Park Irmat Drug Corp. v. Express Scripts Holding Co.

          Submitted: September 26, 2018

          Appeal from United States District Court for the Eastern District of Missouri - St. Louis

          Before WOLLMAN, KELLY, and ERICKSON, Circuit Judges.

          WOLLMAN, CIRCUIT JUDGE.

         Park Irmat Drug Corporation (Irmat) brought suit against Express Scripts Holding Company and Express Scripts, Inc. (Express Scripts), alleging various contract claims, a promissory estoppel claim, and violations of federal antitrust laws and state Any Willing Provider laws. The district court^[1] dismissed Irmat's complaint for failure to state a claim. We affirm.

         I.

         Express Scripts is the largest pharmacy benefits manager (PBM) in the United States. A PBM is a third-party administrator of prescription drug programs. PBMs process and pay prescription drug claims made by pharmacies and patients. PBMs also negotiate drug discounts with pharmaceutical manufacturers, handle pharmacy benefits for health plans and self-insured entities, and develop lists of drugs that are approved for reimbursement. A patient's health insurance plan chooses which PBM covers their drug-related expenses. Express Scripts and another PBM, CVS Health (CVS), account for 65% of the PBM market.

         PBMs create networks of pharmacies in which PBM members can receive their prescription pharmaceuticals at covered, discounted rates. To be successful, independent pharmacies must participate in the largest PBM networks. These independent pharmacies contract with PBMs either directly or through an agent such as a Pharmacy Services Administrative Organization (PSAO). Ninety-seven percent of retail pharmacies in the United States participate in Express Scripts's pharmacy network.

         Express Scripts also operates a mail-order pharmacy that fills prescriptions by mail nationwide. It is the only mail-order pharmacy allowed in Express Scripts's PBM network. According to Irmat, PBMs that own mail-order pharmacies dominate the mail-order pharmacy service industry. Nevertheless, independent pharmacies, like Irmat, have been able to successfully provide mail-order pharmacy services to customers in the United States.

         Irmat is a New York-based, independent pharmacy located in midtown Manhattan. It opened in 1978. For many years, Irmat was a successful retail pharmacy that filled and sold prescriptions via its storefront location. In 2013, Irmat began focusing on dermatological pharmaceuticals. It entered into a patient assistance program with dermatological drug manufacturers for pharmaceuticals that often had no generic equivalent. Under the programs, the manufacturers would pay a portion of a patient's insurance co-payment to Irmat. Because of its participation in these programs, Irmat expanded its business into a nationwide mail-order pharmacy and increased its staff from twenty employees to 208 employees.

         Irmat joined Express Scripts's PBM network in 2012 through AccessHealth, a PSAO, and gained access to more than 100 other PBMs. In October 2014, Express Scripts sent Irmat a Network Provider Agreement (the agreement) requiring that Irmat sign or risk termination from its network. The agreement required Irmat to meet the definition of a "retail provider," which was defined as a pharmacy "that primarily fills and sells prescriptions via a retail, storefront location" and that "shall not include mail order" pharmacies. The agreement also included recredentialing requirements whereby a retail provider must disclose updated information to Express Scripts. Failure to comply with the recredentialing requirements constituted a breach of the agreement and was cause for termination from Express Scripts's network. Finally, the agreement allowed Express Scripts to unilaterally terminate the contract without cause upon thirty days written notice. Irmat signed the agreement.

         Express Scripts required Irmat to submit a recredentialing application in July 2015. Irmat disclosed that 35% of its business came from its retail pharmacy and that 65% of its business came from its mail-order pharmacy. On August 7, 2015, Express Scripts sent Irmat an e-mail, the subject line of which read "Express Scripts credentials approved," and the text of which stated:

We are pleased to inform you that your recently submitted credentials have been reviewed and you are approved to continue in the Express Scripts Holding Company pharmacy networks.

         Irmat then hired more employees, constructed a multi-million dollar facility in New York, and spent time and money acquiring mail-order accreditations. In May 2016, Express Scripts sent Irmat a letter demanding Irmat cease and desist its mail-order operations because they were in violation of the agreement. Irmat responded with a letter referring to the August 2015 e-mail. On July 15, 2016, Express Scripts replied that Irmat would be terminated from the network in sixty-one days, primarily because of Irmat's mail-order business. Irmat appealed the termination through Express Scripts's internal appeal process. Express Scripts affirmed its decision in a letter dated August 22, 2016, which added that it was also terminating Irmat without cause. Express Scripts terminated Irmat from its network on or about September 30, 2016.

         II.

         We review de novo the grant of a motion to dismiss. Christiansen v. W. Branch Cmty. Sch. Dist., 674 F.3d 927, 933-34 (8th Cir. 2012). We accept "as true the complaint's factual allegations and grant[ ] all reasonable inferences to the non-moving party." Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 591 (8th Cir. 2009).

         "To survive a 12(b)(6) motion to dismiss, 'a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" McShane Constr. Co. v. Gotham Ins. Co., 867 F.3d 923, 927 (8th Cir. 2017) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "We assess plausibility considering only the materials that are 'necessarily embraced by the pleadings and exhibits attached to the complaint.'" Whitney v. Guys, Inc., 700 F.3d 1118, 1128 (8th Cir. 2012) (quoting Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003)). "A claim has facial plausibility when the plaintiff pleads factual content ...