Antitrust Law Daily Wrap Up, ANTITRUST—La. App.: Specialty pharmacy fails to state conspiracy, monopolization claims, (May 31, 2016)

By Greg Hammond, J.D.

A specialty pharmacy failed to adequately allege that a managed care organization violated Louisiana’s antitrust laws by conspiring to restrain trade in, and actively monopolizing the sale of, specialty pharmacy medications to members of the manage care organization’s plan. In reversing the trial court’s order denying the specialty pharmacy’s exceptions of no cause of action with regard to the antitrust claims, the Louisiana Appellate Court in Baton Rouge determined that the specialty pharmacy pleaded a legally deficient market and failed to plead that the managed care organization possessed monopoly power or that its conduct injured competition or caused an antitrust injury (HPC Biologicals, Inc. v. UnitedHealthcare of Louisiana, May 26, 2016, McDonald, J.).

HPC Biologicals, Inc. is a specialty pharmacy that serves Medicaid patients enrolled in Louisiana’s privatized Medicaid program, called “Bayou Health.” HPC alleged that managed care organization UnitedHealthcare of Louisiana conspired with BioScrip—another specialty pharmacy—by entering into an arrangement that resulted in patients having no choice as to their specialty pharmacy provider, resulting in a conspiracy to restrain trade in, and active monopolization of the sale of, specialty pharmacy medications to members of UnitedHealthcare’s plan. In particular, HPC claimed that UnitedHealthcare’s proposed contracts informed HPC that it would not be permitted to supply any patients in the UnitedHealthcare plan with two key medications for hemophilia, and that UnitedHealthcare patients would be required to purchase these two medications only through two other specialty pharmacies that were affiliated with or were a partner of UnitedHealthcare’s parent company. The trial court denied UnitedHealthcare’s exception of no cause of action under Louisiana’s antitrust statutes. UnitedHealthcare appealed.

The appellate court agreed with UnitedHealthcare, finding that HPC failed to allege the existence of a plausible conspiracy, a relevant product market, harm to competition, antitrust injury, and monopoly power.

Conspiracy. HPC contends that UnitedHealthcare and BioScrip entered into an arrangement in which BioScrip fills a prescription that treats a special condition only once, and then transfers the service to OptumRx, an affiliate of UnitedHealthcare, which then fills the prescription exclusively. In addition, HPC claims that BioScrip is rewarded through an arrangement with UnitedHealthcare, whereby UnitedHealthcare pays BioScrip above-market prices on other medications prescribed to UnitedHealthcare plan members. These allegations, however, failed to allege that UnitedHealthcare and BioScrip entered into an agreement designed to achieve an unlawful objective with sufficient specificity to state a cause of action for an antitrust violation under Louisiana Law, the appellate court determined.

Relevant market. Next, the court found that because HPC identified the relevant market as limited to the “market for specialty pharmacy medications within the [UnitedHealthcare] network,” despite there being four other managed care providers authorized to provide services to Medicaid recipients in Louisiana, and HPC failed to plead a geographic dimension for the market. Thus, HPC’s allegations were found insufficient to plead a proper market definition.

Harm, antitrust injury. HPC’s vague and conclusory allegation that it believes the arrangement between UnitedHealthcare and BioScrip results in patients actually having no choice at all as to their specialty pharmacy provider was insufficient to allege the necessary element of injury to competition, according to the court. In addition, HPC failed to sufficiently allege an antitrust injury because it is not the patient or a consumer of UnitedHealthcare.

Lastly, the court concluded that HPC failed to sufficiently allege that UnitedHealthcare possessed the market power or ability to control prices or exclude competition from the market. HPC therefore did not demonstrate that UnitedHealthcare possessed monopoly power.

The case is No. 2016 CA 0585.

Attorneys: John M. Landis (Stone Pigman Walther Wittmann L.L.C.) for HPC Biologicals, Inc. James C. Percy (Jones Walker LLP) for UnitedHealthcare of Louisiana.

Companies: HPC Biologicals, Inc.; UnitedHealthcare of Louisiana, Inc.

Cases: Antitrust LouisianaNews