Case 3:18-cv-14999-BRM-LHG Document 47 Filed 08/12/19 Page 1 of 4 PageID: 674

REED SMITH LLP DAVIS POLK & WARDWELL LLP

Melissa A. Geist, Esq. Neal A. Potischman, Esq. (pro hac vice)
Princeton Forrestal Village Andrew Yaphe, Esq. (pro hac vice)
136 Main Street, Suite 250 1600 El Camino Real
Princeton, NJ 08540 Menlo Park, California 94025
Tel.: (609) 514-5978 Tel.: (650) 752-2000
Attorneys for Defendant
COVINGTON & BURLING LLP Novo Nordisk Inc.
Shankar Duraiswamy, Esq.
Henry Liu, Esq. WALSH PIZZI O’REILLY
(pro hac vice forthcoming) FALANGA LLP
Paige M. Jennings, Esq. Liza M. Walsh, Esq.
(pro hac vice forthcoming) Katelyn O’Reilly, Esq.
One CityCenter Katherine M. Romano, Esq.
850 Tenth Street, N.W. 100 Mulberry Street, 15th Floor
Washington, DC 20001 Newark, NJ 07102
Tel.: (202) 662-6000 Tel.: (973) 757-1100
Attorneys for Defendant
Eli Lilly and Company JONES DAY
Michael R. Shumaker, Esq.
GIBBONS P.C. (pro hac vice forthcoming)
Michael R. Griffinger, Esq. Julie E. McEvoy, Esq.
One Gateway Center (pro hac vice forthcoming)
Newark, NJ 07102-5310 William D. Coglianese, Esq.
Tel.: (973) 596-4500 (pro hac vice forthcoming)
51 Louisiana Avenue, N.W.
DAVIS POLK & WARDWELL LLP Washington, DC 20001
James P. Rouhandeh, Esq. (pro hac vice) Tel.: (202) 879-3939
David B. Toscano, Esq. (pro hac vice) Attorneys for Defendant
450 Lexington Avenue Sanofi-Aventis U.S. LLC
New York, New York 10017
Tel.: (212) 450-4000
Case 3:18-cv-14999-BRM-LHG Document 47 Filed 08/12/19 Page 2 of 4 PageID: 675

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

STATE OF MINNESOTA, BY ITS

ATTORNEY GENERAL KEITH Civil Action No.: 18-14999
ELLISON, (BRM)(LHG)

Plaintiff,
DEFENDANTS’ JOINT
v. NOTICE OF MOTION TO
DISMISS PLAINTIFF’S FIRST
SANOFI-AVENTIS U.S. LLC, NOVO AMENDED COMPLAINT
NORDISK, INC., AND ELI LILLY ORAL ARGUMENT REQUESTED
AND CO.,

Defendants.

TO: All Persons on ECF Service List

COUNSEL:

PLEASE TAKE NOTICE that Defendants Novo Nordisk Inc., Sanofi-

Aventis U.S. LLC, and Eli Lilly and Company (collectively, “Defendants”), by and

through their respective undersigned counsel, shall move before the Honorable Brian

R. Martinotti, U.S.D.J., at a date and time to be determined by the Court, at the

Clarkson S. Fisher Building & U.S. Courthouse, 402 East State Street, Trenton, New

Jersey 08608, for an Order, pursuant to Federal Rules of Civil Procedure 12(b)(6)

and 12(b)(1), dismissing Plaintiff’s First Amended Complaint.

PLEASE TAKE FURTHER NOTICE that in support of this Motion,

Defendants will rely on Defendants’ Memorandum of Law in Support of Joint

Case 3:18-cv-14999-BRM-LHG Document 47 Filed 08/12/19 Page 3 of 4 PageID: 676

Motion to Dismiss Plaintiff’s First Amended Complaint, a Certification of Melissa

Geist, Esq. with exhibits, and all other pleadings and proceedings on file.

PLEASE TAKE FURTHER NOTICE that a proposed form of order is

submitted herewith.

PLEASE TAKE FURTHER NOTICE that Defendants hereby request oral

argument.

Dated: August 12, 2019 Respectfully submitted,

By: s/ Melissa A. Geist
Melissa A. Geist
REED SMITH LLP
Princeton Forrestal Village
136 Main Street, Suite 250
Princeton, NJ 08540
Tel.: (609) 514-5978
Shankar Duraiswamy
Henry Liu (pro hac vice forthcoming)
Paige M. Jennings (pro hac vice forthcoming)
COVINGTON & BURLING LLP
One CityCenter
850 Tenth Street, N.W.
Washington, DC 20001
Tel.: (202) 662-6000
Attorneys for Defendant
Eli Lilly and Company

By: s/ Michael R. Griffinger

Michael R. Griffinger
Christopher Walsh
Calvin K. May
GIBBONS P.C.
One Gateway Center
Newark, NJ 07102-5310
Tel.: (973) 596-4500
Case 3:18-cv-14999-BRM-LHG Document 47 Filed 08/12/19 Page 4 of 4 PageID: 677

James P. Rouhandeh (pro hac vice)

David B. Toscano (pro hac vice)
DAVIS POLK & WARDWELL LLP
450 Lexington Avenue
New York, New York 10017
Tel.: (212) 450-4000
Neal A. Potischman (pro hac vice)
Andrew Yaphe (pro hac vice)
DAVIS POLK & WARDWELL LLP
1600 El Camino Real
Menlo Park, California 94025
Tel.: (650) 752-2000
Attorneys for Defendant
Novo Nordisk Inc.

By: s/ Liza M. Walsh

Liza M. Walsh, Esq.
Katelyn O’Reilly, Esq.
Katherine Marie Romano, Esq.
WALSH PIZZI O’REILLY FALANGA LLP
100 Mulberry Street, 15th Floor
Newark, NJ 07102
Tel.: (973) 757-1100

Michael R. Shumaker
(pro hac vice forthcoming)
Julie E. McEvoy
(pro hac vice forthcoming)
William D. Coglianese
(pro hac vice forthcoming)
JONES DAY
51 Louisiana Avenue, N.W.
Washington, DC 20001
Tel.: (202) 879-3939
Attorneys for Defendant
Sanofi Aventis U.S. LLC
Case 3:18-cv-14999-BRM-LHG Document 47-1 Filed 08/12/19 Page 1 of 48 PageID: 678

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

STATE OF MINNESOTA, BY ITS

ATTORNEY GENERAL, KEITH
ELLISON,

Plaintiff,
Civil Action No. 18-14999
v. (BRM)(LHG)
ORAL ARGUMENT REQUESTED
SANOFI-AVENTIS U.S. LLC, NOVO
NORDISK, INC., AND ELI LILLY
AND CO.,
Defendants.

DEFENDANTS’ MEMORANDUM OF LAW IN SUPPORT OF

THEIR JOINT MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED
COMPLAINT

(Counsel Listed on Next Page)

Case 3:18-cv-14999-BRM-LHG Document 47-1 Filed 08/12/19 Page 2 of 48 PageID: 679

REED SMITH LLP DAVIS POLK & WARDWELL LLP

Melissa A. Geist, Esq. Neal A. Potischman, Esq. (pro hac vice)
Princeton Forrestal Village Andrew Yaphe, Esq. (pro hac vice)
136 Main Street, Suite 250 1600 El Camino Real
Princeton, NJ 08540 Menlo Park, California 94025
Tel.: (609) 514-5978 Tel.: (650) 752-2000
Attorneys for Defendant
COVINGTON & BURLING LLP Novo Nordisk Inc.
Shankar Duraiswamy, Esq.
Henry Liu, Esq. WALSH PIZZI O’REILLY
(pro hac vice forthcoming) FALANGA LLP
Paige M. Jennings, Esq. Liza M. Walsh, Esq.
(pro hac vice forthcoming) Katelyn O’Reilly, Esq.
One CityCenter Katherine M. Romano, Esq.
850 Tenth Street, N.W. 100 Mulberry Street, 15th Floor
Washington, DC 20001 Newark, NJ 07102
Tel.: (202) 662-6000 Tel.: (973) 757-1100
Attorneys for Defendant
Eli Lilly and Company JONES DAY
Michael R. Shumaker, Esq.
GIBBONS P.C. (pro hac vice forthcoming)
Michael R. Griffinger, Esq. Julie E. McEvoy, Esq.
One Gateway Center (pro hac vice forthcoming)
Newark, NJ 07102-5310 William D. Coglianese, Esq.
Tel.: (973) 596-4500 (pro hac vice forthcoming)
51 Louisiana Avenue, N.W.
DAVIS POLK & WARDWELL LLP Washington, DC 20001
James P. Rouhandeh, Esq. (pro hac vice) Tel.: (202) 879-3939
David B. Toscano, Esq. (pro hac vice) Attorneys for Defendant
450 Lexington Avenue Sanofi-Aventis U.S. LLC
New York, New York 10017
Tel.: (212) 450-4000

ii
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TABLE OF CONTENTS
PRELIMINARY STATEMENT .............................................................................. 1

BACKGROUND ...................................................................................................... 4

LEGAL STANDARDS ............................................................................................ 8

ARGUMENT ............................................................................................................ 9

I. MINNESOTA’S RICO CLAIMS SHOULD BE DISMISSED. .................... 9

A. Minnesota’s RICO Claims Are Barred by the Indirect Purchaser

Rule..................................................................................................... 10

B. Minnesota’s Claim for an Injunction Fails Because RICO Does

Not Authorize Such Relief. ................................................................ 12

C. Minnesota Cannot Assert Representative Claims Under the

RICO Statute. ..................................................................................... 14

II. MINNESOTA’S CONSUMER PROTECTION CLAIMS SHOULD

BE DISMISSED. .......................................................................................... 16

A. Minnesota’s Consumer Protection Claims Fail Because

Defendants Reported List Prices Consistent With Minnesota
Law. .................................................................................................... 16

B. Minnesota’s Consumer Protection Claims Fail Because

Defendants Do Not Direct Any Deceptive or Misleading
Representations to Consumers. .......................................................... 21

C. Certain Consumer Protection Claims Should Be Dismissed for

Additional Reasons............................................................................. 24

1. Minnesota’s claims for monetary relief should be

dismissed as duplicative of Insulin Pricing. ............................ 24

2. Minnesota has not alleged any “advertisements” covered

by the False Advertising Act.................................................... 26

3. Minnesota cannot seek monetary relief under the

Deceptive Trade Practices Act. ................................................ 28

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III. MINNESOTA’S UNJUST ENRICHMENT CLAIM SHOULD BE

DISMISSED. ................................................................................................ 28

IV. MINNESOTA FAILS TO SUPPORT ITS CLAIMS RELATING TO

THE DEPARTMENT OF CORRECTIONS AND NEWLY
INTRODUCED INSULINS. ........................................................................ 31

A. Minnesota’s Claims on Behalf of the Department of

Corrections Should Be Dismissed. ..................................................... 32

B. Minnesota’s Claims Relating to the Newly Introduced Insulins

Should Be Dismissed. ........................................................................ 34

CONCLUSION ....................................................................................................... 35

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TABLE OF AUTHORITIES
Page(s)

Cases
Adams v. Southern Farm Bureau Life Insurance Co.,
493 F.3d 1276 (11th Cir. 2007) .......................................................................... 25

In re American Investors Life Insurance Co. Annuity Marketing &

Sales Practices Litigation,
2013 WL 3463503 (E.D. Pa. July 10, 2013) ...................................................... 26

Ashcroft v. Iqbal,
556 U.S. 662 (2009) ........................................................................................8, 32

In re Average Wholesale Price Litigation,

491 F. Supp. 2d 20 (D. Mass. 2007) ................................................................... 28

In re Baldwin-United Corp.,
770 F.2d 328 (2d Cir. 1985) ............................................................................... 26

Baraka v. McGreevey,
481 F.3d 187 (3d Cir. 2007) ................................................................................. 8

Berg v. Yellow Transportation, Inc.,

No. 1:05-cv-01289, 2006 WL 533746 (N.D.N.Y. Mar. 3, 2006)....................... 18

California v. IntelliGender,
771 F.3d 1169 (9th Cir. 2014) ......................................................................25, 26

Colorado River Water Conservation District v. United States,

424 U.S. 800 (1976) ............................................................................................ 24

Connecticut v. Health Net, Inc.,

383 F.3d 1258 (11th Cir. 2004) .......................................................................... 14

Cooperman v. R.G. Barry Corp.,

775 F. Supp. 1211 (D. Minn. 1991) .................................................................... 22

Cummins Law Office, P.A. v. Norman Graphic Printing Co. Ltd.,

826 F. Supp. 2d 1127 (D. Minn. 2011)............................................................... 31

iii
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Curley v. Cumberland Farms Dairy, Inc.,

728 F. Supp. 1123 (D.N.J. 1989) ........................................................................ 13

Dessources v. American Conference Institute,

No. 12 Civ. 8105, 2013 WL 2099251 (S.D.N.Y. May 15, 2013) ...................... 33

Dillon v. Combs,
895 F.2d 1175 (7th Cir. 1990) ............................................................................ 15

EEOC v. U.S. Steel Corp.,

921 F.2d 489 (3d Cir. 1990) .........................................................................11, 25

Finkelman v. NFL,
810 F.3d 187 (3d Cir. 2016) ................................................................................. 9

Futterknecht v. Thurber,
No. 14-7395, 2015 WL 4603010 (D.N.J. July 30, 2015) ................................... 13

General Marketing Services, Inc. v. American Motorsports,

393 F. Supp. 2d 901 (D. Minn. 2005) ................................................................. 30

Group Health Plan, Inc. v. Philip Morris Inc.,

621 N.W.2d 2 (Minn. 2001) ............................................................................... 22

Group Health Plan, Inc. v. Philip Morris, Inc.,

68 F. Supp. 2d 1064 (D. Minn. 1999) ................................................................. 27

Guirguis v. Movers Specialty Services, Inc.,

346 F. App’x 774 (3d Cir. 2009) ........................................................................ 34

Gulfstream III Associates, Inc. v. Gulfstream Aerospace Corp.,

995 F.2d 425 (3d Cir. 1993) ............................................................................... 11

Hawaii v. Standard Oil Co.,

405 U.S. 251 (1972) ............................................................................................ 15

Hemy v. Perdue Farms, Inc.,

2011 WL 6002463 (D.N.J. Nov. 30, 2011) ........................................................ 35

Holmes v. Securities Investor Protection Corp.,

503 U.S. 258 (1992) ............................................................................................ 15

iv
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Illinois v. Life of Mid-America Insurance Co.,

805 F.2d 763 (7th Cir. 1986) ........................................................................15, 16

In re Insulin Pricing Litigation,

No. 17-cv-699, 2019 WL 643709 (D.N.J. Feb. 2, 2019).............................passim

Janssen v. Lommen, Abdo, Cole, King & Stageberg, P.A.,

No. A14-0452, 2014 WL 7237121 (Minn. Ct. App. Dec. 22, 2014) ...........29, 30

Johnston Development Group, Inc. v. Carpenters Local

Union No. 1578,
728 F. Supp. 1142 (D.N.J. 1990) ........................................................................ 13

Kansas v. UtiliCorp United, Inc.,

497 U.S. 199 (1990) ............................................................................................ 11

Kociemba v. G.D. Searle & Co.,

707 F. Supp. 1517 (D. Minn. 1989) .................................................................... 26

Lieberson v. Johnson & Johnson Consumer Companies, Inc.,

865 F. Supp. 2d 529 (D.N.J. 2011) ..................................................................... 33

Luckey v. Alside,
245 F. Supp. 3d 1080 (D. Minn. 2017)............................................................... 30

McCarthy v. Recordex Service, Inc.,

80 F.3d 842 (3d Cir. 1996) ................................................................................. 11

Medical Society of New Jersey v. Herr,

191 F. Supp. 2d 574 (D.N.J. 2002) ..................................................................... 32

Merck & Co., Inc. v. U.S. Department of Health & Human Services,
No. 19-cv-01738, 2019 WL 2931591 (D.D.C. July 8, 2019) ............................. 23

MSP Recovery Claims, Series, LLC, et al. v. Sanofi Aventis U.S. LLC,
et al.,
No. 18-cv-2211, 2019 WL 1418129 (D.N.J. Mar. 29, 2019) ......................passim

New Mexico v. Capital One Bank (USA) N.A.,

980 F. Supp. 2d 1346 (D.N.M. 2013) ................................................................. 26

Novus Franchising, Inc. v. Dean,

No. 10-2834, 2010 WL 6421674 (D. Minn. Nov. 29, 2010).............................. 22

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Package Shop, Inc. v. Anheuser-Busch, Inc.,

No. 85-513, 1984 WL 6618 (D.N.J. Sept. 25, 1984).......................................... 18

Pharmaceutical Research & Manufacturers of America v. Walsh,

538 U.S. 644 (2003) (Breyer, J., concurring in part) .......................................... 24

Russo v. NCS Pearson, Inc.,

462 F. Supp. 2d 981 (D. Minn. 2006) ................................................................. 28

Schaaf v. Residential Funding Corp.,

517 F.3d 544 (8th Cir. 2008) .............................................................................. 30

Schumacher v. Schumacher,
627 N.W.2d 725 (Minn. Ct. App. 2001)............................................................. 29

Sedima, S.P.R.L. v. Imrex,

473 U.S. 479 (1985) ............................................................................................ 15

Semanko v. Minnesota Mutual Life Insurance Co.,

168 F. Supp. 2d 997 (D. Minn. 2000) ................................................................. 16

ServiceMaster of St. Cloud v. Gab Business Services, Inc.,

544 N.W.2d 302 (Minn. 1996) ........................................................................... 31

Southtown Plumbing, Inc. v. Har-Ned Lumber Co.,

493 N.W.2d 137 (Minn. Ct. App. 1992)............................................................. 31

Spokeo, Inc. v. Robins,

136 S. Ct. 1540 (2016) ...................................................................................... 8, 9

Travelers Indemnity Co. v. Cephalon, Inc.,

620 F. App’x 82 (3d Cir. 2015) ............................................................................ 8

UnitedHealth Group Inc. v. State ex rel. Swanson,

No. A06-2013, 2007 WL 4234545 (Minn. Ct. App. Dec. 4, 2007) ................... 27

Unitronics, Inc. v. Robotic Parking Systems Inc.,

No. 09-3493, 2010 WL 2545169 (D.N.J. June 18, 2010) .................................. 26

Vandervolk v. United States,

868 F.3d 189 (3d Cir. 2017) ................................................................................. 6

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Walton v. Eaton Corp.,

563 F.2d 66 (3d Cir. 1977) ................................................................................. 24

Wiegand v. Walser Automotive Groups, Inc.,

670 N.W.2d 449 (Minn. Ct. App. 2003)............................................................. 17

Wilson v. Bernstock,
195 F. Supp. 2d 619 (D.N.J. 2002) ....................................................................... 6

Yarrington v. Solvay Pharmaceuticals,

No. A05-2288, 2006 WL 2729463 (Minn. Ct. App. Sept. 26, 2006)................. 16

Statutes
15 U.S.C.

§ 15c .................................................................................................................... 15

§ 1051 et seq. ...................................................................................................... 27

18 U.S.C. § 1964 ...................................................................................................... 13

42 U.S.C.

§ 1395w-3a(c)(6)(B) ........................................................................................... 17

§ 1396r–8(c)(1) ................................................................................................... 19

Minnesota Deceptive Trade Practices Act (MINN. STAT. § 325D.43

et seq.) ..........................................................................................................passim

Minnesota False Statement in Advertising Act (MINN. STAT. § 325F.67) .......passim

Minnesota Prevention of Consumer Fraud Act (MINN. STAT. § 325F.68

et seq.) ..........................................................................................................passim

MINN. STAT.

§ 256B.0625, Subd. 13e(a) ..........................................................................passim

§ 256B.0625, Subd. 13g...................................................................................... 20

Other Authorities

42 C.F.R.

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§ 447.502............................................................................................................. 18

§ 447.512............................................................................................................. 18

Federal Rule of Civil Procedure

9(b) ........................................................................................................................ 8

12(b)(1) ...........................................................................................................1, 32

12(b)(6) ................................................................................................................. 1

JOHN BOURDEAU ET AL., FEDERAL PROCEDURE, LAWYERS ED.

§ 10:205 (June 2019) .......................................................................................... 14

Medicare and Medicaid Programs; Regulation to Require Drug

Pricing Transparency, 84 Fed. Reg. 20,732 (May 10, 2019) ......................23–24

Memorandum of Plaintiff State of Minnesota in Opposition to

Defendants’ Motion to Dismiss, State of Minnesota v. Pharmacia
Corp., No. 02-009660 (Dist. Ct. Minn. Aug. 2, 2004) ....................................... 21

MINN. R. 1230.0150 ................................................................................................... 7

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Defendants Novo Nordisk Inc., Sanofi-Aventis U.S. LLC, and Eli Lilly and

Company (collectively, “defendants”) respectfully submit this memorandum of law

in support of their Motion to Dismiss the State of Minnesota’s First Amended

Complaint (the “Complaint” or “FAC”) pursuant to Federal Rules of Civil Procedure

12(b)(6) and 12(b)(1).

PRELIMINARY STATEMENT

In this action, the State of Minnesota (“the State” or “Minnesota”) accuses

defendants of reporting false and misleading list prices for insulin. According to the

Complaint, there are two different “prices” for prescription drugs: (i) a “list” price

that reflects the amount pharmaceutical manufacturers charge to wholesale drug

distributors, and (ii) a “net” price that reflects the amount manufacturers ultimately

realize for their drugs after paying rebates to pharmacy benefit managers (“PBMs”).

Minnesota contends that the reported list prices for insulin are false and misleading

because they do not accurately represent the net prices defendants receive for insulin

after paying PBM rebates. On that basis, Minnesota seeks relief on behalf of

Minnesota consumers and the Minnesota Department of Corrections.

Although Minnesota’s theory is similar to the ones advanced in two other

lawsuits filed against defendants in this District,1 the State is differently situated

1
See In re Insulin Pricing Litig. (“Insulin Pricing”), No. 17-cv-699 (D.N.J.), and
MSP Recovery Claims, Series, LLC, et al. v. Sanofi Aventis U.S. LLC, et al. (“MSP
Recovery”), No. 18-cv-2211 (D.N.J.).
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from the plaintiffs in those actions. Specifically, Minnesota alleges that it is illegal

for defendants to report insulin list prices—i.e., wholesale acquisition costs or

WACs—that do not reflect PBM rebates. But that allegation cannot be squared with

Minnesota’s own laws, which require that a pharmaceutical manufacturer’s reported

WACs exclude “discounts, rebates or other reductions in price.” MINN. STAT.

§ 256B.0625, Subd. 13e(a). And Minnesota cannot contend that there is anything

unlawful about a difference between defendants’ list and net prices caused by PBM

rebates when Minnesota itself has hired a PBM (CVS Caremark) to aggressively

negotiate rebates from pharmaceutical manufacturers. This is the same CVS that

Minnesota alleges is an “essential” participant in a racketeering enterprise with each

defendant and receives illegal profits from the purported fraudulent conduct. For

these reasons and others, Minnesota’s claims should be dismissed.

RICO. Minnesota attempts to plead a RICO claim that is functionally

identical to the RICO claims this Court has already dismissed against defendants in

the other insulin-pricing lawsuits. Just as in those lawsuits, the Court should dismiss

Minnesota’s RICO claim under the indirect purchaser rule, because neither

Minnesota consumers nor the Department of Corrections purchases insulin directly

from defendants. The Court should also dismiss Minnesota’s claim for an injunction

under RICO because the statute does not permit states to seek such relief. And even

if Minnesota could overcome these threshold defects, its RICO claims on behalf of

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consumers should still be dismissed, because the statute does not allow states to

assert representative claims on behalf of residents.

Minnesota Law Consumer Protection Claims. The Court should likewise

dismiss Minnesota’s claims under the Prevention of Consumer Fraud Act, Deceptive

Trade Practices Act, and False Statement in Advertising Act. Minnesota cannot

claim that defendants violated Minnesota’s consumer protection laws by reporting

list prices that exclude PBM rebates, when that is precisely what another Minnesota

law requires defendants to do. Nor can Minnesota claim that defendants misled

consumers by accurately reporting to third-party pricing services the amounts

defendants charge to wholesalers for insulin. This is especially true for the false

advertising claim, which requires an actual advertisement to consumers. Finally,

Minnesota’s consumer protection claims should be dismissed insofar as they seek

(i) monetary relief that is wholly duplicative of the relief sought by the plaintiffs in

Insulin Pricing, and (ii) damages under the Deceptive Trade Practices Act.

Unjust Enrichment Claim. Minnesota’s unjust enrichment claim should be

dismissed because it is wholly derivative and duplicative of Minnesota’s defective

consumer protection claims. The unjust enrichment claim should also be dismissed

because Minnesota does not allege that defendants received and retained anything

of value from Minnesota consumers or the Department of Corrections, a necessary

prerequisite to such a claim. To the contrary, Minnesota alleges that the difference

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between the list price and net price for defendants’ insulins—the amount of their

alleged loss—is paid to PBMs in the form of rebates, and that those rebates are then

shared between PBMs and their health plan clients (including Minnesota itself).

For these reasons and the additional reasons set forth below, defendants

respectfully request that the Court dismiss the Complaint with prejudice.

BACKGROUND

Minnesota’s claims in this action are predicated on a “fraudulent scheme”

between defendants and four PBMs to publish deceptive and misleading “list” prices

for insulin products. FAC ¶¶ 3, 71.2 According to the Complaint, defendants’ list

prices are misleading because they “are no longer accurate representations of the

actual price Defendants receive for analog insulin” after paying rebates to PBMs.

Id. ¶ 3. These allegations generally track the allegations in the other lawsuits

challenging insulin pricing that are pending before this Court. Compare id. ¶¶ 94,

148, 310 (alleging “deceptively inflated benchmark prices . . . that were not

reasonably reflective of the secret, undisclosed net prices . . . due to rebates and other

concessions to [PBMs]”), with Insulin Pricing, No. 17-cv-699, Dkt No. 255, ¶ 387

(D.N.J. Mar. 18, 2019) (alleging that defendants’ list prices “are no longer a

reasonable approximation of the actual price of insulin”).

2
The four PBMs identified in the Complaint are CVS, Express Scripts, OptumRx,
and Prime Therapeutics. See FAC ¶ 38.

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Although Minnesota’s allegations are similar to the other insulin-pricing

cases, there are meaningful differences between Minnesota and the plaintiffs in those

cases. Most significantly, Minnesota cannot plausibly allege that there is something

unlawful about publishing list prices—i.e., WACs—that do not reflect PBM rebates.

The Minnesota legislature has, by statute, defined WAC to exclude rebates:

Wholesale acquisition cost is defined as the manufacturer’s list

price for a drug or biological to wholesalers or direct purchasers
in the United States, not including prompt pay or other
discounts, rebates, or reductions in price, for the most recent
month for which information is available, as reported in
wholesale price guides or other publications of drug or
biological pricing data.

MINN. STAT. 256B.0625, Subd. 13e(a) (emphasis added). Minnesota law thus

requires that defendants undertake the very conduct that the State now alleges to be

fraudulent: submitting list prices to price reporting services that do not include PBM

rebates.

Minnesota likewise cannot claim that there is anything unlawful or improper

about the payment of rebates to PBMs for prescription drugs. To the contrary,

Minnesota itself contracts with CVS to negotiate rebates from pharmaceutical

manufacturers on behalf of state employees. See Certification of Melissa Geist, Ex.

A, Benefits Information: Medical, State Employee Group Insurance Plan, at

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https://bit.ly/32J4j8A.3 Minnesota even touts the value of these rebates, asserting

that its employee health plan receives “the lowest prices available” and that “all

rebates from drug manufacturers are passed on to the state.” Id., Ex. B, Our Mission,

State Employee Group Insurance Program, at https://bit.ly/2JGJxyI. Indeed, under

its contract with CVS, Minnesota “receives 100% of the rebates associated with its

members,” an amount that exceeded $38 million in 2018 alone. Id., Ex. C,

Consolidated Fiscal Note at 9, Minnesota Health & Human Services Finance

Division (Mar. 25, 2019), at https://bit.ly/2LBTr7d.

Minnesota’s engagement of CVS to negotiate rebates from drug

manufacturers underscores the implausibility of the State’s claims. Minnesota

alleges that CVS participates in a purported fraudulent scheme by “[n]egotiating

significant rebates” from defendants. See FAC ¶¶ 97(a), 205(a), 313(a). Minnesota

also asserts that “CVS’s conduct and participation is essential to the success of”

separate racketeering enterprises with each defendant. Id. ¶¶ 98, 206, 314. These

allegations are irreconcilable with the fact that Minnesota has hired CVS precisely

to obtain negotiated rebates for its benefit—i.e., the alleged proceeds of the alleged

3
The Court may take judicial notice of this information because it has been made
publicly available by the State of Minnesota. See Vandervolk v. United States, 868
F.3d 189, 205 n.16 (3d Cir. 2017) (courts may “take judicial notice of . . . information
. . . made publicly available by government entities”); Wilson v. Bernstock, 195 F.
Supp. 2d 619, 623 (D.N.J. 2002) (on a motion to dismiss, a court may take judicial
notice of matters of public record).

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fraud and racketeering. Minnesota should not be permitted to laud the benefits of

the rebates that CVS obtains for the State through hard, arms-length negotiations, on

one hand, and then claim that the same activity constitutes systemic fraud on the

other.4

While Minnesota’s own law and conduct should preclude it from bringing this

lawsuit, Minnesota nevertheless seeks to hold defendants liable for reporting insulin

list prices that “do not reasonably approximate the actual price they receive for their

insulin products after taking into account all rebates, discounts, and any other

pricing-related concessions.” FAC ¶ 437. The State brings this action on behalf of

“Minnesota residents without insurance, Minnesota residents with high-deductible

health plans, Minnesota residents who pay coinsurance, Minnesota Medicare

beneficiaries, and the Minnesota Department of Corrections.” Id. ¶ 4. The

Complaint asserts claims under RICO, the Minnesota Deceptive Trade Practices Act

(MINN. STAT. § 325D.44), the Minnesota False Statement in Advertising Act (“False

Advertising Act”) (MINN. STAT. § 325F.67), the Minnesota Prevention of Consumer

Fraud Act (“Consumer Fraud Act”) (MINN. STAT. § 325F.69), and for unjust

enrichment.

4
Indeed, if Minnesota’s allegations were plausible, it is unclear how Minnesota
could contract with CVS consistent with the state’s debarment regulations, which
define a “responsible vendor” as “a vendor who . . . has not engaged in unlawful
practices [or] associated with organized crime.” MINN. R. 1230.0150 subp. 20(G).

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LEGAL STANDARDS

A claim should be dismissed if, assuming its well-pleaded allegations of fact

are true, it fails to plausibly show that the plaintiff is entitled to relief. See, e.g.,

Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009). Legal conclusions, “labels,” and

other conclusory allegations are not assumed to be true and cannot establish

entitlement to relief. Id. at 678. Rather, a plaintiff must allege “sufficient factual

matter” that, taken as true, allows the court “to draw the reasonable inference that

the defendant is liable for the misconduct alleged.” Id.; see also Baraka v.

McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (courts “are not compelled to accept

unsupported conclusions and unwarranted inferences, or a legal conclusion couched

as a factual allegation” (internal quotation marks omitted)). In addition, claims

sounding in fraud must be pleaded with the particularity required by Rule 9(b),

including identification of “specific fraudulent statements, omissions, or

misrepresentations.” Travelers Indem. Co. v. Cephalon, Inc., 620 F. App’x 82, 85–

86 (3d Cir. 2015).

To establish Article III standing to sue, the plaintiff must “‘clearly . . . allege

facts demonstrating’” that plaintiff has suffered an injury that is (1) “concrete and

particularized and actual or imminent,” (2) “fairly traceable to the challenged

conduct of the defendant,” and (3) “likely to be redressed by a favorable judicial

decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547–48 (2016). “Where . . . a

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case is at the pleadings stage, the plaintiff must ‘clearly . . . allege facts

demonstrating’ each element” of standing to survive a motion to dismiss. Id.; see

also Finkelman v. NFL, 810 F.3d 187, 194 (3d Cir. 2016) (“[T]o survive a motion to

dismiss for lack of standing, a plaintiff ‘must allege facts that affirmatively and

plausibly suggest that it has standing to sue.’”) (citation omitted).

ARGUMENT

I. MINNESOTA’S RICO CLAIMS SHOULD BE DISMISSED.

Minnesota attempts to plead RICO claims that are virtually identical to the

ones this Court has previously dismissed against defendants in the other insulin-

pricing lawsuits pending in this District. The Court should reach the same result

here and dismiss Minnesota’s RICO claims. First, Minnesota’s RICO claims for

damages are barred by the indirect purchaser rule because Minnesota is asserting

claims on behalf of consumers and a state agency that do not purchase insulin

directly from defendants. Second, Minnesota’s claim for injunctive relief under

RICO should be dismissed because the statute does not permit such a claim. Third,

Minnesota’s claims on behalf of consumers should also be dismissed because the

RICO statute does not authorize state governments to assert representative claims on

behalf of their residents.

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A. Minnesota’s RICO Claims Are Barred by the Indirect Purchaser

Rule.

This Court has already held that RICO claims indistinguishable from those

asserted here are barred by the indirect purchaser rule. In Insulin Pricing, numerous

consumers—including consumers in Minnesota—brought RICO claims against

defendants for “a scheme to ‘artificially inflat[e] the benchmark prices of their

analog insulin.’” Insulin Pricing, No. 17-cv-699, 2019 WL 643709, at *9 (D.N.J.

Feb. 2, 2019). The Court concluded that the consumers lack standing to assert RICO

claims because “they failed to allege that they directly purchased the analog insulin

from Defendants.” Id. at *14. As the Court explained, “controlling caselaw” from

the Third Circuit establishes a bright-line rule that only a direct purchaser has

standing to sue a pharmaceutical manufacturer for RICO violations. Id. at *8; see

also MSP Recovery, No. 18-cv-2211, 2019 WL 1418129, at *13–16 (D.N.J. Mar.

29, 2019) (dismissing RICO claims brought by health plan assignors because they

“failed to allege that they directly purchased the analog insulin from Defendants”).

Minnesota cannot distinguish this Court’s prior holding on this issue in Insulin

Pricing and MSP Recovery. As in Insulin Pricing, Minnesota asserts RICO claims

on behalf of consumers who allegedly pay for insulin based on the list prices set by

defendants—including the same Minnesota consumers whose RICO claims were

dismissed in Insulin Pricing. See FAC ¶¶ 5, 73–74, 82, 438. Those consumers are

not the first in the distribution chain to pay based on defendants’ list prices. Rather,

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as Minnesota acknowledges in the Complaint, the “pricing practices described

herein cause Defendants to charge wholesalers more for insulin, wholesalers to

charge pharmacies more for insulin, and pharmacies to charge patients more for

insulin.” Id. ¶ 78; see also id. ¶¶ 31, 36, 47, 74. These allegations confirm that

Minnesota consumers are “multiple purchasers down the distribution chain from

Defendants and are quintessential indirect purchasers for the purposes of the indirect

purchaser rule.” Insulin Pricing, 2019 WL 643709, at *8.

It makes no difference that the State of Minnesota is the named plaintiff in

this action. The Supreme Court has applied the indirect purchaser rule equally to

claims by state governments “acting as parens patriae . . . on behalf of their

residents.” McCarthy v. Recordex Serv., Inc., 80 F.3d 842, 849 (3d Cir. 1996); see

also Kansas v. UtiliCorp United, Inc., 497 U.S. 199, 204 (1990) (holding that the

indirect purchaser rule barred Kansas and Missouri from asserting antitrust claims

on behalf of their residents to recover inflated prices for natural gas). The rationale

for applying the rule to state governments is straightforward: when a state seeks

relief for its residents, it stands in the shoes of the individuals whose rights it seeks

to vindicate. See, Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp., 995

F.2d 425, 439 (3d Cir. 1993) (noting that “the [Supreme] Court refused to create an

exception to Illinois Brick for states suing in a parens patriae capacity to redress

economic harms to their citizens”); EEOC v. U.S. Steel Corp., 921 F.2d 489, 494–

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97 (3d Cir. 1990) (holding that government agency is in privity with individuals

when it seeks to assert representative claims on their behalf).

Minnesota’s RICO claims on behalf of the Department of Corrections are

likewise barred by the indirect purchaser rule. See FAC ¶ 82. As Minnesota

acknowledges in the Complaint, the Department does not purchase insulin directly

from defendants. Rather, the Department “has purchased insulin from a wholesaler

whose price, like those of other wholesalers, is based on the benchmark price that

the manufacturer sets or passes through to the wholesaler.” Id. ¶ 82 (emphasis

added). Those allegations make clear that the Department does not “directly

purchase[] the analog insulin from Defendants, but instead claim[s] injury by virtue

of inflated prices of [its] downstream purchase.” MSP Recovery, 2019 WL 1418129,

at *16. As a result, the Department’s claims are barred by the indirect purchaser

rule. Id.; see also Insulin Pricing, 2019 WL 643709, at *13 (“Allowing Plaintiffs’

RICO claims to proceed would expose Defendants to liability to Plaintiffs as well as

to the various direct purchasers, such as the wholesalers . . . .”).

B. Minnesota’s Claim for an Injunction Fails Because RICO Does

Not Authorize Such Relief.
Minnesota’s claim for an injunction under RICO should also be dismissed.

As defendants showed in their pending motions to dismiss in Insulin Pricing and

MSP Recovery, other judges in this District have held that RICO limits the

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availability of injunctive relief to actions brought by the federal government.5 See

Curley v. Cumberland Farms Dairy, Inc., 728 F. Supp. 1123, 1137 (D.N.J. 1989);

see also Futterknecht v. Thurber, No. 14-7395, 2015 WL 4603010, at *4 (D.N.J.

July 30, 2015); Johnston Dev. Grp., Inc. v. Carpenters Local Union No. 1578, 728

F. Supp. 1142, 1146 (D.N.J. 1990) (noting in dicta that RICO “makes no provision

for private equitable relief”). These decisions rely foremost on the text and

legislative history of the RICO statute, which indicate that injunctive relief can be

sought only by the federal government. See 18 U.S.C. §§ 1964(a)–(c) (authorizing

only the “Attorney General” to bring claims for injunctive relief); id. § 1961(10)

(defining “Attorney General” to mean the Attorney General of the United States,

other high-ranking DOJ officials and any federal government employee designated

by the Attorney General); see also U.S. Dep’t of Justice, Civil RICO: A Manual for

Federal Attorneys 28 (2007), at http://bit.ly/2MwF8C0 (explaining that RICO’s

“legislative history confirms that it vests the Attorney General of the United States

with the exclusive authority to bring suits for equitable relief”).

5
To avoid burdening the Court with duplicative briefing, defendants incorporate by
reference the arguments made in their pending motions to dismiss in Insulin Pricing
and MSP Recovery. See Insulin Pricing, No. 17-cv-699, Dkt. 263-1, at 4–11 (D.N.J.
filed May 17, 2019); MSP Recovery, 18-cv-2211, Dkt. 97-1, at 12–18 (D.N.J. filed
June 28, 2019). Those arguments apply equally here because they make clear that
injunctive relief is available only to the federal government, and because Minnesota
asserts RICO claims as a private plaintiff. See, e.g., FAC ¶ 440 (asserting claims
under RICO’s private cause of action, 18 U.S.C. § 1964(c)).

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For those reasons, Minnesota’s claim for injunctive relief under RICO should

be dismissed along with its claims for RICO damages.

C. Minnesota Cannot Assert Representative Claims Under the RICO

Statute.

Even if Minnesota could overcome the fundamental defects described above,

Minnesota’s parens patriae RICO claims should be dismissed for another reason:

the statute does not authorize state governments to bring representative claims on

behalf of their residents. “When a state sues in parens patriae to enforce a federal

statute, it must demonstrate that, in enacting the statute, Congress clearly intended

that the states be able to bring actions in that capacity.” Connecticut v. Health Net,

Inc., 383 F.3d 1258, 1261–62 (11th Cir. 2004) (citing Hawaii v. Standard Oil Co.,

405 U.S. 251, 260–66 (1972)). Applying that principle, federal courts have

uniformly held that Congress did not authorize state governments “to bring a RICO

action on behalf of [their] citizens.” 5B JOHN BOURDEAU ET AL., FEDERAL

PROCEDURE, LAWYERS ED. § 10:205 (June 2019) (citing Dillon v. Combs, 895 F.2d

1175, 1177 (7th Cir. 1990), Abrams v. Seneci, 817 F.2d 1015, 1017 (2d Cir. 1987),

and Illinois v. Life of Mid-America Ins. Co., 805 F.2d 763, 766–67 (7th Cir. 1986)).

These decisions follow straightforwardly from the text of the RICO statute,

which allows a plaintiff to sue only for his own injuries. Section 1964(c) of the

statute authorizes lawsuits by a “person injured in his business or property by reason

of a [RICO] violation.” 18 U.S.C. § 1964(c) (emphasis added). This provision

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allows plaintiffs to bring RICO claims for their own injuries, but does not “authorize

a state to obtain relief on account of a fraud practiced against its residents.” Dillon,

895 F.2d at 1177. Otherwise, defendants could be exposed to duplicative RICO

claims in which individual consumers seek to recover for the very same injuries to

their “business or property” as state governments suing on their behalf. Life of Mid-

Am. Ins. Co., 805 F.2d at 764; see also Sedima, S.P.R.L. v. Imrex, 473 U.S. 479, 496

(1985) (“[T]he plaintiff only has standing if, and can only recover to the extent that,

he has been injured in his business or property by the conduct constituting the

violation.”).

This conclusion is confirmed by the Supreme Court’s holding that the antitrust

laws did not authorize state governments to assert representative antitrust claims on

behalf of their citizens. Standard Oil, 405 U.S. at 264 (holding that under the

Clayton Act, a State may “see[k] damages for injuries to its commercial interests,”

but not “for other injuries”). The Supreme Court’s holding in Standard Oil applies

equally to RICO because “Congress modeled § 1964(c) [of RICO] on the civil-

action provision of the federal antitrust laws.” Holmes v. Sec. Inv’r Prot. Corp., 503

U.S. 258, 267 (1992). Further, in response to Standard Oil, Congress amended the

antitrust laws to allow a state attorney general to maintain a representative antitrust

action, 15 U.S.C. § 15c, but did not similarly amend the RICO statute. The absence

of a similar amendment authorizing state governments to bring representative RICO

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claims further demonstrates that Congress did not intend to authorize such claims.

Life of Mid-Am. Ins. Co., 805 F.2d at 767 (“In the face of such congressional action,

we must conclude that the maintenance of [a parens patriae RICO claim] was not

intended by Congress.”).

II. MINNESOTA’S CONSUMER PROTECTION CLAIMS SHOULD BE

DISMISSED.

In addition to federal RICO claims, Minnesota pleads claims under its

Deceptive Trade Practices Act (MINN. STAT. § 325D.44), False Advertising Act

(MINN. STAT. § 325F.67), and Consumer Fraud Act (MINN. STAT. § 325F.69). See

FAC ¶¶ 412–35. In all three cases, Minnesota alleges little more than a list of the

elements of the statutes that defendants allegedly violated. Those claims should be

dismissed for the reasons set forth below.

A. Minnesota’s Consumer Protection Claims Fail Because

Defendants Reported List Prices Consistent With Minnesota Law.

All three consumer protection statutes require Minnesota to show that

defendants “made a false representation, misled, or caused confusion in [their]

marketing of” their products. Yarrington v. Solvay Pharm., No. A05-2288, 2006

WL 2729463, at *5 (Minn. Ct. App. Sept. 26, 2006); Semanko v. Minn. Mut. Life

Ins. Co., 168 F. Supp. 2d 997, 1000 (D. Minn. 2000) (dismissing Minnesota

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consumer protection claims for failure to identify misrepresentations to consumers).6

Here, Minnesota’s consumer protection claims are based on the contention that

defendants “publish and disseminate” misleading list prices (i.e., WACs) for insulin

because those prices “are no longer accurate representations of the actual price

Defendants receive for analog insulin” after paying rebates to PBMs. FAC ¶ 3; see

also id. ¶¶ 415, 420, 425, 431, 437. These claims fail as a matter of law because

Minnesota has statutorily defined list prices to exclude rebates to PBMs.

Minnesota law defines WAC to mean the “list price” that manufacturers

charge to “wholesalers and other direct purchasers,” “not including prompt pay or

other discounts, rebates or reductions in price . . . as reported in wholesale price

guides or other publications.” MINN. STAT. 256B.0625, Subd. 13e(a).7 This

statutory definition forecloses Minnesota’s claims in two respects. First, Minnesota

6
To state a claim under the Consumer Fraud Act, a plaintiff must allege “an
intentional misrepresentation relating to the sale of merchandise.” Wiegand v.
Walser Auto. Grps., Inc., 670 N.W.2d 449, 452 (Minn. Ct. App. 2003), rev’d on
other grounds, 683 N.W.2d 807 (Minn. 2004). Similarly, the False Advertising Act
requires the intent to publish a false or misleading advertisement to consumers.
MINN. STAT. § 325F.67. Finally, the Deceptive Trade Practices Act requires either
(i) “false or misleading statements of fact concerning the reasons for, existence of,
or amounts of price reductions,” or (ii) “conduct which similarly creates a likelihood
of confusion or of misunderstanding.” Id. § 325D.44, Subd. 1(11), 1(13).
7
Federal law defines WAC in a similar fashion. See 42 U.S.C. § 1395w-3a(c)(6)(B)
(“The term ‘wholesale acquisition cost’ means, with respect to a drug or biological,
the manufacturer’s list price for the drug or biological to wholesalers or direct
purchasers in the United States, not including prompt pay or other discounts, rebates
or reductions in price, . . . as reported in wholesale price guides or other publications
of drug or biological pricing data.”).

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law dictates that reported list prices for insulin should exclude rebates and discounts.

Second, defendants’ list prices must reflect the actual price charged to wholesalers,

which is unaffected by any rebates subsequently paid to PBMs. See FAC ¶¶ 31, 78

(acknowledging that “WAC is the approximate price” paid by wholesalers regardless

of any rebates paid to PBMs).8 It simply cannot be misleading or deceptive for

defendants to report list prices that exclude PBM rebates, when that is precisely what

Minnesota law requires. See, e.g., Package Shop, Inc. v. Anheuser-Busch, Inc., No.

85-513, 1984 WL 6618, at *23 (D.N.J. Sept. 25, 1984) (“[L]iability cannot be based

on compliance with a state law.”); Berg v. Yellow Transp., Inc., No. 1:05-cv-01289,

2006 WL 533746, at *4 (N.D.N.Y. Mar. 3, 2006) (“[A] person or entity cannot be

held liable for doing what he was legally required to do.”).

A simple example illustrates how Minnesota’s own statutory definition

forecloses the consumer protection claims asserted here. Suppose that a defendant

sells an insulin product to a wholesaler at a list price of $100. If the defendant agrees

8
Indeed, reporting list prices that account for PBM rebates would undermine
Minnesota’s own use of those list prices. The state’s Medicaid program uses WAC
to estimate the actual prices that pharmacies pay wholesalers to acquire prescription
drugs for purposes of reimbursing pharmacies. See MINN. STAT. 256B.0625, Subd.
13e(a). The prices pharmacies pay are not affected by any rebates that manufacturers
may subsequently pay to PBMs. Thus, if defendants reported list prices that
reflected PBM rebates, Minnesota’s reimbursements to pharmacies would not reflect
the actual prices paid by pharmacies to acquire prescription drugs—and the State
would be out of compliance with federal law. See 42 C.F.R. §§ 447.502, 447.512
(requiring state Medicaid agencies to reimburse pharmacies based on “pharmacy
providers’ actual prices paid to acquire drug products”).

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to pay a PBM a 40% rebate every time an insured consumer receives insulin from a

pharmacy, the $40 rebate would reduce the amount the defendant received on that

transaction to $60. But the rebate is paid long after the purchase by the wholesaler

and does not affect the $100 charged to the wholesaler. Minnesota contends that the

defendant violated the law by reporting that its list price to the wholesaler is $100

instead of the $60 the defendant received for insulin after the payment of PBM

rebates. FAC ¶ 3. Yet that is precisely what Minnesota law requires. See MINN.

STAT. 256B.0625, Subd. 13e(a).9

Even aside from the statutory definition, Minnesota cannot credibly assert that

defendants’ reported list prices are misleading when the State actively negotiates

rebates from pharmaceutical manufacturers. As noted above, Minnesota has hired

CVS to obtain significant rebates from pharmaceutical manufacturers—$38 million

in 2018 alone—on behalf of state employees. Supra at 6. Minnesota’s own conduct

thus creates a difference between list prices and “the net price that the manufacturer

receives for” prescription drugs after the payment of those rebates. FAC ¶ 3.

Moreover, Minnesota receives significant rebates under the Medicaid program. See

42 U.S.C. §§ 1396r–8(c)(1)(A)(ii)(II), 1396r-8(c)(1)(B)(i) (requiring drug

companies to provide a minimum rebate payment of 23.1% off the price charged to

9
Furthermore, it is logically impossible to report a list price that accounts for rebates
because those rebates are calculated as a percentage of the list price (40% in the
above example).

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wholesalers); MINN. STAT. § 256B.0625, Subd. 13g (authorizing state Medicaid

program to negotiate supplemental manufacturer rebates in exchange for placement

on the State’s preferred drug list). As a result of these negotiated and statutorily

mandated rebates and discounts, it is impossible for a manufacturer to report list

prices for a drug that reflect the net amount that it receives.

This Court’s recent decision in Insulin Pricing does not lead to a different

result. In that lawsuit, the consumer plaintiffs focused on defendants’ alleged

publication of average wholesale prices (“AWPs”) for insulin. Insulin Pricing, 2019

WL 643709, at *1 n.2. The Court found that the plaintiffs had adequately pleaded

that defendants “[held] out their artificially increased AWPs as benchmark prices”

that “intended to approximate the true cost of a drug.” Id. at *5. Here, by contrast,

Minnesota’s allegations do not focus on AWPs for insulin—indeed, the Complaint

barely mentions AWPs at all.

Even if Minnesota’s claims were focused on AWPs, Minnesota’s allegations

are materially different from Insulin Pricing in two key respects. First, unlike the

consumer plaintiffs in Insulin Pricing, Minnesota concedes that AWPs are not used

as a benchmark for approximating the amounts that manufacturers receive after

paying PBM rebates. Instead, the Complaint alleges that AWP “is used as a

benchmark for calculating the price at which health plans . . . reimburse pharmacies

for prescriptions that they fill for plan members.” FAC ¶ 33 (emphasis added); see

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also id. ¶ 33 (“AWP was intended to represent the average price at which drug

wholesalers sell medications to pharmacies, physicians, and other customers”

(emphasis added)).10 Second, the Complaint acknowledges that “AWP is merely a

mathematical function of WAC,” which precludes Minnesota from asserting a claim

based on AWP. Id. ¶ 32. If Minnesota law specifies that WACs must exclude

rebates to PBMs, then simple math means that AWPs must likewise exclude rebates

to PBMs.

In sum, Minnesota cannot plausibly allege that defendants are misrepresenting

their list prices for insulin by reporting those prices in compliance with Minnesota

law. All of Minnesota’s consumer protection claims should be dismissed on that

basis.

B. Minnesota’s Consumer Protection Claims Fail Because

Defendants Do Not Direct Any Deceptive or Misleading
Representations to Consumers.

Minnesota’s consumer protection claims fail for a second reason: the

Complaint does not allege that defendants directed any deceptive or misleading

10
It may be the case that Minnesota does not advance a theory based on AWPs
because the Minnesota Attorney General previously sued drug manufacturers
claiming that reported AWPs should reflect prices paid by providers to
wholesalers—not the net amount received by manufacturers after paying PBM
rebates. See Certification of Melissa Geist, Ex. D, Minnesota’s Mem. in Opp’n to
Def.’s Mot. to Dismiss at 15, State v. Pharmacia Corp., No. 27-CV-02-009660 (Dist.
Ct. Minn. Aug. 2, 2004) (“Pharmacia’s argument that the Court must dismiss the
State’s Complaint because of some alleged ambiguity regarding AWP’s meaning is
also meritless. AWP means exactly what the plain language dictates – the average
price wholesalers sell a drug to providers.”).

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conduct to consumers. To state a claim under the three Minnesota statutes asserted

in the Complaint, a plaintiff must allege a misrepresentation or deceptive conduct

directed to consumers in connection with a consumer transaction. See Grp. Health

Plan, Inc. v. Philip Morris Inc., 621 N.W.2d 2, 12 (Minn. 2001) (“[The False

Advertising Act] defines the prohibited conduct in terms of untrue or misleading

statements in advertisements for the sale of merchandise.”); Cooperman v. R.G.

Barry Corp., 775 F. Supp. 1211, 1214 (D. Minn. 1991) (“It is unlikely that the

Legislature intended the Consumer Fraud Act to have such broad application” as to

“render it applicable to any contract remotely related to the ultimate sale of

merchandise.”); Novus Franchising, Inc. v. Dean, No. 10-2834, 2010 WL 6421674,

at *10 (D. Minn. Nov. 29, 2010) (the Deceptive Trade Practices Act “prohibits

businesses from passing off goods or services as those of another and causing the

likelihood of confusion”).

Minnesota has not pleaded any representations to consumers whatsoever,

much less any such representations stating that list prices reflect PBM rebates. As

Minnesota acknowledges, defendants disseminate their list prices to third-party

“reporting services,” not consumers. FAC ¶ 34. Minnesota has not alleged that any

Minnesota consumers ever saw those publications, or that defendants otherwise

advertised their list prices to the public. And as noted above, Minnesota law defines

list prices to mean the prices charged to “wholesalers and other direct purchasers”

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that are “reported in wholesale price guides or other publications.” MINN. STAT.

256B.0625, Subd. 13e(a). That statutory definition makes clear that “list prices” are

not prices for consumers. Minnesota has not offered any theory to explain how

accurate statements to industry publications about the prices defendants charge to

wholesalers could constitute a misrepresentation to consumers about the prices that

pharmacies charge to those consumers.

Even if defendants had advertised their list prices for insulin in some public

fashion, Minnesota still would be unable to identify any deceptive or misleading

representations. Indeed, the federal government has now explicitly rejected the

notion that reporting such list prices could be misleading because they do not

account for rebates to PBMs. On May 10, 2019, the Centers for Medicare &

Medicaid Services (“CMS”) published a rule that would require drug manufacturers

to display their WACs in television advertisements that are directed to consumers.

Medicare and Medicaid Programs; Regulation to Require Drug Pricing

Transparency, 84 Fed. Reg. 20,732 (May 10, 2019).11 In promulgating the Rule,

CMS rejected a proposal that the prices communicated directly to consumers should

11
A federal district court recently vacated the rule on the grounds that the statutory
basis for the rule invoked by the agency did not authorize the rulemaking. See Merck
& Co., Inc. v. U.S. Dep’t of Health & Human Servs., No. 19-cv-01738, 2019 WL
2931591 (D.D.C. July 8, 2019). Although the rule is no longer in effect, it
nonetheless refutes any suggestion that the WACs for defendants’ insulin products
could be misleading or deceptive to consumers because they do not account for
rebates to PBMs.

23
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“include rebate, discount and formulary information.” 84 Fed. Reg. at 20,739. The

fact that CMS would have required defendants to display list prices without rebates

in television advertisements confirms that those prices are not rendered inherently

false or misleading by virtue of the fact that they do not reflect rebates paid to PBMs.

See Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 672 (2003) (Breyer,

J., concurring in part) (“Institutionally speaking, [HHS] is better able than a court to

assemble relevant facts . . . [a]nd the law grants significant weight to any legal

conclusion by the Secretary”).

C. Certain Consumer Protection Claims Should Be Dismissed for

Additional Reasons.

1. Minnesota’s claims for monetary relief should be dismissed

as duplicative of Insulin Pricing.

Minnesota’s claims for monetary relief on behalf of its residents should be

dismissed as wholly duplicative of the claims brought by the putative class in Insulin

Pricing. As a general principle, federal courts strive “to avoid duplicative

litigation.” Colo. River Water Conservation Dist. v. United States, 424 U.S. 800,

817 (1976). Courts thus dismiss or stay lawsuits “involving the same subject matter

at the same time in the same court and against the same defendant.” Walton v. Eaton

Corp., 563 F.2d 66, 70 (3d Cir. 1977).

In this action, Minnesota attempts to seek monetary relief for the very same

Minnesota consumers who are named plaintiffs and members of the putative class

24
Case 3:18-cv-14999-BRM-LHG Document 47-1 Filed 08/12/19 Page 35 of 48 PageID: 712

in Insulin Pricing.12 Indeed, Minnesota relies on similar factual allegations and

brings claims under two of the same statutes (Minnesota’s Consumer Fraud Act and

Deceptive Trade Practices Act) at issue in Insulin Pricing. Moreover, although

Minnesota brings an additional claim under the False Advertising Act, that claim is

based on the same legal theories and seeks the same monetary relief as the other

claims. See Adams v. Southern Farm Bureau Life Ins. Co., 493 F.3d 1276, 1289–90

(11th Cir. 2007) (noting that, for a claim to be deemed identical, the causes of action

need not be identical, as long as the claims arise from the “‘same operative nucleus

of fact’” (citation omitted)).

This Court should decline to permit the claims for monetary relief in both suits

to proceed. It is well settled that a state government is in privity with individual

consumers when it seeks monetary relief on their behalf. See U.S. Steel Corp., 921

F.2d at 496–97 (holding that a government agency is in privity with individuals when

it seeks to assert representative claims on their behalf); California v. IntelliGender,

771 F.3d 1169, 1179 (9th Cir. 2014) (“To the extent that the State seeks restitution

12
Compare FAC ¶ 4 (seeking to represent “Minnesota residents without insurance,
Minnesota residents with high-deductible health plans, Minnesota residents who pay
coinsurance, [and] Minnesota Medicare beneficiaries”), with Insulin Pricing, No.
17-cv-699, Dkt. No. 255, ¶¶ 127–32, 366, 684–96 (putative class seeking to
represent Minnesota residents who paid any portion of the purchase price for analog
insulins, including the uninsured, underinsured, and residents with Medicare
coverage).

25
Case 3:18-cv-14999-BRM-LHG Document 47-1 Filed 08/12/19 Page 36 of 48 PageID: 713

for individual members of [a class], it may be enjoined from doing so.”).13

Accordingly, the Court should prohibit “concurrent litigation over the same subject

matter” and dismiss Minnesota’s monetary relief claims as duplicative of the class

action claims in Insulin Pricing. Unitronics, Inc. v. Robotic Parking Sys. Inc., No.

09-3493, 2010 WL 2545169, at *3–4 (D.N.J. June 18, 2010) (dismissing duplicative

lawsuit where “the parties are the same . . . , the subject matter is the same . . . , []

they are at the same time in the same court”); see also IntelliGender, 771 F.3d at

1179.

2. Minnesota has not alleged any “advertisements” covered by

the False Advertising Act.

Minnesota’s claim under the False Advertising Act should be dismissed

because the Complaint alleges no “advertisements” covered by the statute.

Under Minnesota law, advertisements are “‘[r]epresentations . . . for the

purpose of inducing, or which are likely to induce, directly or indirectly, the purchase

of a product.’” Kociemba v. G.D. Searle & Co., 707 F. Supp. 1517, 1526 (D. Minn.

1989); see also BLACK’S LAW DICTIONARY (10th ed. 2014) (“advertisement” means

13
See also In re Baldwin-United Corp., 770 F.2d 328, 341–42 (2d Cir. 1985)
(enjoining state attorney general action seeking monetary relief for citizens that had
been released by a class action); New Mexico v. Capital One Bank (USA) N.A., 980
F. Supp. 2d 1346, 1351 (D.N.M. 2013) (“Courts have repeatedly recognized a
distinction for res judicata purposes between an instance where a state agency is
seeking to vindicate public interests and when the state agency is seeking restitution
on behalf of consumers.” (collecting cases)); In re Am. Inv’rs Life Ins. Co. Annuity
Mktg. & Sales Practices Litig., 2013 WL 3463503, at *5–8 (E.D. Pa. July 10, 2013)
(enjoining Pennsylvania attorney general’s claims for restitution on behalf of
consumer class members).

26
Case 3:18-cv-14999-BRM-LHG Document 47-1 Filed 08/12/19 Page 37 of 48 PageID: 714

“[a] commercial solicitation; an item of published or transmitted matter made with

the intention of attracting clients or customers”). Minnesota courts have interpreted

the False Advertising Act to apply to “public announcement[s]” that “call the

attention of the public to a product or business.” UnitedHealth Grp. Inc. v. State ex

rel. Swanson, No. A06-2013, 2007 WL 4234545, at *4 (Minn. Ct. App. Dec. 4,

2007).14

Minnesota does not allege that defendants made any such “advertisements”

for their insulins. Minnesota’s claim is predicated on defendants’ publication and

dissemination of list prices “through price reporting services and in various

promotional and marketing materials.” FAC ¶ 425. But the list price of a

prescription drug is not a “public announcement” that seeks to induce Minnesota

consumers into purchasing insulin—rather, it is a real price “at which a manufacturer

sells a drug to a wholesale drug distributor.” FAC ¶ 31; supra at 17–19. Defendants

report the list price to third-party price reporting services; health plans and PBMs

then obtain and use that pricing information “as the basis for drug reimbursement”

to pharmacies and providers. FAC ¶¶ 33–34. As one federal district court has

14
This straightforward definition is recognized in a variety of analogous contexts.
For instance, under the federal Lanham Act (15 U.S.C. § 1051 et seq.), “commercial
advertising or promotion” means (i) “commercial speech,” (ii) “made for the purpose
of influencing customers to buy the defendant’s goods or services,” and (iii)
“disseminated sufficiently to the relevant purchasing public to constitute
‘advertising’ or ‘promotion’ within that industry.” Grp. Health Plan, Inc. v. Philip
Morris, Inc., 68 F. Supp. 2d 1064, 1070 (D. Minn. 1999).

27
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explained, “manufacturers are not advertising prices to the consuming public” and

“are not involved in the offering of discounts off of those prices to consumers.” In

re Average Wholesale Price Litig., 491 F. Supp. 2d 20, 84 (D. Mass. 2007) (emphasis

added).15

In short, defendants’ list prices are not published to influence consumers to

purchase insulin. As a result, Minnesota cannot plead an “advertisement” subject to

the False Advertising Act.

3. Minnesota cannot seek monetary relief under the Deceptive

Trade Practices Act.
Minnesota’s claims for monetary relief under the Deceptive Trade Practices

Act (FAC ¶ 422) should be dismissed because “the DTPA disallows the recovery of

monetary damages,” as this Court already has held. MSP Recovery, 2019 WL

1418129, at *19.

III. MINNESOTA’S UNJUST ENRICHMENT CLAIM SHOULD BE

DISMISSED.

To state a claim for unjust enrichment under Minnesota law, a plaintiff must

allege that the defendant “knowingly received something of value” from the plaintiff

15
In an apparent recognition that list prices are not themselves “advertisements,”
Minnesota also vaguely refers to “promotional and marketing materials.” FAC ¶ 35.
The Court need not credit those conclusory allegations because Minnesota fails to
identify any such promotional and marketing materials in the Complaint. See Russo
v. NCS Pearson, Inc., 462 F. Supp. 2d 981, 1003 (D. Minn. 2006) (dismissing
Minnesota false advertising claim when plaintiffs “failed to identify a single
advertisement disseminated to the public in Minnesota”).

28
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and that “it would be unjust for [defendants] to retain the benefit.” Schumacher v.

Schumacher, 627 N.W.2d 725, 729 (Minn. Ct. App. 2001). This Court has already

dismissed a claim for unjust enrichment alleging nearly identical facts under New

Jersey law, see MSP Recovery, 2019 WL 1418129, at *20, and Minnesota law does

not support a different result.

First, Minnesota’s unjust enrichment claim is based “on the deceptively and

misleading inflated benchmark prices that Defendants published for the products.”

FAC ¶ 431. As explained above, however, Minnesota has failed to allege any

misleading statement by defendants because defendants’ reported list prices were

consistent with Minnesota law and could not have been deceptive to consumers. See

supra at 16–24. This is fatal to the unjust enrichment claim.

Second, Minnesota does not allege that defendants received anything of value

from Minnesota residents or the Department of Corrections. “Essential to an unjust-

enrichment claim is the allegation that a defendant received some benefit from the

plaintiff.” Janssen v. Lommen, Abdo, Cole, King & Stageberg, P.A., No. A14-0452,

2014 WL 7237121, at *7 (Minn. Ct. App. Dec. 22, 2014) (emphasis added). Here,

Minnesota acknowledges that consumers purchase insulin from pharmacies, not

defendants. Supra at 11. As a result, any overpayments were remitted to

intermediaries in the distribution chain, not to defendants. See Insulin Pricing, 2019

WL 643709, at *8. This Court previously dismissed an unjust enrichment claim

29
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under New Jersey law on that basis, see MSP Recovery, 2019 WL 1418129, at *20,

and the Court should reach the same conclusion under Minnesota law. See Janssen,

2014 WL 7237121, at *7 (rejecting Minnesota unjust enrichment claim where the

defendant received something of value from a third party, not from plaintiff); Luckey

v. Alside, 245 F. Supp. 3d 1080, 1099 (D. Minn. 2017) (rejecting Minnesota unjust

enrichment claim by consumers against the manufacturer of defective windows

where the consumers purchased the windows from third parties).

Third, even if defendants indirectly received something of value, Minnesota

does not allege that defendants retained the amount Minnesota seeks to recover

pursuant to the unjust enrichment claim. A claim for unjust enrichment is limited to

“what the person allegedly enriched has received” and does not include “what the

opposing party has lost.” Schaaf v. Residential Funding Corp., 517 F.3d 544, 554

(8th Cir. 2008) (emphasis added). Minnesota contends that it is entitled to recover

the “inequitable” difference between the list prices for insulin and “the actual net

price at which Defendants sold insulin.” FAC ¶ 433. By definition, however,

defendants only receive the net price. See, e.g., id. ¶ 3 (alleging that the “net price”

is “the actual price Defendants receive for analog insulin”). Accordingly, defendants

cannot be required to return any money pursuant to an unjust enrichment claim above

the amount they receive for their insulin products. See also Gen. Mktg. Servs., Inc.

30
Case 3:18-cv-14999-BRM-LHG Document 47-1 Filed 08/12/19 Page 41 of 48 PageID: 718

v. Am. Motorsports, 393 F. Supp. 2d 901, 909 (D. Minn. 2005) (“the remedy [for

unjust enrichment] is returning any benefits received” from plaintiff).

Fourth, “[i]t is well settled in Minnesota that one may not seek a remedy in

equity when there is an adequate remedy at law.” Southtown Plumbing, Inc. v. Har-

Ned Lumber Co., 493 N.W.2d 137, 140 (Minn. Ct. App. 1992). Unjust enrichment

is unavailable where “statutory standards for recovery are set by the legislature.” Id.

Where, as here, a plaintiff asserts a variety of claims under federal and state statutes,

“the availability of those statutory claims (whether state or federal) will preclude the

assertion of an unjust enrichment . . . claim.” Cummins Law Office, P.A. v. Norman

Graphic Printing Co. Ltd., 826 F. Supp. 2d 1127 (D. Minn. 2011) (collecting cases);

see also ServiceMaster of St. Cloud v. Gab Business Services, Inc., 544 N.W.2d 302,

305 (Minn. 1996) (noting that a party may not have equitable relief under unjust

enrichment theory where there is an adequate remedy at law).

For these reasons, the Court should dismiss the unjust enrichment claim.

IV. MINNESOTA FAILS TO SUPPORT ITS CLAIMS RELATING TO

THE DEPARTMENT OF CORRECTIONS AND NEWLY
INTRODUCED INSULINS.

Minnesota also fails to allege sufficient facts to support its claims relating to

the Department of Corrections and defendants’ newly introduced insulins (Tresiba,

Fiasp, and Basaglar). For both sets of claims, the allegations are confined to a single

vaguely worded paragraph in the Complaint. Those lone paragraphs fail to provide

31
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“sufficient factual matter” to “allow[] the court to draw the reasonable inference that

the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

A. Minnesota’s Claims on Behalf of the Department of Corrections

Should Be Dismissed.

Minnesota’s allegations relating to the Department of Corrections appear in

paragraph 82 of the Complaint. There, Minnesota asserts that “[t]he inflated prices

at which the department has purchased insulin through [a] wholesaler has either

reduced the amount of its claims-related underspend that it is entitled to have

returned to it or has increased its obligation to pay excess claims-related spend, as

applicable, under the governing contracts.” FAC ¶ 82. That barebones allegation is

insufficient for two independent reasons.

First, Minnesota lacks standing to assert its Department of Corrections claims

against Lilly because the Department has not purchased Lilly’s insulins. As the

attached declaration establishes, the Department made no purchases of the two Lilly

insulins at issue in this case—Humalog and Basaglar—from January 2012 through

August 2019. See Certification of Melissa Geist, Ex. E, Decl. of Cynthia Ransom

¶¶ 5–6.16 Accordingly, as the Court previously held in the Insulin Pricing action,

Minnesota lacks standing to bring those claims against Lilly. See Insulin Pricing,

16
In considering a motion to dismiss for lack of standing under Rule 12(b)(1), the
Court is free to “consult materials outside the pleadings, and the burden of proving
jurisdiction rests with the plaintiff.” Med. Soc’y of New Jersey v. Herr, 191 F. Supp.
2d 574, 578 (D.N.J. 2002).

32
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2019 WL 643709, at *18 (dismissing claims for lack of standing where the “plaintiff

neither purchased nor used” the specific defendant’s insulin); Lieberson v. Johnson

& Johnson Consumer Cos., Inc., 865 F. Supp. 2d 529, 537 (D.N.J. 2011) (“Because

Plaintiff has not alleged that she purchased or used two of the four [] products at

issue here, Plaintiff cannot establish an injury-in-fact with regard to those

products.”).

Second, as to all defendants, the Department of Corrections-related claims are

woefully deficient. The Complaint fails to allege which insulins the Department

purchased, when it purchased those insulins, what price it paid, and how it was

purportedly harmed by purportedly inflated list prices. Instead, Minnesota carefully

limits its allegations to the assertion that its insulin purchases “either reduced the

amount of its claims-related underspend that it is entitled to have returned to it or

has increased its obligation to pay excess claims-related spend, as applicable, under

the governing contracts.” FAC ¶ 82 (emphasis added). Nothing on the face of these

allegations suggests that Minnesota purchased insulin at artificially inflated list

prices, and the Court is not required to credit such ambiguous allegations that are

within Minnesota’s power to clarify. See Dessources v. Am. Conference Inst., No.

12 Civ. 8105, 2013 WL 2099251, at *4–5 (S.D.N.Y. May 15, 2013).

33
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B. Minnesota’s Claims Relating to the Newly Introduced Insulins

Should Be Dismissed.

The Complaint also asserts claims relating to three insulin products that were

only recently introduced to the market: Tresiba (manufactured by Novo Nordisk),

Fiasp (manufactured by Novo Nordisk), and Basaglar (manufactured by Lilly). See

FAC ¶¶ 17–19. Minnesota’s factual allegations relating to pricing of these products

are likewise confined to a single paragraph in the Complaint. In Paragraph 62,

Minnesota asserts that “Defendants produce other variations of the above-referenced

insulin products . . . all of which have seen similar increases in their benchmark price

and/or reflect significant spreads between these products’ respective benchmark and

actual price, and all of which are the subject of this complaint.”

Paragraph 62 is an egregious example of conclusory pleading. The gravamen

of Minnesota’s claims is that defendants “dramatically increased” the list prices of

certain insulins to create a “spread” between their list and net prices. See FAC ¶¶

47–48; see also id. ¶¶ 19, 56–59. But Minnesota alleges no actual facts indicating

that defendants “dramatically increased” the list prices of Tresiba, Fiasp, and

Basaglar; nor does it allege facts suggesting that there was a spread between the list

and net prices for those products. Because Minnesota fails to allege facts connecting

Tresiba, Fiasp, and Basaglar to the purported “scheme,” all claims relating to those

products should be dismissed. See Guirguis v. Movers Specialty Servs., Inc., 346 F.

App’x 774, 776 (3d Cir. 2009) (“[T]he pleading’s factual content must

34
Case 3:18-cv-14999-BRM-LHG Document 47-1 Filed 08/12/19 Page 45 of 48 PageID: 722

independently ‘permit the court to infer more than the mere possibility of

misconduct.’”) (citations omitted); Hemy v. Perdue Farms, Inc., 2011 WL 6002463,

at *14 (D.N.J. Nov. 30, 2011) (dismissing claims relating to certain products where

“the allegations fail[ed] to distinguish between . . . products”).

CONCLUSION

For the foregoing reasons, defendants respectfully request that the Court

dismiss this action.

35
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Dated: August 12, 2019 Respectfully submitted,

By: s/ Melissa A. Geist

Melissa A. Geist, Esq.
REED SMITH LLP
Princeton Forrestal Village
136 Main Street, Suite 250
Princeton, NJ 08540
Tel.: (609) 514-5978

Shankar Duraiswamy, Esq.

Henry B. Liu, Esq.
(pro hac vice forthcoming)
Paige Jennings, Esq.
(pro hac vice forthcoming)
COVINGTON & BURLING LLP
One CityCenter
850 Tenth Street, N.W.
Washington, DC 20001
Tel.: (202) 662-6000

Attorneys for Defendant

Eli Lilly and Company

36
Case 3:18-cv-14999-BRM-LHG Document 47-1 Filed 08/12/19 Page 47 of 48 PageID: 724

By: s/ Michael R. Griffinger

Michael R. Griffinger, Esq.
Christopher Walsh, Esq.
Calvin K. May, Esq.
GIBBONS P.C.
One Gateway Center
Newark, NJ 07102-5310
Tel.: (973) 596-4500
James P. Rouhandeh, Esq.
(pro hac vice)
David B. Toscano, Esq.
(pro hac vice)
DAVIS POLK & WARDWELL LLP
450 Lexington Avenue
New York, NY 10017
Tel.: (212) 450-4000

Neal A. Potischman, Esq.

(pro hac vice)
Andrew Yaphe, Esq.
(pro hac vice)
DAVIS POLK & WARDWELL LLP
1600 El Camino Real
Menlo Park, CA 94025
Tel.: (650) 752-2000

Attorneys for Defendant

Novo Nordisk Inc.

37
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By: s/ Liza M. Walsh, Esq.

Liza M. Walsh, Esq.
Katelyn O’Reilly, Esq.
Katherine M. Romano, Esq.
WALSH PIZZI O’REILLY FALANGA
LLP
100 Mulberry Street, 15th Floor
Newark, NJ 07102
Tel.: (973) 757-1100

Michael R. Shumaker, Esq.

(pro hac vice forthcoming)
Julie E. McEvoy, Esq.
(pro hac vice forthcoming)
William D. Coglianese, Esq.
(pro hac vice forthcoming)
JONES DAY
51 Louisiana Avenue, N.W.
Washington, DC 20001
Tel.: (202) 879-3939

Attorneys for Defendant

Sanofi-Aventis U.S. LLC

38
Case 3:18-cv-14999-BRM-LHG Document 47-2 Filed 08/12/19 Page 1 of 3 PageID: 726

REED SMITH LLP DAVIS POLK & WARDWELL LLP

Melissa A. Geist, Esq. Neal A. Potischman, Esq. (pro hac vice)
Princeton Forrestal Village Andrew Yaphe, Esq. (pro hac vice)
136 Main Street, Suite 250 1600 El Camino Real
Princeton, NJ 08540 Menlo Park, California 94025
Tel.: (609) 514-5978 Tel.: (650) 752-2000
Attorneys for Defendant
COVINGTON & BURLING LLP Novo Nordisk Inc.
Shankar Duraiswamy, Esq.
Henry Liu, Esq. WALSH PIZZI O’REILLY
(pro hac vice forthcoming) FALANGA LLP
Paige M. Jennings, Esq. Liza M. Walsh, Esq.
(pro hac vice forthcoming) Katelyn O’Reilly, Esq.
One CityCenter Katherine M. Romano, Esq.
850 Tenth Street, N.W. 100 Mulberry Street, 15th Floor
Washington, DC 20001 Newark, NJ 07102
Tel.: (202) 662-6000 Tel.: (973) 757-1100
Attorneys for Defendant
Eli Lilly and Company JONES DAY
Michael R. Shumaker, Esq.
GIBBONS P.C. (pro hac vice forthcoming)
Michael R. Griffinger, Esq. Julie E. McEvoy, Esq.
One Gateway Center (pro hac vice forthcoming)
Newark, NJ 07102-5310 William D. Coglianese, Esq.
Tel.: (973) 596-4500 (pro hac vice forthcoming)
51 Louisiana Avenue, N.W.
DAVIS POLK & WARDWELL LLP Washington, DC 20001
James P. Rouhandeh, Esq. (pro hac vice) Tel.: (202) 879-3939
David B. Toscano, Esq. (pro hac vice) Attorneys for Defendant
450 Lexington Avenue Sanofi-Aventis U.S. LLC
New York, New York 10017
Tel.: (212) 450-4000
Case 3:18-cv-14999-BRM-LHG Document 47-2 Filed 08/12/19 Page 2 of 3 PageID: 727

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

STATE OF MINNESOTA, BY ITS

ATTORNEY GENERAL KEITH
ELLISON, Civil Action No.: 18-14999
(BRM)(LHG)
Plaintiff,
CERTIFICATION OF MELISSA
v. GEIST, ESQ.

SANOFI-AVENTIS U.S. LLC, NOVO Electronically filed

NORDISK, INC., AND ELI LILLY
AND CO.,

Defendants.

MELISSA GEIST, ESQ., does hereby certify as follows:

1. I am an attorney at law of the State of New Jersey, partner with the law

firm of Reed Smith LLP, and attorney of record for Defendant Eli Lilly and

Company. I submit this Certification in support of the Joint Notice of Motion to

Dismiss Plaintiff’s First Amended Complaint submitted by Defendants Eli Lilly and

Company, Novo Nordisk Inc., and Sanofi-Aventis U.S. LLC (collectively,

“Defendants”).

2. Attached as Exhibit A is a true and correct copy of Benefits

Information: Medical, State Employee Group Insurance Plan.

3. Attached as Exhibit B is a true and correct copy of Our Mission, State

Employee Group Insurance Program.

Case 3:18-cv-14999-BRM-LHG Document 47-2 Filed 08/12/19 Page 3 of 3 PageID: 728

4. Attached as Exhibit C is a true and correct copy of Consolidated Fiscal

Note, Minnesota Health & Human Services Finance Division (Mar. 25, 2019).

5. Attached as Exhibit D is a true and correct copy of Minnesota’s Mem.

in Opp’n to Def.’s Mot. to Dismiss, State v. Pharmacia Corp., No. 27-CV-02-

009660 (Dist. Ct. Minn., Aug. 2, 2004).

6. Attached as Exhibit E is a Declaration of Cynthia Ransom dated August

12, 2019, and signed under penalty of perjury in further support of Defendants’ Joint

Motion to Dismiss Plaintiff’s First Amended Complaint.

I certify that the foregoing statements made by me are true and correct to the

best of my knowledge. I am aware that if any of the foregoing statements made by me

are willfully false, I may be subject to punishment.

Dated: August 12, 2019 s/ Melissa A. Geist

Melissa A. Geist
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 Revised
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Consolidated Fiscal Note 2019-2020 Legislative Session

SF278 - 2E - "Licensure & Reg for Pharm Benefit Mngrs"

hief uthor Scott Jensen

ommitee Finance State Fiscal Impact Yes No
ate om leted 03/29/2019 ES
E enditures
Lead genc ommerce e t
ther gencies SP E Fee e artmental ES
Minn Management and Earnings
Pharmac Board
Budget
a Revenue

nformation echnolog
-

ES
Local Fiscal m act

his ta le sho s direct im act to state government onl Local government im act if an is discussed in the narrative
Reductions sho n in the arentheses

State Cost (Savings) Biennium Biennium

Dollars in Thousands FY2019 FY2020 FY2021 FY2022 FY2023
Commerce Dept - - - - -
SpaceGeneral Fund - 147 (29) (84) (84)
State otal S ace S ace S ace S ace S ace
SpaceGeneral Fund - 147 (29) (84) (84)
Total - 147 (29) (84) (84)
Biennial Total 118 (168)
-
Full Time Equivalent Positions (FTE) Biennium Biennium
- FY2019 FY2020 FY2021 FY2022 FY2023
ommerce e t - - - - -
S ace eneral Fund - 25 25 25 25
Total - 2.5 2.5 2.5 2.5

Lead Executive Budget Officer's Comment

have revie ed this fiscal note for reasona leness of content and consistenc ith MMB s Fiscal ote olicies
EB Signature Laurena Schlottach-Ratcliff---- ate 03 29 2019
Phone 651 201-8043 ----Email laurena schlottach-ratcliff state mn us

SF278-2E (Revised)-Licensure & Reg for Pharm Benefit Mngrs Page 1 of 13

2019-2020 Legislative Session
 Revised
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State Cost (Savings) Calculation Details

his ta le sho s direct im act to state government onl Local government im act if an is discussed in the narrative
Reductions are sho n in arentheses
ransfers n ut and sor ed osts are onl dis la ed hen re orted

State Cost (Savings) = 1-2 Biennium Biennium

Dollars in Thousands FY2019 FY2020 FY2021 FY2022 FY2023
ommerce e t - - - - -
S ace eneral Fund - 147 (29) (84) (84)
Total - 147 (29) (84) (84)
Biennial Total 118 (168)
1 - Expenditures, Absorbed Costs*, Transfers Out*
ommerce e t S ace S ace S ace S ace S ace
S ace eneral Fund - 487 354 341 341
Total - 487 354 341 341
Biennial Total 841 682
2 - Revenues, Transfers In* Space Space Space Space Space
ommerce e t - - - - -
S ace eneral Fund - 340 383 425 425
Total - 340 383 425 425
Biennial Total 723 850

SF278-2E (Revised)-Licensure & Reg for Pharm Benefit Mngrs Page 2 of 13

2019-2020 Legislative Session
 Revised
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Fiscal Note 2019-2020 Legislative Session

SF278 - 2E - "Licensure & Reg for Pharm Benefit Mngrs"

hief uthor Scott Jensen

ommitee Finance State Fiscal Impact Yes No
ate om leted 03/29/2019 ES
E enditures
genc ommerce e t
SP E SP E Fee e artmental ES
Earnings

a Revenue

nformation echnolog
-

Local Fiscal m act

his ta le sho s direct im act to state government onl Local government im act if an is discussed in the narrative
Reductions sho n in the arentheses

State Cost (Savings) Biennium Biennium

Dollars in Thousands FY2019 FY2020 FY2021 FY2022 FY2023
SpaceGeneral Fund - 147 (29) (84) (84)
Total - 147 (29) (84) (84)
Biennial Total 118 (168)
-
Full Time Equivalent Positions (FTE) Biennium Biennium
Space FY2019 FY2020 FY2021 FY2022 FY2023
S ace eneral Fund - 25 25 25 25
Total - 2.5 2.5 2.5 2.5

Executive Budget Officer's Comment

have revie ed this fiscal note for reasona leness of content and consistenc ith MMB s Fiscal ote olicies
EB Signature Laurena Schlottach-Ratcliff---- ate 3 26 2019 5 23 24 PM
Phone 651 201-8043 ----Email laurena schlottach-ratcliff state mn us

SF278-2E (Revised)-Licensure & Reg for Pharm Benefit Mngrs Page 3 of 13

2019-2020 Legislative Session
 Revised
Case 3:18-cv-14999-BRM-LHG Document 47-5 Filed 08/12/19 Page 5 of 14 PageID: 743

State Cost (Savings) Calculation Details

his ta le sho s direct im act to state government onl Local government im act if an is discussed in the narrative
Reductions are sho n in arentheses
ransfers n ut and sor ed osts are onl dis la ed hen re orted

State Cost (Savings) = 1-2 Biennium Biennium

Dollars in Thousands FY2019 FY2020 FY2021 FY2022 FY2023
S ace eneral Fund - 147 (29) (84) (84)
Total - 147 (29) (84) (84)
Biennial Total 118 (168)
1 - Expenditures, Absorbed Costs*, Transfers Out*
S ace eneral Fund - 487 354 341 341
Total - 487 354 341 341
Biennial Total 841 682
2 - Revenues, Transfers In* Space Space Space Space Space
S ace eneral Fund - 340 383 425 425
Total - 340 383 425 425
Biennial Total 723 850

Bill Description

Senate File 278-2E esta lishes licensing re uirements for harmac enefit managers (PBMs) doing usiness in the state
of Minnesota his ill re eals sections of Minnesota Pharmac Practice la s in Minn Stat 151 and creates regulator
oversight and rulema ing authorit related to PBMs for ommerce

he ill esta lishes informational and financial re uirements that must e su mitted PBMs during the initial a lication
rocess and hat information is needed for annual PBM licensure rene als Licensure fees are set at 8 500 er initial
a lication and for rene als and are to e de osited in the general fund he ommissioner ma re uest additional
information of the PBM ithin 30 da s of receiving a license a lication or ithin 90 da s of recei t of a com leted
a lication f all standards are met the a lication is deemed a roved nonrefunda le fee of 500 is re uired for late
rene al a lications

he ill esta lishes ommerce s authorit to sus end or revo e a PBM s license in cases of fraudulence sufficient
consumer com laints or failure to meet re uirements esta lished in the ill ommerce ma revo e a PBM s license or
decide not to rene ith evidence of the PBM s financiall ha ardous condition noncom liance ith state la and failure
to su mit a timel rene al a lication n lieu of a denial the ommissioner ma also su mit a corrective action lan to the
PBM to correct deficiencies

he ill s re uirements for continued licensure of the PBM include having an ade uate net or of contracted harmacies
under the PBM consistent ith M Statute 62 10 he second engrossment removes the re uirement that a PBM su mit
a net or ade uac re ort to the commissioner re lacing it ith language indicating that a PBM must not re uire
harmac accreditation standards that are more stringent than state and federal re uirements

he PBM must rovide trans arenc to oth lan s onsors and ommerce PBMs are re uired to annuall re ort to
ommerce on costs from manufacturers for drugs amounts of re ates for rescri tion drugs and overall utili ation of lan
enrollees and de-identified claim data he PBM must include data regarding costs from manufacturers for drugs amounts
of re ates for rescri tion drugs and overall utili ation of lan enrollees he second engrossment added re uirements of
roviding de-identified claim data he ill states that the ommissioner ma im ose enalties u to 1 000 er da for
violations noted in a trans arenc re ort

he ill also includes a gag clause rovision hich rohi its PBMs from limiting a harmacist s a ilit to disclosing the
availa ilit of alternative lo er cost medications to enrollees

SF278-2E (Revised)-Licensure & Reg for Pharm Benefit Mngrs Page 4 of 13

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he ill also esta lishes re uirements that rohi it PBMs from having o nershi interests in affiliate or su sidiar
harmacies if it does not disclose this information to lan s onsors Section 7 removes s ecialt under harmac
services and notes that PBMs and health carriers must not a l financial incentives to enrollees to use harmacies ith
hich the PBM has an o nershi interest

PBMs using a referred net or of harmacies must at the re uest of an enrollee disclose out-of- oc et costs for
rescri tion drugs

he ill a ro riates 378 000 in fiscal ear 2020 378 000 in fiscal ear 2021 from the general fund to the commissioner
of commerce for licensing activities ase a ro riate of 365 000 is esta lished for fiscal ear 2022 and 365 000 in
fiscal ear 2023 246 000 shall e made availa le for each ear for the staff costs of t o enforcement investigators

Assumptions

Pharmac Benefit Managers see ing to o erate in Minnesota are currentl re uired to register as hird Part
dministrators ( P s) ut of 375 P s currentl registered 308 are registered ith the
ccident ealth Medical os ital are Sic ness isa ilit ental Pharmac line of authorit his line of authorit is road
and does not indicate that all 308 entities are engaged in harmac enefit management activities

ccording to information rovided the Minnesota Board of Pharmac 34 entities u licl identified as PBMs are
registered to do usiness in Minnesota ith the Secretar of State

n 2017 the e ras a e artment of nsurance assumed 38 PBMs ould e licensed in that state under a similar
ro osal to SF278 n 2015 the ashington e artment of Revenue assumed 50 PBMs ould e licensed in that state
2017 under a similar ro osal to SF278

For ur oses of this note ommerce assumes 40 entities ill e licensed as PBMs in the first ear of o eration
ommerce assumes these 40 entities ill rene licenses ever ear ommerce assumes five or fe er additional PBM s
ill see licensure in F 21 and F 22

ommerce assumes 1 F E ill e needed ongoing to revie a lications and issue licenses

hile the second engrossment eliminated language s ecificall authori ing rulema ing for ur oses of this cha ter of la
from the ill ommerce assumes the agenc ill still need to engage in rulema ing in order to romulgate detailed
regulations and instructions including a lication forms for PBM licensure a licants

ommerce assumes rulema ing ill also e re uired in order to set s ecific definitions and standards in order to clarif
ho PBMs are to com l ith section 5 of the ill regarding net or ade uac ommerce continues to assume the
agenc ill utili e its e isting interagenc agreement ith the e artment of ealth (M ) to erform harmac net or
ade uac revie re uired in Section 5 of the ill Based on M s e eriences conducting net or ade uac revie s for
other rovider t es ommerce assumes 80 037 in F 20 and F 21 and 66 671 in each fiscal ear thereafter

ommerce assumes it ill use general rulema ing authorit to romulgate rules and incur one-time costs of 130 000
associated ith romulgating a medium rule as defined in the 2018 edition of the Minnesota Rulema ing Manual

ommerce assumes the agenc ill receive and res ond to com laints from consumers and harmacies regarding this
ne cha ter of la ommerce also assumes enforcement staff ill need to revie com liance ith re orting and
licensing a lication re uirements Both e ras a and ashington assumed t o enforcement-related F E ere re uired
to erform similar functions

ommerce assumes t o enforcement F E ill e needed to oversee this regulated industr

Expenditure and/or Revenue Formula

Revenue

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2019-2020 Legislative Session
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8 500 40 PBM s re uiring licensure annuall 340 000 in F 20

8 500 40 PBM s rene al 340 000 in F 21

8 500 5 PBM s re uiring licensure 42 500 in F 21

8 500 45 PBM s rene al 382 500 in F 22

8 500 5 PBM s re uiring licensure 42 500 in F 22

8 500 50 PBM s rene al 425 000 in F 23

ommerce e enditures

F 20 F 21 F 22 F 23
Salar
2 Senior nvest 130 668 130 668 130 668 130 668
SP ntermediate 25 610 25 610 25 610 25 610
Fringe 46 883 46 883 46 883 46 883
ther Personnel Related osts 74 135 71 262 71 262 71 262
otal Em lo ee osts 277 296 274 423 274 423 274 423

Rulema ing - medium 130 000

274 423 274 423
otal ommerce ost 407 296 274 423

M E enditures ( ased on information from M )

5 F E net or ade uac revie staff

25 F E information technolog staff in F 20-21 1 F E information technolog staff in F 22 and ongoing

nteragenc agreement salaries to M - F 20 21 80 037 F 22 and for ard 66 671

Long-Term Fiscal Considerations

ommerce assumes these costs ill e ongoing

Local Fiscal Impact

References/Sources

ealth arrier Prescri tion rug Benefit Management Model ct um er 22

htt s naic org store free M L-022 df

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2019-2020 Legislative Session
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r ansas PBM Licensure ct htt ar leg state ar us assem l 2017 2018S2 cts ct3 df
Agency Contact:
Agency Fiscal Note Coordinator Signature: m rum er Date: 3 26 2019 4 37 02 PM
Phone: 651 539-1517 Email: am trum er state mn us

SF278-2E (Revised)-Licensure & Reg for Pharm Benefit Mngrs Page 7 of 13

2019-2020 Legislative Session
 Revised
Case 3:18-cv-14999-BRM-LHG Document 47-5 Filed 08/12/19 Page 9 of 14 PageID: 747

Fiscal Note 2019-2020 Legislative Session

SF278 - 2E - "Licensure & Reg for Pharm Benefit Mngrs"

hief uthor Scott Jensen

ommitee Finance State Fiscal Impact Yes No
ate om leted 03/29/2019 ES
E enditures
genc Minn Management and Budget
SP E SP E Fee e artmental
Earnings

a Revenue

nformation echnolog
-

ES
Local Fiscal m act

his ta le sho s direct im act to state government onl Local government im act if an is discussed in the narrative
Reductions sho n in the arentheses

State Cost (Savings) Biennium Biennium

Dollars in Thousands FY2019 FY2020 FY2021 FY2022 FY2023
Total - - - - -
Biennial Total - -
-
Full Time Equivalent Positions (FTE) Biennium Biennium
Space FY2019 FY2020 FY2021 FY2022 FY2023
Total - - - - -

Executive Budget Officer's Comment

have revie ed this fiscal note for reasona leness of content and consistenc ith MMB s Fiscal ote olicies
EB Signature Marianne on o ---- ate 3 29 2019 4 54 47 PM
Phone 651 201-8189 ----Email marianne con o state mn us

SF278-2E (Revised)-Licensure & Reg for Pharm Benefit Mngrs Page 8 of 13

2019-2020 Legislative Session
 Revised
Case 3:18-cv-14999-BRM-LHG Document 47-5 Filed 08/12/19 Page 10 of 14 PageID: 748

State Cost (Savings) Calculation Details

his ta le sho s direct im act to state government onl Local government im act if an is discussed in the narrative
Reductions are sho n in arentheses
ransfers n ut and sor ed osts are onl dis la ed hen re orted

State Cost (Savings) = 1-2 Biennium Biennium

Dollars in Thousands FY2019 FY2020 FY2021 FY2022 FY2023
Total - - - - -
Biennial Total - -
1 - Expenditures, Absorbed Costs*, Transfers Out*
Total - - - - -
Biennial Total - -
2 - Revenues, Transfers In* Space Space Space Space Space
Total - - - - -
Biennial Total - -

Bill Description

SF278-2E esta lishes licensure and regulations for a harmac enefit manager (PBM) ho contracts ith a lan s onsor
to rovide harmac enefits management services

Assumptions

MMB administers the State Em lo ee rou nsurance Program (SE P) hich rovides health dental life and other
enefits to eligi le State em lo ees and their de endents and other grou s including uasi-state agencies under the
legislative authorit rovided in Minnesota Statutes 43 ealth enefits are rovided through the self-funded Minnesota
dvantage ealth Plan he Minnesota dvantage ealth Plan aid for over 1 1 million rescri tion drug claims in 2018
at a cost of a ro imatel 163 890 000

SE P has a contract ith a harmac enefit manager (PBM) to administer its rescri tion drug enefit MMB currentl
utili es services through this contract hich are the su ect of this ill and ma need to ma e modifications to meet the
re uirements of this ill

Provisions of this ill hich might affect the current PBM arrangement are

-Section 3 su d 4 Lists circumstances during hich the state ma sus end a PBM from servicing a rescri tion drug
rogram n the event of a sus ension of its PBM SE P mem ers ould e erience ma or disru tions hen attem ting
to fill a rescri tion unless an alternative PBM could rovide services SE P antici ates that if a PBM s services ere
oor enough to re uire sus ension that it ould alread e involved in discussions concerning erformance issues and
ould have an alternative in lace or ould e close to having one m lementing the services of a ne PBM is costl and
ould ta e a minimum of si months ithout a PBM in lace the rogram ould virtuall e una le to fill rescri tions

-Section 6 descri es the re uirement for a PBM to disclose its holesale ac uisition costs from a drug manufacturer he
e anded availa ilit of this information might im act the a ilit of a PBM to negotiate lo er drug costs for the dvantage
lan MMB recogni es this otential cost im act ut ith limited data availa le no fiscal im act is reflected in this note

Language in this section also ma im act the amount of re ates the PBM is a le to negotiate ith drug manufacturers
nder its contract ith its PBM SE P receives 100 of the re ates associated ith its mem ers and those re ates are
used to lo er remiums for all mem ers n 2018 negotiated re ates are estimated to have reduced the dvantage lan s
rescri tion drug costs a ro imatel 38 510 000 he ill ma es it conceiva le that a PBM ma no longer have the
a ilit to secure the current level of re ates from a given manufacturer hile the amount of re ates SE P receives might
e im acted ithout s ecific data on the amount MMB is una le to determine the e act cost to SE P MMB assumed the
amount of re ates received ould e unchanged

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-Section 7 ould rohi it roviding financial incentives including co a ments to an enrollee to use a retail harmac mail
order harmac s ecialt harmac or other net or harmac rovider in hich a PBM has o nershi interest SE P
mem ers currentl enefit from a rogram hen the choose to fill 90-da su lies of medications for chronic conditions
either using a mail service harmac o ned the PBM or hen choosing to fill a rescri tion at a PBM s o ned
harmac n these instances the rogram reduces the num er of co a s a mem er a s from three to t o hen
selecting these distri ution o tions o continue offering SE P mem ers 90 da s su l for t o co a ments ould
re uire develo ing and im lementing an alternative ntil that alternative is secured mem ers ould a three
co a ments for their 90-da s su l he intent of these rograms is to im rove mem er adherence to im ortant
medications and e are concerned that modif ing the rograms could result in lo ered adherence and otentiall higher
costs on the medical side o ever e are una le to uantif an ossi le costs or savings due to the limited data on the
cost to develo and im lement other o tions or to administer the rogram ithout this feature

ssumes an effective date of 1 1 2020

Expenditure and/or Revenue Formula

ot a lica le

Long-Term Fiscal Considerations

ot a lica le

Local Fiscal Impact

MMB e ects local units of government to also incur added e enses MMB cannot estimate the im act to local
governments ith reasona le certaint

References/Sources

Program nformation from SE P administered through MMB

Agency Contact: Lorna Smith (651) 259-3604

Agency Fiscal Note Coordinator Signature: Ruth Mc l nn Date: 3 29 2019 4 37 55 PM
Phone: 651 259-3787 Email: ruth mcgl nn state mn us

SF278-2E (Revised)-Licensure & Reg for Pharm Benefit Mngrs Page 10 of 13

2019-2020 Legislative Session
 Revised
Case 3:18-cv-14999-BRM-LHG Document 47-5 Filed 08/12/19 Page 12 of 14 PageID: 750

Fiscal Note 2019-2020 Legislative Session

SF278 - 2E - "Licensure & Reg for Pharm Benefit Mngrs"

hief uthor Scott Jensen

ommitee Finance State Fiscal Impact Yes No
ate om leted 03/29/2019 E enditures
genc Pharmac Board
SP E SP E Fee e artmental
Earnings

a Revenue

nformation echnolog
-

Local Fiscal m act

his ta le sho s direct im act to state government onl Local government im act if an is discussed in the narrative
Reductions sho n in the arentheses

State Cost (Savings) Biennium Biennium

Dollars in Thousands FY2019 FY2020 FY2021 FY2022 FY2023
Total - - - - -
Biennial Total - -
-
Full Time Equivalent Positions (FTE) Biennium Biennium
Space FY2019 FY2020 FY2021 FY2022 FY2023
Total - - - - -

Executive Budget Officer's Comment

have revie ed this fiscal note for reasona leness of content and consistenc ith MMB s Fiscal ote olicies
EB Signature hardae im er---- ate 3 26 2019 12 39 45 PM
Phone 651 259-3617 ----Email chardae im er state mn us

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2019-2020 Legislative Session
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State Cost (Savings) Calculation Details

his ta le sho s direct im act to state government onl Local government im act if an is discussed in the narrative
Reductions are sho n in arentheses
ransfers n ut and sor ed osts are onl dis la ed hen re orted

State Cost (Savings) = 1-2 Biennium Biennium

Dollars in Thousands FY2019 FY2020 FY2021 FY2022 FY2023
Total - - - - -
Biennial Total - -
1 - Expenditures, Absorbed Costs*, Transfers Out*
Total - - - - -
Biennial Total - -
2 - Revenues, Transfers In* Space Space Space Space Space
Total - - - - -
Biennial Total - -

Bill Description

he ill creates a ne ha ter (62 ) in Minnesota Statutes that s ecifies re uirements for the licensure and regulation of
harmac enefit managers hat ne ha ter ould e under the urisdiction of the e artment of ommerce and the
Board defers to that de artment for the descri tion of those rovisions he onl rovisions that a ear to e of ossi le
relevance to the Board are

Section 14 of the ill hich is a gag clause rohi ition that states that no contract et een a PBM or health
carrier and a harmac or harmacist shall rohi it restrict or enali e a harmac or harmacist from
disclosing to an enrollee an health care information that the harmac or harmacist deems a ro riate
regarding the nature of treatment the ris s or alternatives etc hat section of the ill also reiterates an
e isting re uirement under Minn Stats 151 214 for a harmac or harmacist to rovide certain cost
information to atients ote that ongress also recentl assed a federal rohi ition against gag clauses

Section 16 of the ill e ands the authorit of harmacists to ma e drug su stitutions hen dis ensing
rescri tions urrentl harmacists can ma e su stitutions ithout o taining the ermission of the
rescri er onl hen a genericall e uivalent drug is availa le and the rescri er has not indicated that the
rescri tion is to e dis ensed as ritten his section of the ill ould allo harmacists to ma e thera eutic
su stitutions (i e su stitute ver similar drugs that are not genericall e uivalent) o ever harmacists
could onl do so if the had a ritten rotocol in lace ith a otentiall large num er of rescri ers ho
rites rescri tions for the atients of that harmac he language in the ill does not a ear to allo a
harmacist to have a rotocol ith ust one rescri er that ould cover an atient that resented a
rescri tion to the harmac to e filled (For immuni ations and nalo one the statutes currentl do allo a
single rescri er to enter into a rotocol ith a harmacist that ould allo the harmacist to dis ense
nalo one or rovide an immuni ation to an atient of the harmac not ust atients of that rescri er)
lso e isting rovisions in Minn Stats 151 01 and 151 37 alread allo for thera eutic su stitution
rotocols Some hos itals and health s stems ro a l alread have thera eutic su stitution rotocols in
lace et een the rescri ers and the harmacists or ing ithin the hos ital or health s stem

Section 19 of the ill re eals a num er of sections of ha ter 151 ecause the language in those sections is
included in the ne ha ter 62

Assumptions

iolation of rovisions of the gag clause section on the art of a harmacist or harmac ould e grounds for the Board
to ta e disci linar action against the license of the harmacist or harmac Pharmacies have een vocal o onents of
such gag clauses therefore the Board assumes there ill not e an harmacies that ould sign a contract containing a

SF278-2E (Revised)-Licensure & Reg for Pharm Benefit Mngrs Page 12 of 13

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gag clause that ould violate oth federal and state la lso the Board has received no com laints alleging that
harmacists or harmacies have not rovided re uired cost information to atients he Board assumes e ould not
need to investigate an significant num er of com laints alleging violations of the rovisions of section 11 of the ill So
the Board ould assign no cost to those rovisions

he Board might receive a com laint alleging that a harmacist had used oor clinical udgment hen ma ing a
thera eutic su stitution ursuant to the rovisions of section 14 of the ill o ever the Board assumes such thera eutic
su stitution ill not occur e ce t for hat ma alread e occurring ithin hos itals and health s stems as the ill has a
re uirement to have a rotocol in lace ith a otential multitude of individual rescri ers he Board assumes e ill not
have to investigate an significant num er of com laints alleging violations of the rovisions of section 14 of the ill So
the Board ould assign no cost to those rovisions

lthough a num er of sections in ha ter 151 ould re ealed and the language ould e moved into the ne ha ter
62 there ill e not fiscal im act to the Board as the Board currentl does not have urisdiction over harmac enefit
managers (PBMs) he re ealed sections in ha ter 151 created a asis for harmacies to ursue litigation for PBMs in
violation of these sections Re ealing these sections and including them in the ne ha ter 62 ould result in no ne
revenue or cost for the Board and therefore no there is no fiscal im act to the Board

Expenditure and/or Revenue Formula

o fiscal im act

Long-Term Fiscal Considerations

one

Local Fiscal Impact

one no n

References/Sources

Agency Contact: od i erg (651)201-2830

Agency Fiscal Note Coordinator Signature: uli angsness Date: 3 26 2019 5 50 13 M
Phone: 651 201-2732 Email: uli angsness state mn us

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Case 3:18-cv-14999-BRM-LHG Document 47-6 Filed 08/12/19 Page 8 of 36 PageID: 760
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Case 3:18-cv-14999-BRM-LHG Document 47-8 Filed 08/12/19 Page 1 of 3 PageID: 792

REED SMITH LLP DAVIS POLK & WARDWELL LLP

Melissa A. Geist, Esq. Neal A. Potischman, Esq. (pro hac vice)
Princeton Forrestal Village Andrew Yaphe, Esq. (pro hac vice)
136 Main Street, Suite 250 1600 El Camino Real
Princeton, NJ 08540 Menlo Park, California 94025
Tel.: (609) 514-5978 Tel.: (650) 752-2000
Attorneys for Defendant
COVINGTON & BURLING LLP Novo Nordisk Inc.
Shankar Duraiswamy, Esq.
Henry Liu, Esq. WALSH PIZZI O’REILLY
(pro hac vice forthcoming) FALANGA LLP
Paige M. Jennings, Esq. Liza M. Walsh, Esq.
(pro hac vice forthcoming) Katelyn O’Reilly, Esq.
One CityCenter Katherine M. Romano, Esq.
850 Tenth Street, N.W. 100 Mulberry Street, 15th Floor
Washington, DC 20001 Newark, NJ 07102
Tel.: (202) 662-6000 Tel.: (973) 757-1100
Attorneys for Defendant
Eli Lilly and Company JONES DAY
Michael R. Shumaker, Esq.
GIBBONS P.C. (pro hac vice forthcoming)
Michael R. Griffinger, Esq. Julie E. McEvoy, Esq.
One Gateway Center (pro hac vice forthcoming)
Newark, NJ 07102-5310 William D. Coglianese, Esq.
Tel.: (973) 596-4500 (pro hac vice forthcoming)
51 Louisiana Avenue, N.W.
DAVIS POLK & WARDWELL LLP Washington, DC 20001
James P. Rouhandeh, Esq. (pro hac vice) Tel.: (202) 879-3939
David B. Toscano, Esq. (pro hac vice) Attorneys for Defendant
450 Lexington Avenue Sanofi-Aventis U.S. LLC
New York, New York 10017
Tel.: (212) 450-4000
Case 3:18-cv-14999-BRM-LHG Document 47-8 Filed 08/12/19 Page 2 of 3 PageID: 793

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

STATE OF MINNESOTA, BY ITS

ATTORNEY GENERAL KEITH
ELLISON,
Civil Action No.: 18-14999
Plaintiff, (BRM)(LHG)

v.
ORAL ARGUMENT REQUESTED
SANOFI-AVENTIS U.S. LLC, NOVO
NORDISK, INC., AND ELI LILLY
AND CO.,

Defendants.

[PROPOSED] ORDER GRANTING DEFENDANTS’

JOINT MOTION TO DISMISS
PLAINTIFF’S FIRST AMENDED COMPLAINT

THIS MATTER having been brought before the Court on the motion of

Defendants Novo Nordisk Inc., Eli Lilly and Company, and Sanofi-Aventis U.S.

LLC (collectively, “Defendants”) for an Order pursuant to Federal Rules of Civil

Procedure 12(b)(6) and 12(b)(1) dismissing Plaintiff’s First Amended Complaint

with prejudice; and the Court having considered the submissions of the parties, and

the arguments of the counsel, if any; and for good cause shown,

IT IS, on this ______ day of ________________, 2019;

ORDERED that Defendants’ Joint Motion to Dismiss is GRANTED; and it

is further
Case 3:18-cv-14999-BRM-LHG Document 47-8 Filed 08/12/19 Page 3 of 3 PageID: 794

ORDERED that Plaintiff’s First Amended Complaint is hereby

DISMISSED with Prejudice as against all Defendants.

___________________________________
HON. BRIAN R. MARTINOTTI, U.S.D.J.
Case 3:18-cv-14999-BRM-LHG Document 47-9 Filed 08/12/19 Page 1 of 3 PageID: 795

REED SMITH LLP DAVIS POLK & WARDWELL LLP

Melissa A. Geist, Esq. Neal A. Potischman, Esq. (pro hac vice)
Princeton Forrestal Village Andrew Yaphe, Esq. (pro hac vice)
136 Main Street, Suite 250 1600 El Camino Real
Princeton, NJ 08540 Menlo Park, California 94025
Tel.: (609) 514-5978 Tel.: (650) 752-2000
Attorneys for Defendant
COVINGTON & BURLING LLP Novo Nordisk Inc.
Shankar Duraiswamy, Esq.
Henry Liu, Esq. WALSH PIZZI O’REILLY
(pro hac vice forthcoming) FALANGA LLP
Paige M. Jennings, Esq. Liza M. Walsh, Esq.
(pro hac vice forthcoming) Katelyn O’Reilly, Esq.
One CityCenter Katherine M. Romano, Esq.
850 Tenth Street, N.W. 100 Mulberry Street, 15th Floor
Washington, DC 20001 Newark, NJ 07102
Tel.: (202) 662-6000 Tel.: (973) 757-1100
Attorneys for Defendant
Eli Lilly and Company JONES DAY
Michael R. Shumaker, Esq.
GIBBONS P.C. (pro hac vice forthcoming)
Michael R. Griffinger, Esq. Julie E. McEvoy, Esq.
One Gateway Center (pro hac vice forthcoming)
Newark, NJ 07102-5310 William D. Coglianese, Esq.
Tel.: (973) 596-4500 (pro hac vice forthcoming)
51 Louisiana Avenue, N.W.
DAVIS POLK & WARDWELL LLP Washington, DC 20001
James P. Rouhandeh, Esq. (pro hac vice) Tel.: (202) 879-3939
David B. Toscano, Esq. (pro hac vice) Attorneys for Defendant
450 Lexington Avenue Sanofi-Aventis U.S. LLC
New York, New York 10017
Tel.: (212) 450-4000
Case 3:18-cv-14999-BRM-LHG Document 47-9 Filed 08/12/19 Page 2 of 3 PageID: 796

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

STATE OF MINNESOTA, BY ITS

ATTORNEY GENERAL KEITH
ELLISON,
Civil Action No.: 18-14999
Plaintiff, (BRM)(LHG)

v.
CERTIFICATE OF SERVICE
SANOFI-AVENTIS U.S. LLC, NOVO
NORDISK, INC., AND ELI LILLY Electronically Filed
AND CO.,

Defendants.

I hereby certify that on this 12th day of August, 2019, I caused copies of

Defendants Novo Nordisk Inc.’s, Sanofi-Aventis U.S. LLC’s, and Eli Lilly and

Company’s (collectively, “Defendants’”) Joint Notice of Motion to Dismiss

Plaintiff’s First Amended Complaint; Defendants’ Memorandum of Law in Support

of their Joint Motion to Dismiss Plaintiff’s First Amended Complaint; a Certification

of Melissa Geist, Esq., with exhibits; a Proposed Order; and this Certificate of

Service to be served to all counsel and parties of record via ECF.

I also caused a courtesy copy of Defendants’ Joint Notice of Motion to

Dismiss Plaintiff’s First Amended Complaint; Defendants’ Memorandum of Law in

Support of their Joint Motion to Dismiss Plaintiff’s First Amended Complaint; the

Certification of Melissa Geist, Esq., with exhibits; a Proposed Order; and this
Case 3:18-cv-14999-BRM-LHG Document 47-9 Filed 08/12/19 Page 3 of 3 PageID: 797

Certificate of Service to be sent via overnight mail to the Honorable Brian Martinotti,

U.S.D.J., Clarkson S. Fisher Building & U.S. Courthouse, 402 East State Street

Room 2020, Trenton, NJ 08608.

Dated: August 12, 2019 Respectfully submitted,

By: s/ Melissa A. Geist

Melissa A. Geist
REED SMITH LLP
Princeton Forrestal Village
136 Main Street, Suite 250
Princeton, NJ 08540
Tel.: (609) 514-5978
[email protected]

Attorney for Defendant

Eli Lilly and Company