In re: EpiPen Direct Purchaser Litigation

Background

Rochester Drug Co-Operative, Inc., and Dakota Drug, Inc. sued Mylan Inc., Mylan Specialty L.P., and three groups of pharmacy benefit managers: CVS Caremark, Express Scripts, and OptumRx. The plaintiffs brought the case on behalf of a proposed class of pharmaceutical wholesalers. They allege that Mylan obtained and maintained a dominant position in the market for epinephrine auto-injectors by paying bribes and kickbacks to pharmacy benefit managers, which then favored EpiPen. The plaintiffs assert claims under the Racketeer Influenced and Corrupt Organizations Act and Section Two of the Sherman Antitrust Act.

The plaintiffs moved for leave to file a First Amended Consolidated Class Action Complaint. They sought to:

The defendants opposed almost all of the requested amendments but did not oppose adding CVS Caremark Part D Services, L.L.C.

Rule 15 standard

Federal Rule of Civil Procedure 15(a)(2) generally provides that courts should freely allow amendments to pleadings when justice requires. The court explained that leave to amend may be denied for reasons such as undue delay, bad faith, repeated failure to correct earlier defects, unfair prejudice, or futility. An amendment is futile when the proposed pleading could not survive a motion to dismiss for failure to state a claim.

The court found that the plaintiffs had delayed, but that the delay was not undue. They filed the motion on the final day allowed by the pretrial scheduling order, while the parties were still roughly midway through discovery and approximately seven months remained for fact discovery. The court also found no unfair prejudice. Although the amendments would require the defendants to do additional work, the court concluded that the timing allowed the parties to adjust without affecting the trial-ready date.

Previously dismissed corporate defendants

The defendants argued that a stricter standard should apply because five corporate parents had previously been dismissed with prejudice. The court disagreed. It interpreted the stricter standard discussed in the cited appellate decisions as applying when a party seeks to revive an entire action that has been dismissed, not when a party seeks to reassert claims against defendants whose dismissal concerned only part of an ongoing case.

The court therefore applied Rule 15’s liberal amendment standard. The proposed complaint alleged that personnel or management associated with the five corporate defendants negotiated rebates or other payments with Mylan, made formulary or tier-placement recommendations favoring EpiPen, or helped exclude competing epinephrine auto-injectors. The court held that these allegations plausibly alleged the corporate defendants’ involvement in the alleged bribery and kickback scheme and were sufficient to allow the amendments. It also held that the earlier dismissals with prejudice did not prevent rejoining the defendants because the plaintiffs were not presenting the exact same facts and theories.

Futility

The defendants did not formally raise a futility argument, but they asserted that the new allegations remained conclusory. The court treated that argument as a futility challenge but declined to resolve whether the proposed claims would survive a later motion to dismiss. Instead, it allowed the amendment and deferred that issue to the district court’s consideration of any subsequent motions to dismiss.

Disposition

The court granted the plaintiffs’ Motion for Leave to File a First Amended Consolidated Class Action Complaint. It ordered the plaintiffs to promptly file the amended complaint. This order decided whether the plaintiffs could amend their pleading; it did not decide the ultimate merits of the RICO, antitrust, or state-law claims.