Antitrust Law Daily Wrap Up, ANTITRUST—W.D.N.Y.: Safety-net providers’ state antitrust claims survive in part against insulin and diabetes drugmakers, (Jul 6, 2026)

By Martin A. Steinberg, J.D.

Plaintiffs may pursue claims that drugmakers conspired to restrict contract-pharmacy discounts, but unjust enrichment and two state antitrust theories were dismissed.

The federal district court in Rochester, New York largely denied the drugmakers’ motion to dismiss state antitrust claims brought by safety-net healthcare providers, Mosaic Health, Inc., and Central Virginia Health Services, Inc., alleging that Sanofi-Aventis U.S., LLC, Eli Lilly and Company, Lilly USA, LLC, Novo Nordisk Inc., and AstraZeneca Pharmaceuticals LP coordinated to restrict 340B contract-pharmacy discounts on diabetes medications. The court held that the claims were not barred by Astra USA Inc. v. Santa Clara County because they did not require the court to decide whether the defendants violated the 340B statute. Instead, it alleged an independent antitrust conspiracy to raise prices. The court also found that the plaintiffs adequately alleged intrastate effects for most state antitrust claims, including under New York’s Donnelly Act. However, the court dismissed the Mississippi antitrust claim for failure to allege wholly intrastate transactions. It dismissed the Utah antitrust claim because no named plaintiff was a Utah citizen or resident. The court further dismissed the unjust enrichment claim in its entirety, finding the Virginia claim barred by Illinois Brick, the New York claim duplicative of the antitrust claim, and the remaining unjust enrichment claims unsupported once the New York and Virginia theories failed (Mosaic Health, Inc. v. Sanofi-Aventis U.S., LLC, No. 6:21-cv-06507-EAW-CDH (W.D.N.Y. Jun. 26, 2026)).

Background. The plaintiffs, safety-net hospitals and clinics serving low-income and underserved patients, participate in the federal 340B Drug Discount Program, which allows covered entities to buy certain outpatient drugs at discounted prices. For many years, drug manufacturers allegedly made those discounts available not only for drugs dispensed onsite, but also through retail “contract pharmacies” that dispensed drugs on behalf of covered entities.

The plaintiffs allege that Sanofi, Eli Lilly, Novo Nordisk, and AstraZeneca dominate key diabetes-drug markets, including rapid-acting analog insulin, long-acting analog insulin, and incretin mimetics. According to the complaint, after a joint lobbying effort to limit 340B discounts failed, the defendants coordinated in 2020 to restrict or eliminate contract-pharmacy 340B discounts. The defendants each announced restrictions between July and December 2020, including limiting access to contract pharmacies, requiring covered entities to provide claims data, or ending most contract-pharmacy discounts. The plaintiffs allege that these restrictions had the immediate effect of eliminating the overwhelming majority of contract-pharmacy 340B discount sales to covered entities.

Procedural background. Mosaic Health filed the case in July 2021, and Central Virginia Health Services was added as a plaintiff in an amended complaint filed in October 2021. The district court initially granted the defendants’ motion to dismiss and later denied the plaintiffs leave to amend, resulting in closure of the case. The plaintiffs appealed, and the Second Circuit vacated the judgment in 2025, directing the district court to permit the second amended complaint and reconsider the state-law claims.

On remand, the plaintiffs filed the second amended complaint on December 17, 2025. The complaint asserted a federal claim under Section 1 of the Sherman Act, state-law antitrust claims for unreasonable restraint of trade under the laws of 28 jurisdictions, and unjust enrichment claims under the laws of 20 states.

State-law claims under Astra. The court rejected the defendants’ argument that Astra USA Inc. v. Santa Clara County, 563 U.S. 110 (2011), barred the state-law claims as impermissible attempts to enforce the 340B statute. Although Astra prevents covered entities from using private litigation to enforce 340B pricing obligations, the court held that these claims were distinct because they alleged an independent antitrust conspiracy to restrict contract-pharmacy discounts and raise prices. The court also rejected the defendants’ argument, based on the Second Circuit’s prior ruling that only the Sherman Act claim was permitted to proceed. In the court’s view, the Second Circuit’s reasoning was broader: the case did not require the court to construe Section 340B or decide whether the defendants violated it, and the 340B price could be used as part of the alleged pre-conspiracy status quo without converting the case into a 340B enforcement action.

State-law antitrust claims. The court granted the motion to dismiss only as to the Mississippi and Utah state antitrust claims, but otherwise denied dismissal of the plaintiffs’ state-law antitrust claims, allowing the bulk of the Second Claim to proceed. The defendants argued that the plaintiffs had not adequately pleaded violations under the laws of the many states invoked in the second amended complaint, relying mainly on alleged deficiencies in intrastate effects, standing, and Utah-specific statutory requirements. The court rejected most of those arguments, but dismissed the claims under Mississippi and Utah law.

The court first considered the plaintiffs’ claim under New York’s Donnelly Act. The defendants argued that the complaint did not sufficiently allege an effect on New York intrastate commerce because the alleged conspiracy was nationwide and the complaint relied on generalized allegations that covered entities in each state paid inflated prices. The court disagreed. It found that the complaint alleged more than a generic nationwide effect: Mosaic Health was based in New York, operated safety-net clinics there, New York had thousands of registered contract-pharmacy arrangements, and the defendants allegedly did substantial business in New York. Those allegations were sufficient at the pleading stage to allege the required intrastate impact under the Donnelly Act.

Because the Donnelly Act claim survived, the court also rejected the defendants’ broader standing argument. The defendants had argued that if the named plaintiffs lacked a viable New York antitrust claim, they could not pursue antitrust claims on behalf of unnamed class members under other states’ laws. But that argument depended on the dismissal of the New York claim. Since the court held that the New York claim was adequately pleaded, the standing challenge to the other state-law antitrust claims also failed.

Intrastate conduct. The court next addressed the defendants’ argument that the complaint failed to allege sufficient intrastate conduct or effects under the laws of numerous states. The court held that, for most states, the plaintiffs adequately alleged intrastate effects by pleading an alleged nationwide antitrust conspiracy whose impact was felt in each relevant state. The complaint alleged that more than 4,000 covered entities were affected and that covered entities with contract-pharmacy arrangements in each relevant state were denied or limited in receiving 340B contract-pharmacy discounts. The court found those allegations sufficient at the pleading stage, particularly because the products were widely used diabetes medications rather than a narrow commodity sold to a small number of purchasers.

The court also rejected the defendants’ argument that Arizona, Connecticut, Michigan, Minnesota, Nebraska, and Nevada required intrastate anticompetitive conduct by the defendants, rather than intrastate effects. Reading the relevant statutes and authorities, the court concluded that those states’ laws were satisfied by allegations that the conspiracy affected trade or commerce, purchasers, or end users within the state.

Mississippi. The court reached a different conclusion as to the Mississippi antitrust law claim. Mississippi law requires that the illegal objective be accomplished at least in part through transactions lying wholly within the state. The second amended complaint did not specifically allege wholly intrastate Mississippi transactions, and the plaintiffs did not explain how that requirement was satisfied. The court therefore dismissed the state-law antitrust claim to the extent it was based on the Mississippi Antitrust Act.

Utah. The court also dismissed the claim under the Utah Antitrust Act. Utah law permits an antitrust action to be brought by a Utah citizen or resident, and the court found no named plaintiff from Utah. The plaintiffs argued that the issue should be deferred until class certification or a later stage because the scheduling order permitted future motions to join parties or amend the pleadings. The court rejected that argument, reasoning that practical considerations could not overcome the statute’s requirement that a Utah citizen or resident bring the action.

Unjust enrichment. The court agreed with the defendants' argument that the plaintiffs failed to state unjust enrichment claims under either New York or Virginia law, and that, without a viable unjust enrichment claim under the named plaintiffs’ home-state laws, they could not pursue unjust enrichment claims under other states’ laws on behalf of the putative class. The court therefore dismissed the unjust enrichment claim in its entirety.

As to Virginia, the court held that the unjust enrichment claim was barred because Virginia has not repealed Illinois Brick, which generally prevents indirect purchasers from recovering overcharge damages under antitrust law. The plaintiffs argued that unjust enrichment should remain available as an equitable remedy, but instead the court followed the majority view that indirect purchasers cannot invoke unjust enrichment to circumvent a state’s decision to deny indirect-purchaser antitrust recovery. Because the Virginia unjust enrichment claim sought the same type of overcharge recovery that Virginia law would not allow under antitrust principles, the court dismissed it.

As to New York, the court again agreed with the defendants’ argument that the unjust enrichment claim merely duplicated the plaintiffs’ New York antitrust claim. It explained that unjust enrichment is generally unavailable under New York law where an adequate legal remedy exists, and that even when pleaded in the alternative, an unjust enrichment claim cannot survive if it is simply a repackaging of another statutory or tort claim. Here, the New York unjust enrichment theory was based on the same alleged price-fixing conduct and sought the same overcharge damages as the New York antitrust claim. Because the plaintiffs did not identify any independent basis for equitable recovery, the New York unjust enrichment claim was dismissed as duplicative.

The court then dismissed the remaining unjust enrichment claims as well. The plaintiffs did not meaningfully contest the defendants’ argument that their ability to pursue unjust enrichment claims under other states’ laws depended on having a viable unjust enrichment claim under New York or Virginia law, the states tied to the named plaintiffs. Having dismissed both the New York and Virginia unjust enrichment theories, the court held that the plaintiffs had conceded the point and dismissed the entire unjust enrichment claim.

The Case is No. 6:21-cv-06507-EAW-CDH.

Judge: Holland, C.

Attorneys: Adam R. Shaw (Boies, Schiller & Flexner LLP) for Mosaic Health, Inc. Brian J. Capitummino (Woods Oviatt Gilman LLP) for Sanofi-Aventis U.S., LLC.

Companies: Mosaic Health, Inc.; Sanofi-Aventis U.S., LLC

Cases: Antitrust NewYorkNews