The article below is one that a specialty pharmacy’s legal counsel might find most interesting. In short, the US District Court ruling below said that Humana could not pursue RICO charges against Biogen and ACS Pharmacy because it did not have standing in the matter. Humana would have needed to be the “purchaser” to have standing and the court deemed it was only the “payer”. Hmmmm
The difference between purchaser vs. payer may be difficult for the non-legal-eagles in our midst to fully fathom. But it does clarify how the courts perceive the manufacturer and the specialty pharmacy in these instances. And, ultimately, specialty pharmacies can face a much bigger legal hill to climb if charged with a RICO violation.
Fortunately for the industry, there have been fewer legal black-eyes related to financial shenanigans by specialty pharmacies in recent years. That’s good for the industry especially in a reactionary legislative environment.
Click here to read the full text of the opinion.
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RICO – Standing – Indirect Purchaser
U.S. District Court
By: Mass. Lawyers Weekly Staff April 6, 2023
Where a plaintiff insurance company has filed a complaint under the Racketeer Influenced and Corrupt Organizations statute alleging that the defendant made unlawful charitable donations to fund patient copays of its multiple sclerosis drugs, the defendant’s motion to dismiss should be allowed because the plaintiff is an indirect purchaser of the pharmaceutical products at issue, so it does not have standing to assert a civil RICO claim.
“This is an action arising out of an alleged scheme to increase the number of prescriptions of drugs used to treat multiple sclerosis (‘MS’) through improper charitable contributions. Plaintiff Humana, Inc. is a health-insurance company. Defendant Biogen, Inc. is a biotechnology company and manufacturer of three different drugs used to treat MS. Defendant Advanced Care Scripts, Inc. (‘ACS’) is a specialty pharmacy company. According to the complaint, Biogen made unlawful donations to different charities to fund patient copays of its MS drugs, thereby increasing the sales of those drugs.
“… Although Humana was the ultimate payor of the prescription drugs at issue — putting to one side the requirement of a patient copay — it did not purchase the drugs directly from Biogen. Instead, it paid pharmacies for the drugs, who had purchased the drugs from wholesalers or distributors (or possibly from Biogen itself). Humana was thus an ‘indirect’ purchaser.
“Under the ‘indirect purchaser rule,’ first developed by the Supreme Court in the antitrust context, only a direct purchaser of goods has standing to assert a claim for violation of the antitrust laws. Every circuit to have considered the issue has held that the rule also applies to civil RICO actions, and that indirect purchasers therefore do not have standing to assert RICO claims. The First Circuit has not yet addressed the question. While there may be practical and policy reasons to question the application of that rule in the health-insurance context, for the reasons that follow, this Court will follow the majority rule. It will therefore dismiss the civil claims for failure to state a claim on that basis. …
“Accordingly, because Humana is an indirect purchaser of the pharmaceutical products at issue in this case, it does not have standing to assert a civil RICO claim. Count 1 will therefore be dismissed.”
Humana, Inc. v. Biogen, Inc., et al. (Lawyers Weekly No. 02-154-23) (34 pages) (Saylor, C.J.) (Civil Action No. 21-11578-FDS) (March 31, 2023).
