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Tuesday, May 28, 2024 | Back issues
Courthouse News Service Courthouse News Service

Challenge to Drug Claims Rules Booted From 9th

SAN FRANCISCO (CN) - After the California Supreme Court upheld state rules for prescription drug claims processors, the en banc 9th Circuit remanded the case Wednesday.

Section 2527 of the California Civil Code requires processors of prescription drug claims to compile and summarize information on pharmacy fees and to then transmit such information to their clients.

Jerry Beeman led the owners of five California retail pharmacies sued filed class actions in 2002 and 2004 against Anthem Prescription Management and the other processors that had allegedly failed to comply with the reporting requirements.

A federal judge in Riverside dismissed both cases for lack of standing. While those cases were under appeal, some of the pharmacists filed a similarly unsuccessful case against some of the same defendants in Los Angeles Superior Court. The California Court of Appeal affirmed dismissal of that case but declared Section 2727 unconstitutional.

The federal case meanwhile faced additional proceedings after a three-judge panel of the 9th Circuit found that the pharmacists did have standing.

On remand a three-judge panel of the federal trial court would not strike Section 2727 as unconstitutional.

Worried that the contradicting holdings would lead to forum shopping and the inconsistent enforcement of state law, the en banc 9th Circuit sought review by the California Supreme Court.

The state's highest judicial body answered last month that the California rules do implicate speech but that "the compelled disclosures are reasonably related to the Legislature's legitimate objective of promoting informed decisionmaking about prescription drug reimbursement rates."

This led the en banc 9th Circuit on Wednesday to vacate its 2011 opinion and remand the case to the trial court panel with the state high court's reasoning in mind.

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