Michigan High Court Rejects Pharmacy Class Actions

Michigan High Court Rejects Pharmacy Class Actions Photo: Albert Herring via Wikimedia Commons

The Michigan Supreme Court has rejected two class actions and a qui tam action alleging that multiple pharmacies violated Michigan’s law requiring pharmacists to pass savings onto purchasers when fulfilling prescriptions for name-brand drugs with generic versions.

Chief Justice Robert Young Jr. wrote that the plaintiffs failed to adequately plead their cause of action because they tried to extrapolate to all the Michigan defendants the wholesale costs from one Kroger pharmacy in West Virginia. The plaintiffs argued that the Michigan defendants’ wholesale costs were not materially different because their purchasing power was substantially the same as the Kroger chain’s.

“The connection drawn between the West Virginia data and pharmaceutical sales in Michigan is simply too tenuous and conclusory to state a claim for relief,” especially because the heightened pleading standard for fraud requires that those type of claims be “stated with particularity,” Young wrote for the court.

Additionally, the plaintiffs did not pinpoint the transactions in which generic drugs were submitted in the place of name-brand drugs, Young said.

If the plaintiffs’ first claim failed, then their claims that the Michigan Health Care False Claim Act and the Michigan Medicaid False Claim Act had been violated when reimbursement claims were submitted to the state also failed, Young said.

Behind the class actions were third-party payors, the city of Lansing, Dickinson Press Inc., and Scott Murphy, a consumer of prescription medications.

Bringing the qui tam action was Marcia Gurganus, seeking to stand in the shoes of Michigan for the alleged submission of prescription drug claims when generic drugs dispensed to Medicaid beneficiaries instead. Gurganus worked at the Kroger pharmacy from which the plaintiffs obtained their dataset.

The defendants including the CVS, Rite-Aid, Sears, Revco, Target, Wal-Mart and Kroger chains.

Justice Michael Cavanagh, concurring in the result only, said in a separate opinion that the plaintiffs did not meet the heightened pleading standard for fraud because they did not specifically allege a “single occurrence in which defendants dispensed a generic drug as a replacement” for a prescription brand-name drug.

Amaris Elliott-Engel contributes to law.com.

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