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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 1 of 149
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` IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
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`COUNTY OF HARRIS, TEXAS
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`Plaintiff,
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`
`
`
`ELI LILLY AND COMPANY; NOVO
`NORDISK INC.; SANOFI-AVENTIS U.S.
`LLC; EXPRESS SCRIPTS HOLDING
`COMPANY; EXPRESS SCRIPTS, INC.;
`ESI MAIL PHARMACY SERVICES, INC.;
`EXPRESS SCRIPTS PHARMACY, INC.;
`CVS HEALTH CORPORATION;
`CAREMARK RX, L.L.C.; CAREMARK PCS
`HEALTH, L.L.C.; CAREMARK, L.L.C.;
`CAREMARK TEXAS MAIL PHARMACY,
`LLC; OPTUM, INC.; OPTUMRX INC.;
`AETNA RX HOME DELIVERY, LLC AND
`AETNA PHARMACY MANAGEMENT
`SERVICES, LLC.
`
`
`
`
`v.
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` Defendants.
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` Case No. 4:19-cv-04994
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`Jury Trial Demanded
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`PLAINTIFF’S SECOND AMENDED COMPLAINT
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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 2 of 149
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`
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`I.
`II.
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`TABLE OF CONTENTS
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`INTRODUCTION ................................................................................ 1
`PARTIES ............................................................................................ 7
`Plaintiff .......................................................................................................... 7
`Manufacturer Defendants ............................................................................. 8
`PBM Defendants .......................................................................................... 12
`
`III. JURISDICTION AND VENUE ............................................................ 21
`Subject Matter Jurisdiction ......................................................................... 21
`Personal Jurisdiction ................................................................................... 21
`Venue ........................................................................................................... 22
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`IV. FACTUAL ALLEGATIONS ................................................................ 23
`Diabetes and Insulin Therapy ..................................................................... 23
`The Dramatic Rise in the Price of Diabetes Medications .......................... 30
`PBMs and the Pharmaceutical Payment and Supply Chain ....................... 39
`The Insulin Pricing Scheme ........................................................................ 46
`The Insulin Pricing Scheme Deceived and Harmed Harris County and the
`Insulin Market ............................................................................................. 58
`TOLLING OF STATUTE OF LIMITATIONS ....................................... 73
`Discovery Rule Tolling ................................................................................ 73
`Fraudulent Concealment Tolling ................................................................ 74
`Estoppel ....................................................................................................... 75
`Continuing Violations .................................................................................. 75
`
`VI. CLAIMS FOR RELIEF ....................................................................... 75
`1. Violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”),
`18 U.S.C. § 1962(c) .................................................................................................. 75
`2. Violations of RICO, 18 U.S.C. § 1962(c) ................................................................. 91
`3. Violations of RICO, 18 U.S.C. § 1962(c) ............................................................... 107
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`V.
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`i
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`4. Violations of RICO, 18 U.S.C. § 1962(d) ............................................................... 122
`5. Texas Deceptive Trades Practices-Consumer Protection Act .............................. 124
`6. Common Law Fraud ............................................................................................. 137
`7. Money Had and Received ..................................................................................... 139
`8. Unjust Enrichment ............................................................................................... 141
`9. Civil Conspiracy .................................................................................................... 142
`VII. APPLICATION FOR TEMPORARY AND PERMANENT INJUNCTION
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`142
`VIII. CONDITIONS PRECEDENT ............................................................. 143
`IX. PRAYER FOR RELIEF ..................................................................... 143
`X.
`JURY DEMAND .............................................................................. 144
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`ii
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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 4 of 149
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`Plaintiff, Harris County, Texas, by and through the undersigned attorneys
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`(“Plaintiff” or “Harris County”) brings this lawsuit against Defendants: Eli Lilly and
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`Company; Novo Nordisk Inc.; Sanofi-Aventis U.S. LLC; Express Scripts Holding
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`Company; Express Scripts, Inc.; ESI Mail Pharmacy Service, Inc.; Express Scripts
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`Pharmacy, Inc.; CVS Health Corporation; Caremark Rx, L.L.C.; Caremark PCS Health,
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`L.L.C.; Caremark, L.L.C.; Caremark Texas Mail Pharmacy, LLC; Optum, Inc.; OptumRx
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`Inc.; Aetna Rx Home Delivery, LLC and Aetna Pharmacy Management Services, LLC
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`(collectively, “Defendants”). Plaintiff alleges on information and belief as follows:
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`I.
`
`INTRODUCTION
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`1.
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`Diabetes is an epidemic in the United States. The total estimated cost of
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`diagnosed diabetes in 2017 was $327 billion, including $237 billion in direct medical costs
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`and $90 billion in reduced productivity.1 In Houston, Texas alone, diabetes-related costs
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`reached $4.1 billion in 2015.2 One in four health care dollars is spent caring for people with
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`diabetes.3 In total, nearly thirty (30) million people, 9.3% of the country, live with this
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`disease.4 Of this number, approximately six million people rely on daily insulin treatments
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`to survive.5
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`1 See American Diabetes Association, The Staggering Cost of Diabetes, March 2018, available at
`https://www.diabetes.org/resources/statistics/cost-diabetes.
`2 See Tom Dart, Houston’s Health Crisis: By 2040, One in Five Residents Will Be Diabetic, The
`Guardian, Feb. 11, 2016, available at https://www.theguardian.com/cities/2016/feb/11/houston-
`health-crisis-diabetes-sugar-cars-diabetic.
`3 Supra note 1.
`4 Supra note 1.
`5 Carolyn Y. Johnson, Why treating diabetes keeps getting more expensive, WASH. POST (Oct.
`31, 2016), https://www.washingtonpost.com/news/wonk/wp/2016/10/31/why-insulin- prices-
`have-kept-rising-for-95-years/.
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`1
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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 5 of 149
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`2.
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`Defendants Eli Lilly, Novo Nordisk and Sanofi (collectively, “Manufacturer
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`Defendants”) manufacture the vast majority of insulins and other diabetes medications
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`currently on the market in the United States.
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`3.
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`Defendants CVS Caremark, Express Scripts, OptumRx and Aetna Rx
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`(collectively “PBM Defendants”) manage the pharmacy benefits for the vast majority of
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`individuals in the United States. As part of this work, PBM Defendants establish national
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`formularies that, among other things, set the baseline for which diabetes medications are
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`covered by insurance and which are not.
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`4.
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`Over the course of the last fifteen years, Manufacturer Defendants have in
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`lockstep raised the reported prices of their respective diabetes drugs in an astounding
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`manner.
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`5.
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`Insulins that today cost Manufacturer Defendants just $5 to produce and
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`that were originally priced at $20 when released in the late 1990s, now range between
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`$300 and $700.6
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`6.
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`In the last decade alone, Manufacturer Defendants have in tandem increased
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`the prices of their insulins up to 1000%, taking the same price increase down to the
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`decimal point within a few days of each other.7
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`7.
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`Figure 1 illustrates the rate in which Defendant Eli Lilly raised the price of
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`its analog insulin, Humalog, compared to the rate of inflation for select consumer goods
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`from 1997-2018.
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`6 See Dzintars Gotham, Melissa J. Barber, Andrew Hill, Production Costs And Potential Prices
`For Biosimilars Of Human Insulin And Insulin Analogues, BMJ Global Health, Vol. 3, Issue 5,
`available at https://gh.bmj.com/content/3/5/e000850; Table 1 of this Complaint.
`7 See Irl B. Hirsch, MD, Changing Cost of Insulin Therapy in the U.S. (Mar. 6, 2016),
`http://professional.diabetes.org/files/media/Changing_Cost_Insulin.pdf; Figure 1 of
`this
`Complaint.
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`2
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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 6 of 149
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`Figure 1: Price Increase of Insulin vs. Selected Consumer Goods
`from 1997-2018
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`3
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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 7 of 149
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`8.
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`Remarkably, nothing about these medications has changed during that time
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`period; today’s $350 drug is the exact same one Defendants sold decades ago for $20.8
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`9.
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`The current exorbitant price stands in stark contrast to insulin’s origins: the
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`discoverers sold the original patent for $1 to ensure that the medication would remain
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`affordable. Today, insulin has become the poster child for pharmaceutical price gouging.
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`10.
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`It has now become apparent that the reason behind the lockstep price
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`increases is a conspiracy between PBM and Manufacturer Defendants to create a secret
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`spread between the reported price for diabetic treatments (on which Harris County’s
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`payments are based) and the true net price of those same drugs.9
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`11.
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`This conspiracy between Manufacturer and PBM Defendants is at the root
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`of the instant complaint and referred to herein as the “Insulin Pricing Scheme.”10
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`12.
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`Both Manufacturer and PBM Defendants play vital roles and profit
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`immensely from the Insulin Pricing Scheme.
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`13.
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`Given their market power and role in formulary and plan design, PBM
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`Defendants wield enormous control over drug purchasing behavior.
`
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`8 Indianapolis Business Journal, Lilly Insulin Prices Under Microscope, The Republic, Sept. 2.
`2017, available at
`http://www.therepublic.com/2017/09/03/lilly_insulin_prices_under_microscope/#:~:targetT
`ext=Lilly%20launched%20Humalog%20in%201996,month's%20supply%20for%20many%20p
`atients.&targetText=Instead%2C%20the%20company%20said%2C%20they,negotiate%20drug
`%20prices%20for%20insurers; see also Table 1 of this Complaint.
`9 For the purposes of this Complaint, “net price” refers to Manufacturer Defendants’ reported
`price minus all payments made by Manufacturer Defendants to PBM Defendants.
`10 The diabetes medications at issue in this case are Eli Lilly’s Humulin N, Humulin R, Humalog,
`Trulicity and Basaglar; Sanofi’s Lantus, Toujeo, Soliqua and Apidra; and Novo Nordisk’s Novolin
`R, Novolin N, Novolog, Levemir, Tresiba, Victoza and Ozempic. All of these drugs are insulins,
`except Trulicity, Victoza and Ozempic, which are non-insulin medications used in conjunction
`with insulins to treat Type 2 diabetes. While these drugs are clinically different than insulins, the
`relevant facts in this Complaint regarding Defendants’ fraudulent pricing scheme apply equally to
`Trulicity, Victoza and Ozempic. For the purposes of this Complaint, the Insulin Pricing Scheme
`includes the non-insulin drugs Trulicity, Victoza and Ozempic.
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`4
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`14.
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`PBM Defendants represent both publicly and to their clients that they use
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`their market power to drive down prices for diabetes medications by forcing
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`manufacturers to compete on price for formulary placement.
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`15.
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` This representation is patently false. Instead, PBM Defendants exploit their
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`market power to cause substantial increases in the price of diabetes medications in order
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`to create massive profits for themselves and Manufacturer Defendants—entirely at the cost
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`of consumers and employers, such as Harris County, who provide employee health
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`benefits.
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`16.
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`To gain formulary access, Manufacturer Defendants artificially and willingly
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`raise their reported prices, and then secretly refund a significant portion of that price back
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`to PBM Defendants. These refunds are provided under a variety of labels—rebates,
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`discounts, credits, concession fees, etc.11 But, however they are described, they are a quid
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`pro quo for formulary inclusion.
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`17.
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`PBMs then grant formulary status based upon the highest inflated price and
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`the largest refund amount.
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`18.
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`This Insulin Pricing Scheme creates a “best of both worlds” scenario for
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`Defendants. Manufacturer Defendants are able to make these secret payments to buy
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`preferred formulary position—which significantly increases their revenue—without
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`sacrificing their profit margins. PBM Defendants profit from the inflated reported price
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`by: (1) retaining a significant percentage of Manufacturer Defendants’ payments; (2)
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`11 In the context of this Complaint, the terms “refunds” and “rebates” are defined as all payments
`or financial benefits of any kind conferred by the Manufacturer Defendants to PBM Defendants,
`either directly via contract or indirectly via Manufacturer-controlled intermediaries. By way of
`example, “refunds” and “rebates” includes rebates, administrative fees, volume discounts, price
`or margin guarantees and any other form of consideration exchanged.
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`5
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`pocketing an additional pricing spread between what a payor pays the PBM for an insulin
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`script based on this inflated price and a lower price that the PBM reimburses the pharmacy
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`for the same drug (“Pharmacy Spread”); and (3) diverting sales to their profitable mail
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`order pharmacies.
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`19.
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`The Insulin Pricing Scheme has resulted in record profits for Defendants at
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`the expense of Plaintiff Harris County.
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`20. Harris County now spends more money on diabetes medications than for
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`medications related to any other disease.
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`21.
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`In 2015 alone, the amount that Harris County spent on diabetes medications
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`increased over 60% from the previous year.
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`22.
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`Since 2013, Harris County has spent more than $27 million on the at issue
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`diabetes medications.12
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`23.
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`A substantial portion of this $27 million is attributable to Defendants’
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`inflated prices that did not arise from transparent market forces, but rather from the secret
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`dealings between Manufacturer and PBM Defendants—the Insulin Pricing Scheme
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`described herein.
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`24.
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`This action alleges that Defendants violated the Racketeer Influenced And
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`Corrupt Organizations Act, the Texas Deceptive Trade Practices Act and various Texas
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`common laws by engaging in the Insulin Pricing Scheme. This scheme directly and
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`foreseeably caused and continues to cause harm to Harris County.
`
`
`12 See Appendix A attached hereto for a chart detailing Harris County’s spends on the at issue
`drugs from 2013-2018. To note, 2013-2018 is only a subset of the damages period alleged in this
`Complaint.
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`6
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`

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`25.
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`This action seeks damages, damage multipliers, attorneys’ fees, costs and
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`injunctive relief to address and abate the harm caused by the Insulin Pricing Scheme.
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`26.
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`The relevant period for damages alleged in this Complaint is from 2003
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`continuing through the present.
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`II. PARTIES
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`
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`Plaintiff
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`27.
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`Plaintiff, Harris County, is a body corporate and politic under the laws
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`of the State of Texas.
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`28.
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`The Harris County government serves its almost five (5) million residents by
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`providing vital services throughout the County. As a large government employer, Harris
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`County provides health benefits to approximately 38,000 employees, retirees and their
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`dependents (“Beneficiaries”). One of the benefits that Harris County offers its Beneficiaries
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`is subsidizing their purchases of the pharmaceutical drugs, including diabetes
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`medications, they need to survive. Harris County also purchases diabetes medications to
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`administer directly to inmates in Harris County jails.
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`29. As detailed in Appendix A, Harris County spends millions of dollars every
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`year on the at issue drugs.
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`30. Any increase in spending can have a detrimental effect on Harris County’s
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`overall budget and, in turn, negatively impact its ability to provide necessary services to
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`the community.
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`31.
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`The Insulin Pricing Scheme has had such an effect.
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`7
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` Manufacturer Defendants
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`32. Defendant Eli Lilly and Company (“Eli Lilly) is a corporation
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`organized and existing under the laws of the State of Indiana and has a principal place of
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`business at Lilly Corporate Center, Indianapolis, Indiana 46285.
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`33.
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`Eli Lilly may be served through its registered agent: National Registered
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`Agents, Inc., 1999 Bryan Street, Suite 900, Dallas, Texas 75201.
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`34.
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`In Texas and nationally, Eli Lilly manufactures, promotes and distributes
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`several diabetes medications paid for by Plaintiff and at issue in this case: Humulin N,
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`Humulin R, Humalog, Trulicity and Basaglar.
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`35.
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`Eli Lilly’s global revenues in 2018 were $3.2 billion from Trulicity, $2.99
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`billion from Humalog, $1.33 billion from Humulin and $801 million from Basaglar.13
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`36.
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`Eli Lilly’s global revenues in 2017 were $2.03 billion from Trulicity, $2.85
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`billion from Humalog, $1.33 billion from Humulin and $432 million from Basaglar.14
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`37.
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`Eli Lilly transacts business in Texas, targeting the Harris County market for
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`its products, including the diabetes medications at issue in this lawsuit.
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`38.
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`Eli Lilly employs sales representatives throughout Texas, including in Harris
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`County, to promote and sell Humulin N, Humulin R, Humalog, Trulicity and Basaglar. For
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`example, Eli Lilly recently advertised online that it was seeking sales representatives in its
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`diabetes primary care division to service Houston, Texas and the surrounding
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`communities.15
`
`
`13 Eli Lilly, Annual Report (Form 10-K) (Dec. 31, 2018).
`14 Id.
`15 See
`https://careers.lilly.com/business/custom_fields.multipleregion/north%20america/410/5.
`
`8
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`39.
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`Eli Lilly also directs advertising and informational materials to Harris
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`County physicians and potential users of Eli Lilly’s products.
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`40. At all times relevant hereto, Eli Lilly published its reported prices of its
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`diabetes medications at issue in this lawsuit throughout the United States and Texas,
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`including in Harris County.
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`41.
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`Between 2013-2018 alone (a subset of the total damages period at issue),
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`Harris County spent over $11.9 million on Eli Lilly’s at issue drugs.
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`42. Defendant Sanofi-Aventis U.S. LLC (“Sanofi”) is a Delaware limited
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`liability company with its principal place of business at 55 Corporate Drive, Bridgewater,
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`New Jersey 08807.
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`43.
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`Sanofi may be served through its registered agent: Corporation Service
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`Company DBS CSC – Lawyers Incorporating Service Company, 211 East 7th Street, Suite
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`620, Austin, Texas 78701.
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`44.
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`Sanofi manufactures, promotes and distributes pharmaceutical drugs both
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`in Texas and nationally, including insulins and diabetes medications paid for by Plaintiff
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`and at issue in this case: Lantus, Toujeo, Soliqua and Apidra.
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`45.
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`Sanofi’s global revenues in 2018 were $3.9 billion from Lantus, $923 million
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`from Toujeo, $389 million from Apidra and $79 million for Soliqua.16
`
`46.
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`Sanofi’s global revenues in 2018 were $5.08 billion from Lantus and $896
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`million from Toujeo, $414 million from Apidra and $28.5 million from Soliqua.17
`
`47.
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`Sanofi transacts business in Texas, targeting the Harris County market for
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`its products, including the diabetes medications at issue in this lawsuit.
`
`
`16 Sanofi, Annual Report (Form 20-F) (Dec. 31, 2018).
`17 Id.
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`9
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`48.
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`Sanofi employs sales representatives throughout Texas, including in Harris
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`County, to promote and sell Lantus, Toujeo, Soliqua and Apidra. For example, Sanofi
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`recently advertised online that it was seeking Diabetes Specialty Sales Representatives in
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`Texas.18
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`49.
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`Sanofi also directs advertising and informational materials to Texas
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`physicians and potential users of Sanofi’s products.
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`50. At all times relevant hereto, Sanofi published its reported prices of its
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`diabetes medications at issue in this lawsuit throughout the United States and Texas,
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`including in Harris County.
`
`51.
`
`Between 2013-2018 alone (a subset of the total damages period at issue),
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`Harris County spent over $6.6 million on Sanofi’s at issue drugs.
`
`52. Defendant Novo Nordisk Inc. (“Novo Nordisk”) is a Delaware
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`corporation. Its headquarters are at 800 Scudders Mill Road, Plainsboro, New Jersey
`
`08536.
`
`53. Novo Nordisk may be served through its registered agent: CT Corporation
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`System, 1999 Bryan Street, Suite 900, Dallas, Texas 75201.
`
`54. Novo Nordisk manufactures, promotes and distributes pharmaceutical
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`drugs both in Texas and nationally, including insulins and diabetic medications paid for
`
`by Plaintiff and at issue in this case: Novolin R, Novolin N, Novolog, Levemir, Tresiba,
`
`Victoza and Ozempic.
`
`
`18 See https://jobs.sanofi.us/search-jobs/texas/Texas%2C%20US/507-18104/1/3/6252001-
`4736286/31x25044/-99x25061/50/2.
`
`10
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`55. Novo Nordisk’s global revenues in 2018 were $4.19 billion from Novolog,
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`$1.66 billion from Levemir, $1.19 billion from Tresiba and $3.61 billion from Victoza.19
`
`56. Nordisk’s global revenues in 2017 were $1.65 billion from Novolog, $1.05
`
`billion from Levemir, $781.4 million from Tresiba and $2.68 billion from Victoza.20
`
`57. Novo Nordisk transacts business in Texas, targeting the Harris County
`
`market for its products, including the diabetes medications at issue in this lawsuit.
`
`58. Novo Nordisk employs sales representatives throughout Texas, including in
`
`Harris County, to promote and sell Novolin R, Novolin N, Novolog, Levemir, Tresiba,
`
`Victoza and Ozempic. For example, Novo Nordisk recently advertised online that it was
`
`seeking Pharma Field Sales—Diabetes Care Specialists in Texas.21
`
`59. Novo Nordisk also directs advertising and informational materials to Texas
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`physicians and potential users of Novo Nordisk’s products.
`
`60. At all times relevant hereto, Novo Nordisk published its reported prices of
`
`its diabetes medications at issue in this lawsuit throughout the United States and Texas,
`
`including in Harris County.
`
`61.
`
`Between 2013-2018 alone (a subset of the total damages period at issue),
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`Harris County spent over $8.9 million on Novo Nordisk’s at issue drugs.
`
`62.
`
`Collectively, Defendants Eli Lilly, Novo Nordisk and Sanofi are referred to as
`
`“Manufacturer Defendants.”
`
`
`
`
`
`
`19 Novo Nordisk, Annual Report (Form 20-F) (Dec. 31, 2018).
`20 Novo Nordisk, Annual Report (Form 20-F) (Dec. 31, 2017).
`21 See https://www.novonordisk-
`jobs.com/search/?createNewAlert=false&q=&locationsearch=texas.
`
`11
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`
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`PBM Defendants
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`63. Defendant CVS Health Corporation (“CVS Health”) is a corporation
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`organized under the laws of Delaware and headquartered at One CVS Drive, Woonsocket,
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`Rhode Island 02895. CVS Health transacts business and has locations throughout the
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`United States and Texas.
`
`64.
`
`CVS Health may be served through its registered agent: The Corporation
`
`Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
`
`19801.
`
`65. Defendant Caremark Rx, L.L.C. is a Delaware limited liability company
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`and an immediate or indirect parent of many subsidiaries, including pharmacy benefit
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`management and mail order subsidiaries. Caremark Rx, L.L.C. is a subsidiary of Defendant
`
`CVS Health and its principal place of business is at the same location as CVS Health.
`
`66.
`
`Caremark Rx, L.L.C. may be served through its registered agent: The
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`Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington,
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`Delaware 19801.
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`67. Defendant Caremark L.L.C. is a California limited liability company
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`whose principal place of business is at the same location as CVS Health. Caremark, L.L.C.
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`is a subsidiary of CVS Health. Caremark, L.L.C. is also the direct or indirect parent of
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`dozens of limited liability companies all over the U.S. that provide mail-order pharmacy
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`services in the U.S. and in Texas.
`
`68.
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`Caremark L.L.C. may be served through its registered agent: CT Corporation
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`System, 1999 Bryan Street, Suite 900, Dallas, Texas 75201.
`
`12
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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 16 of 149
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`69. Defendant CaremarkPCS Health, L.L.C. is a Delaware limited liability
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`company whose principal place of business is at the same location as CVS Health. CVS
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`Health is the direct or indirect parent company of CaremarkPCS Health LLC.
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`70.
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` CaremarkPCS Health LLC, doing business as CVS Caremark, provides
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`pharmacy benefit management services and has been registered to do business in Texas
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`since at least 2009.
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`71.
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`CaremarkPCS Health, L.L.C. may be served through its registered agent: CT
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`Corporation System, 1999 Bryan Street, Suite 900, Dallas, Texas 75201.
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`72. Defendant Caremark Texas Mail Pharmacy, LLC, doing business as
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`CVS Caremark, is a Texas limited liability company whose principal place of business is at
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`the same location as CVS Health.
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`73.
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`Caremark Texas Mail Pharmacy, LLC may be served through its registered
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`agent: CT Corporation System, 1999 Bryan Street, Suite 900, Dallas, Texas 75201.
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`74.
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`Caremark Texas Mail Pharmacy, LLC is licensed with the Texas Board of
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`Pharmacy and is registered with the Drug Enforcement Administration (“DEA”) to
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`dispense controlled substances, including diabetes medications.
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`75.
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`Collectively, Defendants CVS Health Corporation, Caremark Rx, L.L.C.,
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`Caremark, L.L.C., CaremarkPCS Health, L.L.C and Caremark Texas Mail Pharmacy, LLC
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`are referred to as “CVS Caremark.”
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`76.
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`CVS Caremark is named as a defendant in its capacities as a PBM and mail
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`order pharmacy.
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`77.
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`In its capacity as a PBM, CVS Caremark negotiates on behalf of payors and
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`insurers with Novo Nordisk, Eli Lilly and Sanofi regarding the price of diabetes
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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 17 of 149
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`medications, as well as for the placement of these firms’ diabetes medications on CVS
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`Caremark’s drug formularies.
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`78.
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`CVS Caremark filled or managed approximately 1.9 billion prescriptions
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`during the year ending December 31, 2018.22
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`79.
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`CVS Caremark has the largest PBM market share based on total prescription
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`claims managed, representing 36% of the market.23 CVS Caremark’s pharmacy services
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`segment, which includes PBM activities, but not its retail/long-term care segment,
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`generated $120 billion in total revenues last year.24
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`80. CVS Caremark describes its PBM business as follows:
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`[CVS Caremark’s] formularies provide recommended products in numerous
`drug classes to help ensure member access to clinically appropriate drugs
`with alternatives within a class under the client’s pharmacy benefit plan,
`while helping to drive the lowest net cost for clients that select one
`of [CVS Caremark’s] formularies.25
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`81.
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`At all times relevant hereto, CVS Caremark derived substantial revenue
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`providing pharmacy benefits in Texas, including in Harris County.
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`82. At all times relevant hereto, CVS Caremark derived substantial revenue
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`providing mail order pharmacy services in Texas, including in Harris County.
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`83. At all times relevant hereto, CVS Caremark offered pharmacy benefit
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`management services nationwide and maintained a national formulary or formularies that
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`are used nationwide, including in Texas and Harris County. At all times relevant hereto,
`
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`22 CVS Caremark Annual Report (Form 10-K) (Dec. 31, 2018).
`23 National Community Pharmacists Association, PBM Resources,
`http://www.ncpanet.org/advocacy/thetools/pbm-resources.
`24 Ed Kaplan & Wendy Pongracz, Negotiating and Drafting Pharmacy Benefit Manager
`Plans,
`Strafford
`(June
`21,
`2016),
`Contracts
`for
`Self-Insured
`http://media.straffordpub.com/products/negotiating-and-drafting-pharmacy-benefit-manager-
`contracts-for-self-funded-plans-2016-06-21/presentation.pdf.
`25 CVS Caremark, Annual Report (Form 10-K) (Dec. 31, 2018).
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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 18 of 149
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`those formularies included diabetes medications, including those at issue in this
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`Complaint.
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`84.
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` At all times relevant hereto, CVS Caremark dispensed diabetes medications,
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`including diabetes medications at issue in this Complaint, nationwide and in Texas,
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`including in Harris County, through its mail order pharmacies.
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`85. Defendant Express Scripts Holding Company is a Delaware
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`corporation. Its principal place of business is at 1 Express Way, St. Louis, Missouri 63121.
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`86. Express Scripts Holding Company may be served through its registered
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`agent: The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
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`Wilmington, Delaware 19801.
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`87. Defendant Express Scripts, Inc. is a corporation organized under the
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`laws of Delaware and headquartered at 1 Express Way, St. Louis, Missouri 63121.
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`88. Express Scripts,
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`Inc. may be
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`served
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`through
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`its
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`registered
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`agent: Corporation Service Company DBS CSC – Lawyers Incorporating Service
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`Company, 211 East 7th Street, Suite 620, Austin, Texas 78701.
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`89. Defendant ESI Mail Pharmacy Service, Inc. is a Delaware corporation
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`with its principal place of business in St. Louis, Missouri.
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`90. Defendant ESI Mail Pharmacy Service, Inc. may be served through its
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`registered agent: Corporation Service Company, 251 Little Falls Drive, Wilmington,
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`Delaware 19808.
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`91.
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`ESI Mail Pharmacy Services, Inc. is licensed as an out-of-state prescription
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`drug distributor with the Texas Department of State Health Services.
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`92. Defendant Express Scripts Pharmacy, Inc. is a Delaware corporation
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`with its principal place of business in St. Louis, Missouri.
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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 19 of 149
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`93. Defendant Express Scripts Pharmacy, Inc. may be served through its
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`registered agent: Corporation Service Company DBS CSC – Lawyers Incorporating Service
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`Company, 211 East 7th Street, Suite 620, Austin, Texas 78701.
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`94. Defendants Express Scripts, Inc., ESI Mail Pharmacy Service, Inc. and
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`Express Scripts Pharmacy, Inc. are subsidiaries of Defendant Express Scripts Holdings
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`Company.
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`95.
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`Collectively, Defendant Express Scripts, Inc., Defendant Express Scripts
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`Holding Company, Defendant ESI Mail Pharmacy Service, Inc. and Defendant Express
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`Scripts Pharmacy, Inc. are referred to as “Express Scripts.”
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`96.
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`Express Scripts is named as a defendant in its capacities as a PBM and mail
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`order pharmacy.
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`97.
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`In its capacity as a PBM, Express Scripts negotiates on behalf of payors and
`
`insurers with Novo Nordisk, Eli Lilly and Sanofi regarding the purchase price of diabetes
`
`medications, as well as for the placement of these firms’ diabetes medications on the PBM’s
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`drug formularies.
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`98.
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`Prior to merging with Cigna in 2019, Express Scripts was the largest
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`independent PBM in the United States.26 During the relevant period of this Complaint,
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`Express Scripts controlled 30% of the PBM market.27
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`99.
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`In 2017, annual revenue for Express Scripts was over $100 billion.28
`
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`26 Express Scripts, Annual Report (Form 10-K) (Dec. 31, 2017).
`27 See supra note 23.
`28 See supra note 26.
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`Case 4:19-cv-04994 Document 68 Filed on 10/13/20 in TXSD Page 20 of 149
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`100. As of December 31, 2018, more than 68,000 retail pharmacies, representing
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`over 98% of all retail pharmacies in the nation, participated in one or more of Express
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`Scripts’ networks.29
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`101. Express Scripts transacts business throughout the United States and Texas,
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`including in Harris County.
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`102. Express Scripts describes its PBM business as follows:
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`Our core PBM services involve management of prescription drug utilization
`to drive high qualit