RUN IT FIRST, LLC

v.

CVS PHARMACY, INC.

Run it First, LLC, Plaintiff, ) ) v. ) ) Civil Action No. 21-22604-Civ-Scola CVS Pharmacy, Inc. and others, ) Defendants. )

Order Granting Motion to Dismiss Through this antitrust action, Plaintiff Run it First, LLC, complains that Defendants CVS Pharmacy, Inc.; Caremark PCS Health, LLC; Express Scripts Holding Company; and OptumRx conspired to restrain trade by refusing to do business with Run it First. (Compl., ECF No. 1.) The Complaint alleges two counts, both against all four Defendants: conspiracy in violation of § 1 of the Sherman Act (count one); and violations of the Florida Antitrust Act (count two).

In response, the Defendants have jointly moved to dismiss the complaint, arguing it suffers from multiple defects, failing to set forth factual allegations (1) suggesting an agreement among the Defendants not to do business with Run it First; (2) establishing a relevant antitrust market; or (3) showing harm to competition. (Defs.’ Mot. to Dismiss, ECF No. 39.) Run it First opposes the motion, insisting its complaint sufficiently alleges a hub-and-spoke conspiracy among the Defendants to fix prices, as well as a relevant market and harm to competition. (Pl.’s Resp., ECF No. 54, 4.) The Defendants have timely replied. (Defs.’ Reply, ECF No. 57.) After careful review, the Court agrees with the Defendants that the complaint’s allegations fail to allege a conspiracy among the Defendants. This alone means Run it First has failed to state a claim and, therefore, the Court, grants the Defendants’ motion to dismiss. (ECF No. 39.)

1. Background1

The rising cost of prescription drugs is a significant and growing concern for consumers and benefit providers, such as insurance companies, large employer groups that self-insure, labor unions, and even Medicare and Medicaid (generally all referred to as “Payors”). (Compl. ¶ 2.) The pricing of

2. Legal Standard

When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must accept all the complaint’s allegations as true, construing them in the light most favorable to the plaintiff. Pielage v. McConnell, 516 F. 3d 1282, 1284 (11th Cir. 2008).

A pleading must only contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A motion to dismiss under Rule 12(b)(6) challenges the legal sufficiency of a complaint. See Fed. R. Civ. P. 12(b)(6).

In assessing the legal sufficiency of a complaint’s allegations, the Court is bound to apply the pleading standard articulated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

That is, the complaint “must . . . contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Am. Dental Ass’n v. Cigna Corp., 605 F. 3d 1283, 1289 (11th Cir. 2010) (quoting Bell Atlantic Corp, 550 U.S. at 570). “Dismissal is therefore permitted when on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action.” Glover v. Liggett Grp., Inc., 459 F. 3d 1304, 1308 (11th Cir. 2006) (internal quotations omitted) (citing Marshall Cnty. Bd. of Educ. v. Marshall Cnty. Gas Dist., 992 F. 2d 1171, 1174 (11th Cir. 1993). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

With respect to antitrust claims in particular, § 1 of the Sherman Act provides: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. The elements of a § 1 claim are: (1) a conspiracy that (2) unreasonably (3) restrains interstate or foreign trade. Quality Auto Painting Ctr. of Roselle, Inc. v. State Farm Indem. Co., 917 F. 3d 1249, 1260 (11th Cir. 2019).

Three general types of conspiracies are recognized: horizontal—involving agreements between companies that are direct competitors; vertical—involving agreements between businesses that operate at a different level of the same product or service’s chain; and a hybrid form—referred to as a “hub and spoke” conspiracy “where an entity at one level of the market structure (the ‘hub’) coordinates an agreement among competitors at a different level (the ‘spokes’).” United Am. Corp. v. Bitmain, Inc., 530 F. Supp. 3d 1241, 1255–56 (S.D. Fla. 2021) (McAliley, Mag. J.).

Importantly, “[u]nder Twombly, parallel conduct, such as competitors adopting similar policies around the same time in response to similar market conditions, may constitute circumstantial evidence of anticompetitive behavior.” In re Musical Instruments & Equip. Antitrust Litig., 798 F. 3d 1186, 1193 (citing (Twombly, 550 U.S. at 553–54).

However, “mere allegations of parallel conduct—even consciously parallel conduct—are insufficient to state a claim under § 1”; instead, “[p]laintiffs must plead something more, some further factual enhancement, a further circumstance pointing toward a meeting of the minds of the alleged conspirators.” Musical Instruments, 798 F. 3d at 1193 (cleaned up).

3.

Discussion The Defendants argue that Run it First has failed to allege facts supporting its claim that the Defendants violated either § 1 of the Sherman Act or its state analog, the Florida Antitrust Act.² In particular, the Defendants

To establish such an agreement—a threshold issue in a Section¹ claim— an allegation of mere parallel conduct, even consciously parallel conduct, will not alone suffice. Twombly, 550 U.S. at 552. Indeed, a plaintiff “must ‘plead something more,’ ‘some further factual enhancement,’ a ‘further circumstance pointing toward a meeting of the minds’ of the alleged conspirators.” Musical Instruments, 798 F. 3d at 1193 (quoting Twombly, 550 U.S. at 557).

These “plus factors are economic actions and outcomes that are largely inconsistent with unilateral conduct but largely consistent with explicitly coordinated action.” Musical Instruments, 798 F. 3d at 1194. Parallel conduct, on the other hand,

740, 745 n.11 (11th Cir. 1998) (“Federal and Florida antitrust laws are analyzed under the same rules and case law.”). has been defined, simply, as similar action. See SD³, LLC v. Black & Decker (U.S.) Inc., 801 F. 3d 412, 427 (4th Cir. 2015) (“A plaintiff establishes parallel conduct when it pleads facts indicating that the defendants acted ‘similarly.’”); Quality Auto Painting, 917 F. 3d at 1263 (noting defendants’ adoption of a “uniform” price suggests parallel conduct); Williamson Oil Co., Inc. v. Philip Morris USA, 346 F. 3d 1287, 1304 (11th Cir. 2003) (finding “repeated, synchronous pricing decisions” over seven years established parallel behavior).

As Run it First describes its case, CVS Pharmacy is the “hub,” having coordinated an agreement with a group of competitors (the PBM Defendants) at a different level—the alleged “spokes.” (Pl.’s Resp. at 6.) In response to the Defendants’ motion to dismiss, Run it First maintains it has sufficiently alleged both parallel conduct as well as adequate plus factors plausibly suggesting this hub-and-spoke conspiracy among the Defendants. (Pl.’s Resp. at 7.) The Court disagrees. Regardless of whether the complaint succeeds in alleging facts supporting an inference of parallel conduct—of which the Court is not entirely convinced—it falls well short of alleging any plus factors from which the Court could plausibly infer an actual conspiracy among the Defendants—whether of the vertical, horizontal, or hub-and-spoke variety. In support of its argument, Run it First lists what it describes as a “series of concerted events” which all took place “within a four-month period.” (Pl.’s Resp. at 7.) Upon scrutiny, however, the Court finds these events to be separated in both time and context such that they do not amount to anything other than non-contemporaneous, independent action. The events and actions Run it First points to are summarized as follows: • Although OptumRx stopped working with Run it First entirely in “October/November 2020” (Compl. ¶ 69 (emphasis added)), CVS Pharmacy continued to actively process claims (in association with an unnamed, non-defendant PBM) with Run it First’s system through March 18, 2021 (id. ¶ 68); • Caremark requested and participated in a conference call with Run it First on March², 2020, which involved Caremark executives’ asking detailed questions about Run it First’s systems and operations (id. ¶ 76–77);3 • On the same day as the Caremark conference call—March²— inhouse counsel from CVS Health, a non-party and Caremark’s

These events, either in isolation or together, do not plausibly support the inference of an antitrust agreement. Although all the Defendants ultimately made the same decision—not to work with Run it First—there is nothing in the complaint that shows they did so in coordination or by agreement. See United Am., 530 F. Supp. 3d at 1259 (noting that even though all the defendants supported a particular course of action, relating to a certain Bitcoin protocol, without more, the allegations were insufficient to imply even parallel conduct, never mind any plus factors).

Indeed, these series of events imparts no information from which the Court could conceivably, never mind plausibly, discern concerted, cooperative action among the Defendants.

First, OptumRx terminated its relationship, apparently “without reason,” with Run it First, at the latest, in November 2020. (Compl. ¶ 69.) Over a month later, in January 2021, Caremark, in contrast, affirmatively expressed its ability and willingness to work with Run it First, in conjunction with one of Caremark’s Payor clients, even participating in a conference call with Run it First in the beginning of March. (Id. ¶¶ 72–73, 75– 77.) It was not until the end of March—some four months after OptumRx’s disengagement—that Run it First says Caremark decided not to continue working with Run it First. (Id. ¶ 99.) In still further contrast, the only meaningful contact Express Scripts appears to have had with Run it First, according to the complaint, is a March 4, 2021, conference call during which “Run it First went over its entire process,” explaining, in response to Express Scripts’ questions, how Express Scripts’ claims could be reconciled after being processed through Run it First’s system. (Id. ¶ 81.) Unlike OptumRx and Caremark, Express Scripts, according to the complaint, never actually worked with Run it First at all. Without providing any other information specific to Express Scripts’ interactions with Run it First, the complaint just chronicles that, like Caremark, Express Scripts, some time “towards the end of March,” also “refused to work with Run it First.” (Id. ¶ 99.) These events show nothing more than three horizontally positioned entities who all unilaterally decided on a particular course of action in various, unrelated contexts and without any apparent connection except for their mutual, vertical relationship with a fourth entity—CVS Pharmacy, the purported hub in Run it First’s alleged conspiracy. As for the hub, because the complaint alleges not a single fact implicating an agreement between CVS Pharmacy and either OptumRx or Express Scripts, the only conceivable vertical conspiracy would have to be between CVS Pharmacy and its corporate sibling, Caremark. And, indeed, the most specific allegations in the complaint regarding any entity agreements are between Caremark and CVS Pharmacy and between Caremark and its parent, CVS Health. But even if those allegations were enough to allege some sort of “conspiracy” between those entities, neither corporate siblings nor a corporate parent and its wholly owned subsidiary are capable of conspiring with each other for purposes of § 1 of the Sherman Act. Am. Needle, Inc. v. Nat’l Football League, 560 U.S. 183, 194 (2010) (parent and its subsidiary cannot legally conspire for the purposes of § 1 of the Sherman Act); see Lenox MacLaren Surgical Corp. v. Medtronic, Inc., 847 F. 3d 1221, 1233 (10th Cir. 2017) (wholly owned subsidiaries of the same parent cannot conspire under § 1 of the Sherman Act) (collecting cases from the First, Third, Fourth, Fifth, Sixth, Eighth, and Ninth Circuits).

In addition to the specific actions set forth above, Run it First also points to other circumstances and conduct that it says suggest coordination among the Defendants. According to Run it First, these plus factors are: the purportedly “significant competitive advantage” one PBM Defendant would gain if it was the only PBM to implement Run it First (Pl.’s Resp. at 13); “past conspiratorial conduct by the PBM Defendants through their use of similar deceptive pricing strategies” (id. at 12); “the secrecy of the traditional PBM drug pricing system” (id. at 10); “the same drug, at the same pharmacy, at the same time, can be priced substantially different[ly]” (id. at 10 (cleaned up)); “the Defendants dominate the prescription drug market” (id. at 12); and the speculative nature of how the use of Run it First might affect the PBM Defendants’ profits (id. at 11).

Contrary to Run it First’s urgings, none of these purported plus factors makes the grade. Indeed, many of them are not even supported by the complaint’s factual allegations or are supported only by conclusory allegations. For example, Run it First fails to direct the Court’s attention to any actual support in the complaint for its contention that if only one PBM Defendant agreed to work with Run it First, that that PMB would eventually gain advantages over the others.

Moreover, the complaint’s allegations actually refute Run it First’s claim: OptumRx unilaterally refused to work with Run it First some four months before any of the other PBM Defendants appear to even have had occasion to interact with Run it First at all. (See Compl. ¶ 69.) Similarly, Run it First’s conclusory supposition that the PBM Defendants have engaged in past conspiratorial conduct finds no support from the complaint’s allegations. Nor, in any event, would such a generalized fact provide a basis upon which to infer the specific conspiracy Run it First alleges here. See Theatre Enterprises, Inc. v. Paramount Film Distrib. Corp., 346 U.S. 537, 543 (1954) (finding that a past conspiracy among defendants did not establish a separate conspiracy between those same defendants where the past conspiracy involved different business practices and a different plaintiff, during a different time frame).

Many of Run it First’s other purported plus factors appear to simply be complaints about the way the Defendants operate, divorced from any explanation as to how these allegedly questionable business practices might imply something more than parallel conduct. For example, as set forth above, Run it First complains that the Defendants rely on secrecy in drug pricing and do not conventionally or consistently price prescription drugs. But Run it First makes no effort to explain why these practices, as dubious as they may be, suggest that the Defendants conspired in their refusal to work with Run it First. Nor does Run it First’s apparent criticism of the Defendants’ combined market share amount to a viable plus factor. Simply because the Defendants, together, “dominate the prescription drug market,” does not allow the Court to infer a conspiracy. Certainly, any plaintiff could lump together any group of competitors and then complain that they have an unduly large market share. But Run it First provides no support, nor is the Court aware of any, for the proposition that such a combination, in and of itself, can amount to a showing of a conspiracy.

Finally, Run it First—in the face of the Defendants’ pointing out that the complaint fails to allege that the Defendants acted against their own selfinterest—maintains that the Defendants’ use of Run it First would not necessarily result in any lost profits. (Pl.’s Resp. at 11.) Run it First misses the point. To begin with, even if this were true, the possibility that the Defendants’ business would not be harmed by agreeing to work with Run it First is irrelevant. That is, Run it First fails to connect the supposedly speculative nature of Run it First’s impact on the Defendants’ businesses with an affirmative showing that the Defendants were acting against their own selfinterest.

Furthermore, Run it First’s hypothesis, that its business model would not “automatically” reduce the Defendants’ profits seems, in any event, to be directly at odds with Run it First’s own allegations that it “developed an innovative technology to compete with PBMs” in order to “provide lower prescription drug costs to consumers and Payors.” (Compl. ¶ 3.) As demonstrated by Run it First’s own examples, the whole point of Run it First’s methodology appears to be to directly reduce the amount that PBMs are able to charge their Payor clients for prescription drugs. (Id. ¶¶ 59, 61.) The inescapable conclusion, then, would be that incorporating Run it First would inevitably lead to a reduction in a PBM’s profits.

In sum, Run it First’s arguments and allegations, while painting a disturbing picture of the state of the pharmacy-benefit-manager business, nonetheless fall short in the antitrust context. Ultimately, the Court finds the complaint’s allegations fail to imply that the Defendants’ “resistance to the upstart[]”—Run it First—“was anything more than the natural, unilateral reaction of each [Defendants’] intent on keeping its . . . dominance.” Twombly, 550 U.S. at 566. In other words, even if the Defendants’ refusals to work with Run it First were parallel, there is no plausible implication of conspiracy where each Defendant simply did “what was only natural anyway.” Id.

4.

Conclusion For the foregoing reasons, the Court grants the Defendants’ motion (ECF No. 39), thus dismissing Run it First’s complaint with prejudice because it has failed to state a claim under Rule 12(b)(6).

Further, the Court denies Run it First’s request for leave to amend, inserted as an afterthought, in the last sentence of its twenty-page opposition to the Defendants’ motion to dismiss: the request is both procedurally defective and lacking in substantive support. See Newton v. Duke Energy Florida, LLC, 895 F. 3d 1270, 1277 (11th Cir. 2018) (“[W]here a request for leave to file an amended complaint simply is imbedded within an opposition memorandum, the issue has not been raised properly.”); Avena v. Imperial Salon & Spa, Inc., 740 Fed. App’x 679, 683 (11th Cir. 2018) (“[W]e’ve rejected the idea that a party can await a ruling ona motion to dismiss before filing a motion for leave to amend.”) (noting also that “a motion for leave to amend should either set forth the substance of the proposed amendment or attach a copy of the proposed amendment”) (cleaned up).

The Clerk is directed to close this case. Any other pending motions are denied as moot. Done and ordered in Miami, Florida, on February 15, 2022. 7 Robert N. Scola, Jr. United States District Judge