LOS ANGELES (Legal Newsline) - California Attorney General Rob Bonta will get his wish that his lawsuit over insulin prices will be heard in Los Angeles state court, rather than federal court.
Judge Sherilyn Peace Garrett on June 28 remanded the case to Los Angeles Superior Court, where it was first filed by Bonta. He alleges Eli Lilly and several other insulin manufacturers and pharmacy benefit managers, alleging artificial inflation of insulin.
Other defendants include Novo Norsisk, CVS and Express Scripts. They removed the case to federal court earlier this year, claiming a nexus between their alleged actions and actions taken pursuant to a federal officer's directions.
But Bonta included a disclaimer in his complaint that he was not challenging the creation of "custom formularies for a federal officer, such as for any Federal Employee Health Benefits Act or TRICARE governed health benefits plan."
He also did not seek to recover anything paid by the federal government pursuant to those plans. The disclaimer was apparently a good idea, as Garrett wrote that it proved there is no nexus between his case and actions involving a federal officer.
"While the result as to each defendant here may differ regarding whether a sufficient causal nexus has been alleged in the absence of any disclaimer or waiver, to make such a decision would ignore the express allegations made in the complaint," Judge Garrett wrote.
CVS argued the disclaimer was ineffective because it negotiates formularies on behalf of all of its clients jointly, while Express Scripts said the Department of Defense creates the formularies it applies.
The disclaimer's mention of custom formularies for TRICARE (the health care program for active-duty military service members) is thus ineffective, Express Scripts said.
"This appears to rely on an overly narrow interpretation of one portion of the disclaimer, and overlooks the intent of the disclaimer as buttressed by the plaintiff's waiver in the remand motion," Garrett wrote.
"Similarly, (CVS's) indivisibility argument stretches federal officer jurisdiction too far. A number of courts have credited similar types of waivers that seek to disclaim work performed on behalf of government officers while suing private contractors for work performed on behalf of private organizations."
Bonta's suit claims the defendants' excessive price of insulin has affected millions of Californians who suffer from diabetes. The plaintiff alleges that the defendants aggressively raise the list price of insulin in lockstep with each other to artificial levels.
The plaintiff further alleges that the cost of manufacturing insulin is less than $10 per month and that the defendants "obtain significant secret rebates" that are a percentage of the inflated insulin list price in exchange for "favorable placement" on the pharmacy benefit managers' "standard formularies," which incentivizes manufacturers to raise their list prices.
The plaintiff claims the defendants' actions have disproportionately harmed low-income communities, who have higher rates of diabetes and uninsured and whose residents have to choose between their insulin medication or housing and food. The plaintiff also claims the defendants' actions constitute unfair and deceptive practices.