August 11, 2022

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Rite Assist loses bid to arbitrate drug pricing class motion

A Ceremony Assist retail store at 1841 North Western Avenue is demonstrated at in Los Angeles, California, U.S., January 21, 2020. Photo taken January 21, 2020. REUTERS/Mike Blake

Rite Aid will have to facial area a proposed course action accusing it of fraudulently inflating the prescription drug charges it negotiated with insurance organizations in court, a federal appeals courtroom ruled Friday, denying the pharmacy operator’s bid to ship the case to arbitration.

A unanimous 9th U.S. Circuit Courtroom of Appeals panel uncovered that Rite Aid’s arbitration agreements with the pharmacy gain supervisors (PBMs) that negotiate charges between it and insurance plan organizations do not bind well being plan beneficiaries, like plaintiff Bryon Stafford, affirming a ruling by a lower court.

Ceremony Assist and its attorney Stephanie Schuster of Morgan, Lewis & Bockius did not immediately react to requests for remark. Nor did Andrew Adore of Robbins Geller Rudman & Dowd, a attorney for Stafford.

Stafford sued Ceremony Help in San Diego federal courtroom in 2017, alleging that Rite Help inflated the “regular and customary” charges of prescription medicines that it documented to PBMs.

Standard and customary price ranges are made use of as the basis of the negotiations between pharmacies, PBMs and insurers that decide the costs insurers finally pay. Stafford explained that Rite Aid’s noted selling prices have been greater than the prices it billed clients without having insurance who paid out in cash, which he claimed represented the genuine common and customary selling prices.

As a outcome, quite a few well being system beneficiaries overpaid, because their share of prescription drug fees is based mostly on the rate paid out by the insurer, Stafford claimed. He brought statements beneath California’s Unfair Competition Regulation and Shopper Lawful Cures Act, as properly as frequent legislation unjust enrichment and negligent misrepresentation, and sought to signify a nationwide course and California subclass of equally located people.

Ceremony Assist moved to compel arbitration, arguing that Stafford’s claims ended up intertwined with its contracts with PBMs, which contain arbitration clauses. It said equitable estoppel prevented Stafford from suing in court above promises arising from contracts with arbitration clauses.

U.S. District Choose Anthony Battaglia denied the motion, discovering the statements ended up unbiased of Ceremony Aid’s contracts, and Rite Assist appealed.

Circuit Choose Milan Smith, producing for the panel on Friday, agreed that Stafford’s claims did not occur from Rite Aid’s contracts with PBMs.

“Even if the contracts contained no provision necessitating Ceremony Aid to report the standard and customary price, the simple fact remains that Rite Support did report that details and allegedly purposely inflated it,” the judge wrote. “Ceremony Aid’s obligation not to commit fraud is independent from any contractual needs with the pharmacy benefit professionals.”

Smith was joined by Circuit Judges Sandra Ikuta and District Choose Kathryn Vratil of the District of Kansas, sitting by designation.

The circumstance is Stafford v. Rite Aid Corp, 9th U.S. Circuit Courtroom of Appeals, No. 20-55333.

For Stafford: Andrew Appreciate of Robbins Geller Rudman & Dowd

For Ceremony Support: Stephanie Schuster of Morgan, Lewis & Bockius

Our Criteria: The Thomson Reuters Trust Ideas.

Brendan PiersonBrendan Pierson stories on merchandise legal responsibility litigation and on all parts of wellbeing care legislation. He can be achieved at brendan.pierson@thomsonreuters.com.