In re: EpiPen Direct Purchaser Litigation

Background

Plaintiffs Rochester Drug Co-Operative, Inc., and Dakota Drug, Inc., are wholesalers that buy pharmaceuticals directly from manufacturers. They alleged that Mylan Inc. and Mylan Specialty L.P., collectively Mylan, paid bribes and kickbacks to pharmacy benefit managers CVS Caremark, Express Scripts, and OptumRx. Plaintiffs alleged that this conduct enabled Mylan to increase EpiPen prices while maintaining a monopoly share of the market, violating the Racketeer Influenced and Corrupt Organizations Act, commonly called RICO. Plaintiffs sought overcharge damages for the alleged price increases.

During fact discovery, Express Scripts served an interrogatory asking Plaintiffs to allocate their claimed damages among the separate alleged RICO enterprises involving Mylan and the pharmacy benefit managers, as well as other alleged misconduct involving Mylan and entities that were not parties to the case. Plaintiffs responded that they were not seeking damages based on alleged anticompetitive activity involving nonparty entities and that their harm from Defendants’ alleged EpiPen overcharges was indivisible and could not be allocated among Defendants.

Magistrate Judge’s Ruling and Objections

Express Scripts moved to compel Plaintiffs to provide the requested allocation. On March 29, 2023, Magistrate Judge John F. Docherty denied the motion to compel. He found, in relevant part, that Plaintiffs’ alleged overcharge harm was indivisible, making allocation of damages irrelevant to Express Scripts’ defense at that stage.

Express Scripts appealed or objected to that ruling. CVS Caremark and Optum Rx joined the objection even though they were not parties to the interrogatory and had not participated in the proceedings before the magistrate judge. The objecting Defendants argued that the magistrate judge should have denied the motion based only on the sufficiency of Plaintiffs’ response, without addressing whether the damages were indivisible. They agreed that Plaintiffs’ response was sufficient at that stage of the case.

Court’s Analysis

The court affirmed the denial of the motion to compel because Express Scripts agreed that Plaintiffs’ response was sufficient, at least for the current stage of discovery. The court also clarified two issues.

First, the discovery ruling did not finally resolve the factual question of whether Plaintiffs’ harm could be allocated. Plaintiffs’ response indicated that they could not yet determine whether the alleged harm resulted from other anticompetitive conduct involving Mylan or how much of the harm was attributable to the Defendants in this lawsuit. The response could therefore change as discovery continued.

Second, the ruling did not resolve the legal question whether Defendants could be jointly and severally liable if Plaintiffs’ injuries ultimately proved indivisible. Joint and several liability can make each responsible defendant liable for the full amount of damages that cannot be divided, subject to the governing law. The court explained that RICO requires damages proximately caused by a defendant’s conduct and that the Eighth Circuit treats RICO as a statutory tort remedy, making tort-law principles relevant.

The court noted that the alleged RICO enterprises were separate: Mylan was at the center of a “wheel,” while each pharmacy benefit manager formed a separate alleged “spoke” enterprise with Mylan. The court rejected Express Scripts’ reliance on cases involving separate schemes that caused distinct, divisible injuries. Here, according to the allegations, each scheme contributed to the increase in EpiPen prices. The court stated that no binding authority resolved whether joint responsibility for indivisible damages is permitted or prohibited under RICO. It held that the magistrate judge’s discovery ruling did not prevent Defendants from raising the issue in later dispositive motions, which are motions that could resolve claims without a trial.

Disposition

The court overruled Express Scripts’ Appeal/Objection and overruled CVS Caremark and Optum Rx’s Appeal/Objection. It affirmed Magistrate Judge Docherty’s March 29, 2023, order. The order did not finally decide whether Plaintiffs’ damages were divisible or whether joint and several liability would apply.