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February 2021: Victory in EpiPen ERISA Putative Class Action

February 2021

Quinn Emanuel achieved an important victory for its client, Express Scripts, in a massive putative ERISA class action in the federal district court of Minnesota concerning the cost of EpiPen.

Plaintiffs were members of ERISA-governed health plans.  They alleged that the rebates and fees that Express Scripts and other pharmacy benefit managers (“PBMs”) negotiated with Mylan, the manufacturer of EpiPen, caused health plan members to pay too much for EpiPen prescriptions.  Plaintiffs brought suit in the federal district court in Minnesota, alleging that the PBMs owed fiduciary duties under ERISA to plan participants and that by negotiating the rebates and fees for EpiPen, Express Scripts, and other PBMs breached those fiduciary duties.  Plaintiffs sought to certify a nationwide class of hundreds of thousands of participants in ERISA plans who had paid out-of-pocket for an EpiPen from January 1, 2007, through the present.

The firm obtained a number of important early successes in the litigation.  First, Quinn Emanuel successfully opposed the consolidation of the cases in an ongoing multi-district litigation against Mylan in Kansas; instead, the cases against Express Scripts and the other PBMs were consolidated in Minnesota.  Second, the firm, along with counsel for the other PBMs, successfully persuaded the Minnesota district court judge to dismiss one of the two ERISA claims.

At the class-certification stage, Quinn Emanuel, working with counsel for the other defendant PBMs, prepared a comprehensive 100-page joint opposition brief, which relied on hundreds of pages of evidence and six expert reports.  All the defendants agreed that counsel from Quinn Emanuel should handle the oral argument on behalf of all the PBMs in opposition to the motion for class certification.  A few weeks after Quinn Emanuel’s argument in July 2020, Judge Paul A. Magnuson issued an opinion denying class certification for the reasons the firm had pressed in the joint opposition brief and at oral argument.  The court reasoned that “Plaintiffs must allege that Defendants were fiduciaries of Plaintiffs’ ERISA plans with respect to the rebates/discounts Defendants received from Mylan, that Defendants breached their fiduciary duties to the ERISA plan participants, and that Plaintiffs were injured as a result of the breach,” but “Plaintiffs cannot establish that proof of these elements will be common to the entire class, and class certification of the broad classes Plaintiffs seek is therefore inappropriate.”  In particular, the court found that “Defendant PBMs managed pharmacy benefits for thousands of plans, each with its own specific provisions governing the PBMs’ behavior.  For example, many plans required the PBMs to pass along 100% of any negotiated rebate or discount from Mylan, and sometimes 100% of the PBM’s administrative fee, to the plan itself.”  The court went on to conclude that “Plaintiffs cannot escape that the PBM/client contracts are the foundation for their claims, and because they vary from client to client, are not amenable to classwide proof.”

Plaintiffs then petitioned the U.S. Court of Appeals for the Eighth Circuit to overturn the denial of the class certification.  Quinn Emanuel, working with counsel for the other defendant PBMs, prepared another successful opposition brief.  The Eighth Circuit denied the petition in September 2020, less than ten days after receiving the opposition brief.

Thereafter, Express Scripts and the plaintiffs reached a settlement.  The plaintiffs agreed to dismiss with prejudice their remaining claims against Express Scripts, and the district court entered a final judgment of dismissal in November 2020.