Today, the Retail Litigation Center (RLC) joined the National Association of Chain Drug Stores (NACDS), the Minnesota Retailers Association and others in an amicus brief filed with the Minnesota Supreme Court. The brief asks the state high court to reverse a decision that through the threat of an influx of litigation imposes tremendous costs on pharmacy operators, jeopardizing access to affordable prescription drugs.
In the case in question, Graphic Communications Local 1B Health & Welfare Fund et al., v CVS Caremark Corporation et al., et al., the lower courts adopted the plaintiffs’ novel interpretation of fraud liability, opening the door for private lawsuits against pharmacies for violations statutes regarding generic drug substitution. The decision imposes an impossible choice on pharmacies: attempt to calculate the cost of acquisition of drugs at the point of sale (nearly impossible due to the practices of the industry, which include retroactive price adjustments and 3rd party negotiations) or subject themselves to costly litigation.
The RLC has been involved on this issue in multiple states, joining with multiple associations to file an amicus brief in State of Michigan v CVS Caremark, et al. This case saw the courts impose similar, costly, disclosure obligations on Michigan pharmacies or risk expensive fraud claims. As in the brief submitted to the Minnesota Supreme Court, the RLC notes that widespread access to generics benefits public health and that complying with this decision would see the costs be passed on to consumers or force pharmacy closures, to the detriment of consumers.
“The obligations created here, while well-intentioned, fail to take into consideration the reality of the industry or the legislative intent of the statutes in question,” said RLC President Deborah White. “Opening the floodgates for private lawsuits, using provisions designed for administrative oversight, will create a hostile business environment where providing affordable medication is equated to committing fraud. The case must be reversed or damages to the healthcare infrastructure in Minnesota are inevitable.”
From the brief filed with the Minnesota Supreme Court:
“When the Substitution Statute was enacted nearly forty years ago, the market for generic prescription drugs did not exist. The availability of generic equivalents was relatively new and most Americans paid full retail rates. Today, generics account for approximately 69% of all prescription drugs dispensed in the United States.”
“What is more, if the pharmacies are forced to bear that increased cost themselves, thereby further reducing their already slim profit margins, some Minnesota pharmacies may not survive. Minnesota consumers would lose pharmacy access and ultimately have to spend more to acquire their prescription drugs.”
The complete brief can be found HERE. The brief was drafted by NACDS and Briggs and Morgan, P.A. attorney Leah Ceee O. Boomsma.
The Retail Litigation Center is a public policy organization that identifies and engages in legal proceedings which affect the retail industry. The RLC, whose members include some of the country’s largest retailers, was formed to provide courts with retail industry perspectives on significant legal issues, and highlight the potential industry-wide consequences of legal principles that may be determined in pending cases.