v. Connecticut Gen. Life Ins. Co., 924 F.2d 698 (7th Cir.1991) (co-pay waiver context; contractual duties control outcome.)
- Blue Tree Hotels Inv. (Canada), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212 (2d Cir.2004) (section 2(c) reach includes commercial bribery in some contexts.)
- Dayton Superior Corp. v. Marjam Supply Co., Inc., No. 07 Civ. 5215, 2011 WL 710450 (E.D.N.Y.2011) (discusses scope of § 2(c) and commercial bribery sense.)
- McLaughlin v. Anderson, 962 F.2d 187 (2d Cir.1992) (Rule 9(b) pleading standard for fraud claims.)
- Iqbal v. Ashcroft, 556 U.S. 662 (Supreme Court 2009) (plausibility standard for fed. pleadings.)
- Twombly v. Bell Atlantic Corp., 550 U.S. 544 (Supreme Court 2007) (pleading must show plausible claim.)
- World Wrestling Entm’t, Inc. v. Jakks Pac., Inc., 425 F. Supp. 2d 484 (S.D.N.Y.2006) (articulates complexity of § 2(c) drafting and bribery reach.)
- United Magazine Co. v. Murdoch Magazines Distribution, Inc., 146 F. Supp. 2d 385 (S.D.N.Y.2001) (discussion of commercial bribery and fiduciary duty.)
- United Magazine Co., Inc. v. Curtis Circulation Co., 279 Fed. Appx. 14 (2d Cir.2008) (affirmation related to related bribery principles.)