T1DF voluntarily dismisses Boss v. CVS Health, sounds alarm on agreement between PBM Defendants and plaintiffs’ counsel

Yesterday in New Jersey federal court, the Type 1 Diabetes Defense Foundation and its president Julia Boss—collectively the “Foundation Plaintiffs”—filed a Notice of Voluntary Dismissal in Boss v. CVS Health (Civil Action No. 17-01823). Boss and T1DF also voluntarily dismissed their claims in the related cases Bewley v. CVS Health (Civil Action No. 17-12031) and Prescott v. CVS Health (Civil Action No. 17-13066). The Voluntary Dismissal counters a Tolling and Standstill Agreement (“Agreement”) entered into between fourteen law firms, including In re Insulin Pricing Litigation’s interim co-lead counsel and Keller Rohrback, the MSP Plaintiffs (payers) and PBM Defendants (agents and subsidiaries of payers)—here described collectively as the “Joint PBM-Payer Enterprise.”

UPDATE: Order from the Hon. Brian Martinotti entered January 7, dismissing Boss. v. CVS Health without prejudice in its entirety and also dismissing without prejudice the Foundation Plaintiffs’ claims in the related cases is available here.

The Agreement, executed by the Joint PBM-Payer Enterprise in January 2018 but not disclosed to plaintiffs Boss or T1DF until December 27, 2018, aims at preventing prosecution of any claim against PBM Defendants. (Boss and T1DF were not parties to the Agreement, and dispute the validity and enforceability of the Agreement.) The Agreement specifically references Boss v. CVS Health (Article 9) and, if enforceable, would also preclude current named plaintiffs and part of the putative classes in the Bewley (glucagon) and Prescott (test strip) cases from advancing claims against PBM Defendants (Article 2). Prosecuting Boss v. CVS at this time would have required directly challenging the capacity of co-lead counsel in the insulin litigation to enter into an agreement for the sole benefit of those attorneys’ current and/or former payer clients. Boss and T1DF were unable, for a period of over 12 months, to secure litigation counsel and local counsel willing to represent them in opposing this Joint PBM-Payer Enterprise. Throughout 2018, the Agreement effectively protected payers and their PBM agents from public outrage as state and federal actors began to investigate payer-controlled cost sharing and rebate pass-through.

The filing of a Notice of Voluntary Dismissal cuts the procedural Gordian knot. By voluntarily dismissing Boss v. CVS Health in its entirety, the Foundation Plaintiffs de facto terminate the PBM Defendants’ right to seek a stay of the Boss case’s PBM claims—a first step towards securing legal representation and refiling an augmented complaint in a more suitable forum. The Foundation Plaintiffs further decided to sever all involvement with lawsuits now controlled by participants in the Joint PBM-Payer Enterprise and thus also withdrew as plaintiffs in the Bewley and Prescott cases. 

The procedural morass: when unaddressed attorney conflict impedes effective pursuit of plaintiffs’ claims

T1DF initiated the insulin pricing case eventually filed as Boss v. CVS Health in early 2017 to advance insulin users’ claims against PBM Defendants, who act as agents for payers (and have, in the intervening months, vertically integrated with health insurance companies). The Boss case was filed specifically to advance patients’ claims against PBMs and payers for failing to pass insulin manufacturers’ rebates through to insured patients in the form of low net prices. Boss v. CVS Health thus also addresses the role that PBM/payer rebate-pumping and rebate-capture have played in driving up prices paid by uninsured patients. T1DF’s intervention was also intended to prevent attorneys with a history of representing payer clients (often as part of nominal joint payer-patient classes) from compromising insulin users’ right of redress by solely suing insulin manufacturers for an injury that has been primarily and independently caused by payers.

Boss and T1DF were unable to prevent Boss v. CVS Health from being consolidated into In re Insulin Pricing Litigation in September 2017. Foundation Plaintiffs’ counsel failed to raise the issue of past or current payer representation in their application for leadership, even though Hagens Berman attorney Tom Sobol and co-counsel James Cecchi had, in 2012–2014, litigated a rebate (copay coupon) case on behalf of payers in the same federal court, in front of the same administrative judge. Steve Berman and James Cecchi were named interim co-lead counsel in the insulin litigation. Judge Brian Martinotti ultimately reserved judgment on how the PBM-payer claims should be handled. Over the Foundation Plaintiffs’ opposition, attorneys in In re Insulin—including the Foundation Plaintiffs’ former counsel—filed a consolidated complaint in December 2017 that dismissed all claims against PBMs and withdrew PBMs as defendants; in January 2018 these In re Insulin attorneys, supposedly acting on behalf of insulin users, went on to enter into the Tolling and Standstill Agreement with the PBM Defendants. 

Although In re Insulin attorneys made conflicting references to the Agreement in two contemporaneous Court filings, they never filed the executed Agreement with the Court. Only on December 27, 2018, did T1DF or Boss finally receive a copy of the executed Agreement that the PBM-Payer Enterprise has endeavored to use to control patient plaintiffs’ cases. That Agreement, if deemed enforceable, could allow the insulin litigation counsel and PBM Defendants to jointly delay patients’ insulin-related claims against PBMs and the payers for whom the PBMs act as agents. The resulting procedural morass has acted as a deterrent that effectively prevented the Foundation Plaintiffs from securing legal representation.

“Pursuant to the interest of justice”?

Throughout 2018, T1DF and Julia Boss, unrepresented by legal counsel, challenged interim co-lead counsel Steve Berman and James Cecchi’s leadership claims over the Boss case, arguing that their extensive relationships with payers (including former clients who had rebate pass-through contracts with OptumRx, a PBM Defendant named in Boss v. CVS Health) should preclude them from exercising any authority over claims against PBMs in their capacity as agents of payers. On November 6, 2018, Foundation Plaintiffs Boss and T1DF won a partial victory in their 9-month-long procedural battle to regain control of the Boss case; Judge Martinotti unconsolidated the Boss case from In re Insulin Pricing Litigation “pursuant to the interest of justice.” That ruling removed the Boss case’s PBM-insurer claims from the direct control of In re Insulin’s interim co-lead counsel, but did not compel disclosure of the Tolling and Standstill Agreement and did not address the impact of that Agreement on the unconsolidated case or on the Foundation Plaintiffs’ ability to secure legal representation. 

The “procedural morass, engineered by the Joint PBM-Payer Enterprise” and left unresolved by the Court, has effectively prevented the Foundation Plaintiffs from proceeding. The Tolling Agreement could be used to delay any insulin-related claims against PBMs (and, by extension, their insurer clients) until at least six months after resolution of specifically named insulin claims, including Boss v. CVS Health. Article 9 of the Tolling Agreement could allow PBM Defendants to stay Boss v. CVS Health—and the condition for lifting the stay on Boss v. CVS would be the complete adjudication of Boss v. CVS, “a circular logical loop that can’t be resolved unless the Agreement itself is voided.” Article 2 could be used by In re Insulin interim co-lead counsel to prevent the filing of any claims against PBM Defendants and to interfere with class certification for any case related to insulin pricing, including Bewley and Prescott (either delaying these cases, or pursuing them with partial classes that do not include insulin users, would be a miscarriage of justice). Since joining the Joint PBM-Payer Enterprise, Keller Rohrback has ceased to prosecute these two related cases. 

Challenging the Agreement would require exposing powerful class action attorneys’ conflicts and misrepresentations—an internecine adversarial endeavor none of the many class action attorneys the Foundation Plaintiffs contacted had any interest in pursuing in this New Jersey District Court. The Foundation Plaintiffs therefore determined to dismiss Boss v. CVS Health in its entirety, and to withdraw from the Bewley and Prescott cases where Keller Rohrback—signatory to the Tolling Agreement—remains counsel of record.

Tolling and Standstill Agreement protects payers and their PBM agents while state and federal actors investigate payer-controlled cost sharing and rebate pass-through

Boss and T1DF note in their Voluntary Dismissal that several law firms signing the Tolling Agreement, including Hagens Berman and Keller Rohrback, have current or former insurer or other payer clients, and all three PBM Defendants are now vertically integrated with health insurers. The Tolling Agreement can therefore “be best described as an agreement between payers and payers’ current/former counsel for the purpose of protecting payers and their PBM agents while the U.S. Congress, state legislatures and government agencies actively investigate insulin pricing and payer-controlled patient cost-sharing.” 

The Joint PBM-Payer Enterprise has, among its other effects, served the anti-manufacturer public relations agenda of the insurance lobby. For two years, the litigation against insulin manufacturers has received vocal public support from pundits, media outlets, and nonprofits supported by the payer-aligned Laura and John Arnold Foundation; some of these entities were also directly involved in the initial recruitment of plaintiffs for Hagens Berman’s manufacturer-only lawsuit. The Agreement has effectively allowed payer- and LJAF-aligned actors to point to litigation “against insulin manufacturers” as supposed evidence of a price-fixing cartel exclusively controlled by manufacturers—when in fact the narrow focus of the insulin litigation proves only that payer-aligned counsel have exclusively controlled that litigation, to the benefit of the health insurance lobby and its allies. The current absence of vigorously prosecuted claims against PBMs and payers is not proof of non-liability, but instead proof that a Joint PBM-Payer Enterprise—comprised of class action attorneys and PBM Defendants—has thus far succeeded in suppressing patient plaintiffs’ claims against these powerful U.S. health care actors.

The Joint PBM-Payer Enterprise’s attempt to hide the actual role of payers and their PBM agents sustains the injury insulin users now suffer as the direct result of payers’ rebate capture

U.S. elected officials at the state and federal level now strive to outdo one another in denouncing insulin manufacturers. None of these officials—not even the Attorney General of Minnesota, who filed a lawsuit reiterating the narrow manufacturer-only claims sustained via the Joint PBM-Payer Enterprise—has ever publicly mentioned the existence of an Agreement entered into by a cartel of class action attorneys and PBM Defendants for the sole purpose of undermining or delaying patient plaintiffs’ right to pursue claims against PBMs and payers. 

Payers’ capture of very large manufacturer rebates remains at the heart of the insulin price and access crisis. For analog insulin, rebates from manufacturers to insurers now exceed 75% of list price. Refusal to confront insurers’ misrepresentation of gross pharmacy claims expense as “plan cost” (while insurers treat rebates as general revenue)—and the Tolling and Standstill Agreement executed by the PBM-Payer Enterprise—now sustain the injury insulin users are experiencing, with medical harm and even death as the predictable outcome of refusal to confront the actions of insurers and of their PBM agents (now vertically integrated with insurers). 

Since early 2017, T1DF has fought to protect patients’ right to pursue claims against the parties that actually control the prices they pay at the point of sale—PBMs (payers’ agents) and the insurers, large employers, unions and other payers that control health plans’ benefit design. The Type 1 Diabetes Defense Foundation will continue to pursue this crucial issue through regulatory comment, through the education of key government actors and the general public, and via impact litigation.

About T1DF

Oregon-based 501(c)(3) nonprofit Type 1 Diabetes Defense Foundation is America's only legal advocacy organization dedicated to advancing equal rights and opportunities for Americans with type 1 and other forms of insulin dependent diabetes. T1DF accepts no funding from the pharmaceutical, medical device, pharmacy benefit management, or insurance industries or from any organization they fund. We support regulatory frameworks in which manufacturers compete directly on innovation and price to consumers and where drug channel actors can engage in open and efficient price arbitraging, without price discrimination and asymmetries of information.