Judge Won’t Certify State Classes on CVS Drug Prices

OAKLAND, Calif. (CN) – A federal judge refused to certify 11 state classes in a national class action accusing CVS Pharmacy of cheating customers.

U.S. District Judge Yvonne Gonzalez Rogers found the plaintiffs had not satisfied predominance, commonality and typicality requirements for certification, and gave them until April 24 to file an amended motion to certify, if they choose.

“Plaintiffs have failed to demonstrate how the class action procedure can resolve common questions, which predominate all the identified transactions. Certification would be inappropriate,” Gonzalez Rogers wrote in the March 21 order denying class certifying and denying other motions to strike as moot.

Lead plaintiff Christopher Corcoran sued CVS in August 2015, claiming it charged insured customers and their insurers up to four times more for generic prescription drugs than it charged uninsured customers.

Corcoran said that by law, the co-pay that CVS charges insured customers cannot exceed its “usual and customary price” — the amount it charges uninsured customers for a prescription. But CVS’s co-pays do exceed that price, he said.

In calculating a customary price, a pharmacy takes into account the most common prices it charges for drugs without insurance. The pharmacy then reports its customary price to insurers, and insurers and patients pay the pharmacy what they owe based on that price, according to the plaintiffs’ motion to certify.

In 2008, CVS launched its Health Savings Pass (HSP) program, a discount program for generic drugs aimed at uninsured patients. When CVS rolled it out, a 90-day supply of a covered drug cost $9.99. Corcoran said that CVS should have used that rate to calculate its customary price, but did not.

In fighting certification, CVS argued that determining customary prices, and which contracts required it to report the HSP price as customary, would require analyzing thousands of individual contracts between it and insurers, because each contract contains a different definition of customary price.

The plaintiffs maintained that the contracts all contained the same definition of customary price.

“Plaintiffs do not persuade,” Gonzalez Rogers wrote on Tuesday. “First, even ignoring contracts that expressly exclude membership programs from their definition of U&C [usual and customary], the showing before the court demonstrates significant variation with how the different contracts define U&C.”

She said several insurance executives have submitted declarations stating that they did not consider the HSP prices to be customary.

Finally, Gonzalez Rogers found that four of the class representatives were not typical of the classes they sought to represent.

CVS had argued that the four representatives were atypical because they did not buy a 90-day supply of drugs, and so paid less than the HSP price.

The plaintiffs said the class representatives paid prorated prices based on the HSP price for 30- and 60-day supplies.

Gonzalez Rogers called that argument “speculative,” and added that the plaintiffs had not submitted a reference price for the prorated drugs. The lack of a reference price, she said, would subject the claims to individual analysis.

The plaintiffs sought to certify 11 classes of CVS customers, in Arizona, California, Florida, Georgia, Illinois, Massachusetts, New Jersey, New York, Ohio, Pennsylvania and Texas.

They are represented by Robert Gilmore with Stein Mitchell Cipollone Beato & Missner; and CVS by Frank Heard with Williams & Connolly, both of Washington, D.C.

Both attorneys declined to comment on Friday.

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