thank you good morning please be seated good morning judge webster can you hear us can you i'm sorry yes good morning oh i understand walk out so i hear so i will turn to the first case on the calendar and they all begin the same way the court marks the evidence and the government objects to the evidence which states are objections in this case with the  government as always objected to all documents that came from china that would not properly authenticated and they had the inability to cross examine witnesses and what the judge will say invariably is i will give it the appropriate weight this court recently stated minimal emissions or inconsistency in letters that come from overseas they were given minimal weight at best should not rise to the level to and in this case we have a letter from mother that failed to mention a red herring a fact about somebody may know that he's going to church here in the united states because claim rests upon one thing as a practicing christian to be sent back to china there is a well founded fear that he'll be persecuted by attending underground churches or by  the court is satisfied that under gal and under recently two days three days ago the score in march on sixteen dash twenty five sixty five confirmed that minor omissions in letters are given little weight or not enough for adverse credibility so we assume my client was credible then the next question is is there enough evidence in the record that a reasonable person would fear returning to china and being a practicing christian for this particular region of china yes you want to put all the trust that issue also so this for ports in the record i want to point out to the court number one in this day or one eighty one the government exercise state control over religion and restricted the activities of personal freedom of religious and here it's when these were proceed even potentially to threaten state or chinese communist party interests the government harassed assaulted detained or arrested or sentenced to prison a number of religious it here it's for activities reported to be related to their religious beliefs and practices there were also reports of physical abuse and torture in detention now this is from the two thousand and thirteen international religious freedom report the second portion of the record zero point two a or one ninety eight and again this comes from the same report or thirty's often confiscated bibles in raids on house churches the court recently sentenced a bookstore owner and a fellow christian to imprisonment of five and two years we spect to flee on charges related to distribution of christian books number three page a or two now seventeen in the record and this comes from the c e c see the congressional executive commission report on china two thousand and fourteen in this addresses the issue of the courts as ways authorities throughout china interrupted house church gatherings activities took participants into custody and blocked access to sites of worship i understand this court in the past judge winter you have a decision in may of two thousand and sixteen unpublished summary order that there were variances in the enforcement of persecution of religious persecution of christians but the country poor says differently it says throughout china and a we supposed to believe that a province in china when joe which is in the report and a province from food joe where my clients from which is the difference between new york and washington d c has different laws china is not divided in states it's one state it's one government one authority the authority of the chinese authorities want to suppress and oppress christians they believe it's a threat to their communist party the same way democracy would be in the last part of the record i want to point to come from the state department the poor page two hundred twenty four the record numerous former prisoners in detainees reported that they were beaten subjected to electric shock forced to sit on stools for hours on end and deprived of sleep another was subjected to physical and psychological abuse although ordinary prisoners were subjects of abuse prison authorities singled out political and religious dissidents for particularly harsh treatment so that's what's in the report you thank you will hear from the govern braga appearing on behalf of the attorney general the court should deny the petition for review the agency's alternative denial of relief on the merits which is not implicated by this court's recent credibility decision in gallo is supported by substantial evidence mr huang began practicing christianity in the united states this court has been clear that when alleged persecution will be based on an activities undertaken in the united states an applicant must show that authorities in their home country are aware or would likely become aware of their activities that would subject them to persecution here mr huang has fallen far short of making the shelling because they didn't have this man who was interested in his christian yes it's because the testimony on that point is incredibly vague and also uncorroborated the testimony is just that an unnamed village or a neighboring village or or a neighbor in china told mr hwang's parents that some other unnamed person was aware that mr pyne was practicing christianity in the united states the testimony is just too vague to allow him to meet his burden it doesn't name anyone one who was in contact with his parents and it also gives no indication that anyone who is in contact with his undergo however the court the immigration judge and the board relied both on this omission to make an adverse credibility finding however the court doesn't need to affirm the agency's adverse credibility finding to deny the petition for a view the court can simply rely on the agency's alternative finding that even assuming that mr huang was credible the testimony that he offered on this point was simply not enough to meet his burden what about the that this mistreatment varies from region to region and i believe it's page one ninety of the administrative record this is the international religious freedom report it states in part of the country local authorities tacitly approved of or did not interfere with the activities of some unregistered groups that agency relied on that fact i think that it's actually cited not cited but a similar indication is made in the board's decision additionally what is essentially making as a pattern or practice claim with evidence like that in the record that's simply not enough to show the kind of pervasive abuse of christians sufficient to make a pattern or practice claim i thought was to reduce sure that it was pervasive he just read from the sort of record that there was perverse perverse of abus is reading from at least the international religious freedom report is the same report that this evidence is and this as i just read indicates that there were regions and areas in the country where unregistered religious groups were able to practice without interference from authorities and this so there is contradicting evidence in the record both that they are persecuted and that they're only allowed to practice in some regions without persecution i don't think the record contradicts itself i think that the international religious freedom report which is a lengthy report goes through various provinces where there are abuses and talks about you know a number of abuses to make it so it is and i think the board and the immigration judge recognize that there is nice treatment however to make a pattern or practice claim it has to be something that's so pervasive that every every practicing christian that returned to china would be subject to persecution and the record simply doesn't go far enough to establish that notably as the board noted there's nothing in the international religious freedom report in particular has been unable to coin to anything that shows that there is abuse in his province of food john this court has addressed pattern or practice sixteen case they're both unpublished but in both decisions the court relied on the fact that documentary evidence provided that the mistreatment of christians varied by region and found that because the mistreatment varied by region someone could not succeed on a pattern or practice claim a claim that just because they established that they were christian in the united states they established that they would necessarily be subject would have  think of his claim if he could show that there were abuses in his province because he's on able to show a pattern or practice claim he would be able to succeed if he showed some sort of individual eyes risk and that brings us back to where we began with the fact that the evidence he's produced on individual lies risk which he seems not to argue before this court is is simply uncorroborated and vague testimony that some person in china is aware of his christian practice again under this court's precedent which requires a person who undertook activities in the united states upon which persecution would be based to prove that authorities are aware or would likely become of their become aware of these practices he simply hasn't met that burden of making that shelling on the part of the country report that says in parts of the country local authorities tacitly approved or did not interfere with the activities of some unregistered groups i think that alone would fall short of meeting the pattern or practice standard which is a high standard and which requires that a petitioner show that the the the mistreatment is pervasive throughout all of the country that any where the person returned in the country they would face the risk what the evidence is showing is that that's not the case for christians in china if there are no other questions i see my time has expired so i would ask the court to deny the petition for view because the agencies denial of relief on the merits is supported by substantial systemic and widespread proof of a pattern of practice but don't take my word for last week the congressional executive committee report came out for two thousand and eighteen  in that in that report the second sensor said that reports now says there is widespread and systemic abuse of christians so because the omission in this case are very similar to those a issue in gal the court should we men the case for the agency to reconsider the adverse credibility finding under the clarified standards set forth in cow and review the four years of or the most recent country ports international religious freedom report so the judge has all the evidence in front of them and open could you move to reopen this case the new report i would only i would have to do that if you denied the petition today i would have to file the motion to reopen saying worse in country conditions the new c e o has widespread and systemic i'm hoping not to have to do that in this case widespread and those are the exact words necessary for a pattern of practice and this is the first time i've been doing religion chinese religion cases since two thousand and one those words have ever come out in a report so that's how bad it must be because they always temper the report let's ask ourselves is it a is it a supplementary or contradictory statement i believe it's a supplementary statement which under gal is means it's not  in today's health care system the provision of prescription drugs at reasonable prices is one of the crucial functions in managing administering it resell flans the resupply hands on whose behalf plaintiffs bring suit entered into contracts with anthem that delegated anthem the discretion to provide prescription drugs to the plant participants and to set the pricing for those drugs including by contract with the pharmacy benefit manager or p p m as a result fiduciary to the plans and their participants because it had and exercise discretion on behalf of the plans but tell me how they get to be a fiduciary i missed that little step in your analysis well because the definition of sure in or under is a person among other things who has authority or who exercises discretion with regard to the management or administrati manage that business know that they did not exactly they sold their business their subsidiary but they hired someone to provide prescription benefit man why wasn't that a business decision as opposed to acting as a fiduciary the decision to sell their business was a business decision it is situation on behalf of the plans to contract to provide pharmacy benefit management services to the plans was a fiduciary decision under the clear precedents of this court and others and the coupling of the two is what created the breach of i do shri duty but the fact that something is related to a business decision as the simultaneous and conditional negotiation or there was a hostile takeover bid for grumman corp the corporate officers and directors who also were producers the plan decided to resist that plan one of the mechanisms they used to resist at that  takeover bid was that they had the plan buy additional shares of the stock so that voted against the tender offer and also not tender the shares that the plan already owned the second circuit said that the act of the plan the act related to the plan was nonetheless a fiduciary act the fact that it was coupled with a business decision was relevant not to the fiduciary status but is relevant to the breach because it showed that they were motivated to not take into account the interest of the planets participants when they acted with regard to the plan that so the point is and some exercise had the discretion an exercise of discretion in this court the fact that it was in a contract is met of the f h clear case this court said quite clearly and i want to read it because i think it's directly on point here court said that if a contract confers discretionary authority on a service provider which anthem was that gives rise to fiduciary status and duty even though the contract itself is the product for an arm's length bargain and also said after a person is entered into an agreement with a discipline and anthem did enter agreements with the arista plans the agreement may give it such control over factors that determine the actual amount of its compensation and second amendment complaint yes you know it's there is it anywhere else in the record well this is not a motion to dismiss your honor so the the we only have the allegations then delegated further discretion to express scripts over the pricing and furnishing of drugs to the plant and it and the district court held that well that discretion was constrained by certain provisions of the agreement between express scripts and anthem but not that it didn't exist and this court again and the district court had been clear that the exercise of discretion albeit constrained is nonetheless still the evidence of fiduciary status proof of status so for example here express scripts exercised discretion with regard to several things number one if anthem is correct and its contentions in its dispute with express scripts section five point six of the agreement set a very loose constraint on a right express scripts that they should charge competitive benchmark pricing and have that  members that's right because anthem was delegated by the plans the complete discretion to negotiate p b m contracts to provide prescription drugs to the plans and the participants and anthem in turn delegated at least part of that discretion to express scripts because the contract with express scripts both through fixed five six weeks through section five point six and also through section five point four and the exhibit a to that gave express scripts discretion because although it set limits and also gave express scripts the of the discretion to change the limits right i thought i read the contract tell me a firm if i had them felt that they were meeting the benchmark price they could begin negotiations but express group said no duty to agree with the price they have no duty to change their pricing based on the negotiation is that correct well that's one interpretation the contract and express scripts dispute that and the fans and there's not been determined by any court yet and that think that's going to be a subject that anthem and express scripts are litigating and will lead but there's another provision of the contract that the judge found set the constraints and that is section five point four and section five point four eight only sets constraints that is that sets maximum prices that express scripts to charge but within that gives express scripts  discretion to charge whatever it wants and number two is that some of the constraints that were in section five point four were them i don't quite understand what you just said if it's at maximum limit why second circuit has made it clear that a constraint on discretion that doesn't absolutely set it as a constraint which gives an entity room within the constraints to exercise discretion the entity will still have discretion albeit limited assuming just for the sake of the argument there is i take it that the violation in your view is that two thousand nine  well there are several violations one is the entry into the two thousand and nine contract effect of the beginning of two thousand and ten but second as the supreme court recently made clear in the temple case if you do she has an ongoing duty to monitor  whether or not a service provider is functioning according to the standard to which it's held and it has a duty an ongoing duty to correct past breach of duty so our theory is from day one  believe but that lawsuit is different your honor first of all they didn't file it till two thousand and fifteen or sixteen arc claimed and second it only and so our claims go back to two thousand and ten and judge rama hell that we could assert claims at least from may sixth two thousand and ten on so that our monitoring claims and our failure to renegotiate claims would certainly be broader than anthems but the second important point is that anthems lawsuit against express scripts only seeks damages for the difference between what they claim competitive benchmark pricing was and what express scripts charged our theory is and we allege it quite clearly is that anthem's that that that contract was not in what a loyal and not conflicted fiduciary and what a prudent for two issue should have negotiated the terms should have been some fixed terms as is much more common in the industry where you get a certain discount off published prices and so the difference in damages between our case and the theory of our case is good is a good deal it covers more years and agreed or amount and third it's not even clear from anthem's lawsuit that they're seeking recovery on behalf of the plans and participants as opposed of all in those are two claims that are only against express scripts in this case first of all judge the court below dismissed the rico kline it accepted some the motion with respect to some elements but it dismissed the rico claim on one specific ground and it page forty two of the court's opinion it's gus's that that the defeat of motion it's miss the point as most must have adequately allege that he only represented to amp them that it would charge at them participants competitive benchmark pricing for prescription medication and the quote went on to say that we had not satisfied rule nine b in making that allegation and so let me quickly say tell you where we did we allege that the representation was made in section five point six of the two thousand and two thousand and twelve complaints where it say and these are the words that it would ensure that will point is receiving competitive benchmark pricing no we allege it  contract we relived those in paragraph two fifty one and in paragraph two fifty two we allege that at the time the contract was entered into there was a present intent not to comply  which is the requirement for to make a statement and in a contract for all but under the countrywide decision that this courses has entered and how is it of course you don't have to allege intent with specificity position in defending the anthem claims that it paid four point six seven five billion dollars instead of paying about five hundred million for amp phones p b m subsidiary so it could charge higher prices and the logical inference since this is a motion to dismiss in this courtroom and a no vote the logical inference is that it had an intent it paid over four billion dollars for the privilege it paid there no it paid for the privilege for charging more than what it would have charged others to which would have been a competitive benchmark is anthems expert strategy has gone out into turman and in fact has charged more than eighteen billion dollars more than competitive benchmark pricing is determined by an independent bert those are the facts are the allegations and with that the specificity the plausibility of president it survives now turning really quickly to the a c l u the only point i wanted to make here is to clarify what is the neutral practice we are alleging has a disparate impact and then you see the neutral practice that we are alleging is the charging of excessive or above competitive  pricing where there is a twenty percent co insurance amount for individuals and for people with a disability if we allege those disabilities in paragraph four fifty three have to get specialty pharmacy drugs that have very high prices so obviously taking a sample percentage of if something is ten percent greater for a thousand dollars that has a much greater impact if it's ten percent greater than ten dollars but that's the that is that for sorry good morning your honor glenn kurtz on behalf of anthem that government law here is settled and it was correctly applied by the district court the seminal case is pegram is the decision issued by the united states supreme ways and recognize this contract with express scripts that was just a pure business decision it was completely a business decision after them had just spun off three of its subsidiary as part of the is well it was part of the same deal they sold net our access to express scripts and it didn't do a deal with express correct health right and they had a choice of paying as council just reiterate y i think you have a generalized understanding but there are some important nuances that i'd like to address ok always i'm interested in nuance thank you ron i mean the first issue is it was a sale of subsidiaries and when you sell subsidiaries you're not subject to wrestle law you're subject to corporate law you duties run in favor of stockholders and your duties are to back summarize the value of the stock on behalf of the company and its stockholders and that is why pegram ensures that you don't have irreconcil conflicts when you're because you're a fiduciary and administering claims doesn't make you a fiduciary when you make a business decision to change a corporate organization so as to sell subsidiaries you know but here it appears to  outsiders are that they sold their own customers down the river i'm going to give the money for them for themselves and allowing their customers to be charged more money for the drugs that just doesn't seem fair  let me let me address that very specifically one anthem solved its p b m it needed a new p b m service provider anthem entered into not on behalf of a plan not for a plan for itself because anthem can't function without early proposals this is not the ultimate negotiation at the marina process with bank of america there was a number of bidders there was a number of of big that came in and anthem negotiated with a number of bidders until it came n anthem an anthem has no discretion with respect to the price in the pricing is set by the side but i want to know that those could have a controlled anthem negotiated that p b m agreement and this is what's important in the judge poolers question is well there was never a proposal on the table that you can but you can either take four billion dollars which you're required to do if you're stockholders or you can take five hundred million and get different pricing for plaintiffs the pricing that was being offered that proposal that had a lower purchase price was for pricing to anthem which anthem could then use to make more money  it sales and this is the way corporate america works nobody legitimately tells you i'll give you four billion dollars i'll give you five hundred million which one do you want ok so the customers the drug takers only lose no matter who  would well i think your honor may have made the right point that the market's a highly competitive market and the pricing is whatever the market bears but if you're a member of a plan you know you can't take advantage of any competition well have to go to someone who's part of the plan to fill your prescription if you actually as a plaintiff you are afforded a lot of offered plans from a lot of different health insurers you look at all the terms and provisions which are not just drug pricing include hospitalisation what networks up with them right when you sign up with have them you can't take advantage of any competition for drug prices you have to use someone in the express scripts network is that correct no you can use any one you want but people tend to want to be able to use the networks that are provided by their healthcare provider there's no exclusivity in their it to the contrary the plans say you can buy from you can buy from anyone else you want to choose a rising drug prices in three year increments subject to certain things called exception pricing where you can negotiate for that as it means that every three years years i was required to engage in a market check pursuant to which they were terms the pricing terms say you will purchase drug categories up to a particular price there is no alleged breach with respect to the price at their pay this is an offering in the marketplace it is true anthem could have offered this pricing and kept a bigger margin had taken a different m and a structure in two thousand and nine or at them could have passed on some of those savings in the hopes of growing its footprint in the marketplace but there was not any of the savings did it in anthem had a profit they made from selling when they entered into this contract but there's the health plans themselves have no provision whatsoever by signing discretionary authority or any or addressing any fashion the sale of companies or the entrance into a p b m agreement that's done in a corporate way these are offerings anthem offers into the marketplace pricing they say here is our whole basket of services we give you hospitalization we give you  our offerings into the marketplace include the pricing and it is a black letter law principle from the supreme court and this circuit that plan design in playing content what you offer into the marketplace is not a fiduciary function you see it in an arm's length transaction with respect to that you think consumers know that it's an arm's length of course that of course they do their representative go of course they do they're represented by p p m consultants and health plan consultants and they negotiate with and the more they negotiate with at northern a go she ate with signori united health group people at the end of the chain that is the consumers of the drugs they really have no choice well the it to the extent their employees and their employees of an employer they rely on their employer to negotiate their benefits it's important to note that the court correctly found a receipt guarantees no particular level of benefits and no particular pricing competitive or otherwise this is a transaction where later and took the terms that were offered there's no breach of the health plan no breach whatsoever of the health plan they they were provided the pricing they were promised to be provided they bought prices they bought networks they bought formularies and they're no one's alleging there's a breach of that they're saying you could have entered into a different m n a structure you could have taken money out of stockholders pockets and gotten better pricing then you could have offered their pricing to us but anthem was never didn't say i'll tell you want to give you four billion or five hundred million they said i'll give you a tender price and the idea was do you want to make your money today up front for the stock sale and there's fairness opinions all over the place these were this was a fair transaction or would sold policies with guaranteed pricing maximum you could buy buy drugs up to a particular amount and no and they would have the same abilities e s i question did the discretion to raise an outside firm or inside their argument is why aren't we getting the best pricing conceivable and they're not entitled to the best pricing conceivable but the allegation is and that's the allegation but  the anthem the allegation is actually that amp them exercise discretion not in pricing that's done by e s i but an anthem exercise discretion by contract and by spinning off its p b m some subsidiaries in their contract and that that's the allegation with respect to anthem anthem as a pet anthem the way it works in terms of drug fulfillment is that the plaintiffs decide what drugs they need to go to a pharmacy the plan then forwards to an amount that was agreed to in the plan and then anthem transfers that to the side and that would happen regardless of what the terms are the issue is what their core allegation here is that the terms and them could have negotiated lower terms and if you had it done so it could have offered those terms in the marketplace and them has no fiduciary obligation offering any terms in the marketplace and when he as i was making a variety of proposals on consideration the idea wasn't we're  long period that the contract has been in existence the allegation is that the ultimate consumer paid much more for each prescription because they paid this much upfront and i write about yeah  you agree or not well that's true but anthem would seed the discretion on pharmacy pricing to the pharmacy benefit service provider and all circumstances the issue is what's the number the number there being charge is the number they agreed to in their health plans could have got you could have been in a position to offer me better pricing had you wanted to do so and this all is borne from the fact that there was an m and a structure proposed very early on not the deal that got signed there was a lot of it and many activity there that you could have taken your consideration by either taking it upfront and making what the amount you make now off drug pricing or you could have taken it with better drug pricing for anthem there was never a proposal to extend reduce drug pricing to the plaintiffs or any other plan it was to anthem and that anthem in turn would have kept the market wasn't part of the deal if they paid only five hundred million that the prices would be lower the low prices would be lowered anthem not to the plaintiffs that would have been lower pricing to anthem anthem then would have made the margin weight so but wouldn't the ultimate consumer pay a lower price for each prescription only if anthem chose to go out with an offer on its health claim or for lower pricing the right yes i am though was that the deal they would take the money lower amount and then take it over time instead of taking it in a lump sum at the beginning correct by offering that would that would assume that anthem chose to offer the same pricing then yes i is providing so i have never really cared about the customers they just wanted as much money as they could get i don't think that's fair at all i think the proposal was not to give customers lower pricing it was to give and the lower pricing an anthem would have made the margin by charging the customers more then anthem was paying for a mistake is the thinking that anyone cared about the ultimate user but your honor the  no one does here but anthem has a fiduciary obligation to stockholders we'd be here in a stockholder lawsuit if the allegation was anthem turned down four billion dollars instead of one billion dollars a whole system stinks well the this system is controlled by the market and the market is very competitive that's why people are talking about medicare for everyone to get rid of this combo looted system where the ultimate user pays more to everyone  along the chain i want to note that the pricing is that pricing formulas over time have changed and that is why the pricing today is different than what the price and used to be and the beneficiary of that is e assigned an anthem anthem is brought a to consumer arising out of these contracts to obtain a lower price that is correct the plans don't grant fiduciary discretionary authority and they don't address it this is a corporate contract that applies to anthem and it's a matter of well established black letter law when you offer pricing to clients as here that's not a fiduciary function you sit in an arm's length relationship selling into the marketplace these are the the plaintiffs choose to contract under this plan or they don't pursuing the earlier well anthem got that the price for the stock where there is fairness opinions confirming it was the right number for the stock and that was a stockholder  is anthem makes offerings into the marketplace that has pricing terms and other terms and plaintiffs except that if they don't accept that and where you have a contract that says i can charge up to ten dollars and you get charged up to ten dollars once anthem enters into a p b m agreement on the terms it enters into make goes to the marketplace and says i can offer you the following terms in a health plan do you want them and the health plans employers take them or leave them after evaluating  the other offerings in the marketplace in the marketplace is competitive and they accept the terms and they don't claim there's a breach in the idea that you had to go back in zero nine and a sale is subsidiaries and you have to take consideration and put it into lower pricing which was designed to allow them to make more money per drugs not for the good there was never an offer for the plaintiffs to have a lower price and it was anthem's pricing the plaintiffs are an even third party beneficiaries of the p b m agreement when you're performing an administrative act in connection with the claims or an investment in the plan assets these are not planned assets the plans had no interest in the subsidiary they had no interest in the p b m contract right that's a good place to start thank you thank you very much others have a lot of questions will hear from express scripts morning your honour's thank you judge who will meet please the court derek schieffer here on behalf of tell the express scripts your honor the express scripts portion of this case respectfully it reflects an effort by plaintiffs to federalize a state law contract to speed between express scripts and anthem specifically their piggybacking is third parties on anthems allegations of a contractual breach by express express scripts and somehow trying to spin that into federal claims and and under the affordable care act that bid is foreclosed by settled law and this court should affirm the dismissal in full with my time runners i'll be focusing on the issues but i'm glad to answer of course any questions the one question based on our fifty billion with a neutral about that i don't know about neutral your honor because obviously express scripts is out four billion dollars more if it upfront that money but they were willing to do both those things according to the allegations of the complaint and i would up somewhere well iran and let me just emphasize there's a tremendous business this was an arm's length business negotiation between express scripts is a business an anthem is a business and i think the case law is uniform that says they don't wear fiduciary hats at the bargaining table if they did there's nothing to negotiate they'll just you know give basically this would be a charitable endeavor which it's not express scripts has its shareholders still and express scripts took a tremendous risk judged cooler by paying the four point six seven billion dollars up front if the market had moved up anthem's not able to express scripts is unable to go after anthem for the difference at that point it's simply out the money and it has a low market pricing that's baked into section five point four and exhibit a it's fixed over the course of ten years so that was a business decision that drugs the pricing of the drugs your honor is strictly kept it's in a discount on not can see it in exhibit a of the contract which is part of the exhibit and section four five point four operates in tandem with that two to identify different metrics it's the lowest of any of them that is the ultimate prize was that there was no limit of the pricing and your honor i think that there is confusion in the plaintiff's complaint that way but judge ramos was perfectly clear about this i would direct your honour's to i believe it's special appendix pages twenty nine thirty one goes through how exhibit five point four operates in tandem with exhibit day when you read exhibit exhibit a it is an exquisitely detailed menu of exactly how the pricing was to work over the span of ten years of the contract the basis of this suit versus express scripts section five point six pool or about competitive benchmark pricing and what would happen if them every three years it has the right to conduct a market check there are three sentences of section five point six the first sentence says that anthem and a third party provider of its choosing can conduct a price check to do to ensure a competitive benchmark pricing speaking to express scripts what them and its third party does the second sentence says if determines that the pricing is not competitive at that point in time it can return to express scripts and express scripts will negotiate in good faith just as it negotiated in good faith at the initial contracting stage it returns to that as a business or change their prices in any of the three year investigation there's no allegation to that effect judge pooler and if they had alleged that we probably would have ruhle en because there was no good there were negotiations at the three year mark that resulted in exception pricing that's part of what went into an amended two thousand and twelve agreement that express scripts and then agreed to the allegations of the breach come from a two thousand and fifteen price check so this is six years into the contract when there was a disagreement between ant and express scripts that persists to this day it is being litigated in the district court before judge ramos it's in discovery we don't think that this court needs to speak to section five point six in its opinion because i would emphasize judge pooler the case law is uniform that when express scripts negotiates with and at arm's length they are negotiating as businesses they do not were fiduciary hot for that and it is the ninth circuit pointed out in the sentimental case it would it would yield absurd results in fact it would be an impossibility to say that express scripts negotiate as a fiduciary there be nothing to negotiate your honor all it would do was a will will lower the prices however may be desired and of course there's no corresponding way for express scripts to make its fair money on the market if there's no opposite duty on the other side of the table one other thing to emphasize judge who are the plaintiffs disavowed before judge ramos any reliance upon section five point six for their theory of fiduciary duty as to express scripts judge ramos noted that to them he invited he did not dismiss with prejudice he explicitly invited them to return he gave them leave to him and they opted not to do that and to come up to this court but i think in this profile especially your honor in section five point six the only provision that they really rely upon is to express scripts is no basis for reversing the  that that's pleaded into this conflict derive from this contract no it is not wrong and in fact when express scripts negotiated with them there was no plan contract as far as express scripts and if i would direct your honor to section two point one zero of the contract between anthem and express scripts or anthem explicitly reserves the right to set pricing for plans and for customers as anthem pleases that's up to and not e s i and lest the court think that that's just a theoretical reservation i'd point  point one zero b two point one zero b explains operationally how it is that pricing is going to vary plan by plan based on the agreements that anthem strikes with each individual plant so the  pricing that express scripts has as to anthem not only isn't the pricing that plans face but there's there's a specific accounting for what actually is the pricing plan by plan and that's not what plaintiffs offer is as basis for their complaint  started this discussion with you telling me that express was severely constrained by the terms of the contract and to what to what they could charge yes correct correct and so what is the basis is  t what is the basis for the claim that customers are overcharged i think your honor it's that they feel that the they don't like the pricing that they're getting in the in the health care marketplace i was going to plaintiffs can best answer that question but if that's the right judge pooler it could be a gripe that they would state against drug manufacturers against all sorts of health care providers against everyone who's part of a health care chain and is is contributing to the prices they face the terms of the statute say that the judiciary duty attaches if and only if the defendant wields discretionary authority or disk responsibility in the administration of covered plants that's not what express scripts is doing wrong because it doesn't know what plans have agreements with anthem and what pricing and them is agreeing to what the plans of course if if customers feel that they're not getting the right price and if they're not getting a fair shake they have planned for the sherries they have planned for you serious who are of the beneficiaries in the plans and they represent but there's no allegation that express scripts here ever contracted with the plan there's no there's no allegation consistent with the terms of the contract that express scripts was setting the pricing for plants it just wasn't virtue of that even though that was agreed just misconduct that was alleged to have control over the plan assets or dictating prices there are too many different factors that go into that to give rise to a case but i'd also emphasize if they wanted to make this case based on what the plan agreements and the plan pricing are they would surely have have said something about what those plan agreements actually say and when it comes to the function of a pharmacy benefit manager does in response to judge winters question to this that that would be completely counterproductive it is a self defeating theory because the way that express scripts does its work the reason that people turn to it is a pharmacy benefit manager is it negotiates across its business with the drug manufacturers to drive the it can and to get prices down if you say that express scripts has to interact as if you share and look at individual plans and what are the demographics and what of the drug needs it doesn't have that large market leverage it can't drive the best deals and get the best prices for manufacturers and as to the two thousand and nine that who can do that feels for the ultimate that that's what but that's what pharmacy benefit managers do that's why that's why anthem turns to express scripts and that's why plans when they have a choice decide that they're going to use express scripts as their pharmacy benefit manager trying to get the best deal for the people who are going to take the drugs right yes or r and that gets passed on  consumer anthem is the consumer in that exchange and express and express i want to be clear judge pooler express scripts takes a tremendous risk by saying four billion dollars if it turns out that the market moves up the there's no allegation that that pricing was not competitive as it was scheduled in to exhibit a over the course of ten years down to meticulous detail that allegation is not in the complaint that is competitive pricing there are predictions that are made about where the market might move over the span of ten years to be sure but if it turns out that the market moves up express scripts is out four billion dollars to anthem and it has no ability to charge prices above those that buy buy exhibit at it's just you know it's losing money and it doesn't have a reverse arista claim or anything like that it  made it a business decision that it was willing to incur that risk and it was willing to proceed according to exhibit a if plans didn't like that they didn't have to contract with anthem or if they did contract with and then they could choose a different pharmacy benefit manager there's no there's no dispute that was explicitly allowed to them under the terms of these agreements and there's no allegation i want to emphasize this there's no allegation that e s i breached section five point four or exhibit a or charge prices that it was not permitted to that express scripts did breach section five point six they're simply saying that to the extent that that may be right that express scripts breached section five point six express scripts should be liable not just to anthem but to the individual  plans as well for that and something else there's no allegation in the complaint that express scripts knew how anthem was going to use the upfront payment that express scripts made to anthem for all express scripts new anthem was going to use that money to do for the benefit of the plans that it contracted with its customers it could have would they use it for the benefit of their customers i think this through i think it's mr kurtz is right just for the sake of getting more business for the sake of expanding its business and saying we have now a buffer we can do that we can expand market share but express scripts didn't have this ability into that and it wasn't position and make that decision frantic and in terms of co producer a liability we respectfully submit for the reasons allegation that based on the law as it existed that express scripts had a state of mind of knowing that it was a fiduciary and the law says there need to be that allegation in order for express scripts to be liable and there no plan assets that express scripts ever receive direct control over the only allegation of the complaint as to non fishery liability that express scripts would have are based upon co insurance payments and everyone has agreed those are not planned assets or honor so there is no basis for express scripts to state in this case unless express scripts is deemed a fiduciary by this court and i would respectfully refer the court to chamber amicus brief pages seventeen to twenty four that goes through meticulous detail what courts have done in arriving in a court that a pharmacy benefit health care providers it is anyone who may do something that ultimately translates to the downstream price borne by consumers and i've been for that proposition i would refer rogers to page eighteen in the reply brief where there is an argument made that because the express scripts in negotiating  record that most or all drug contracts are the most or all p p m contracts at maximum prices in fact the law wasn't saying they would ok it was just asking whether the record by the way as to that the content of the contract between anthem on the one hand and the plans on the other hand there's representations of it made to the court about that but the allegation of the complaint is all those contracts did was say anth to well that's correct your honor but anthem did have discretion here on the allegations of the complaint which of course is or were plausible and it must be accepted as true on a motion to dismiss anthem had absolute discretion under the allegations of the complaint the operative pleading to go out and negotiate anything it wanted for as far as drug prices are concerned with any pharmacy benefit manager that it wanted i want to  specific drug prices the allegations are that anthem contract had with the plans to go out and obtain and met to manage pharmacy benefits and to obtain prices for pharmacy benefits three contract with a p b m that's all that's correct your honor no not in seeking a contract but once it's signed contracts with the plans which gave it that discretion it became a fiduciary and in turn a receipt does not limit the number of producers who may be responsible for a particular activity drug but that negotiated fix prices that said we will pass on exactly what the price we get from p b m or as in a lot of the reported cases which defendants of site it says site published lists there are published prices there are the typical contracts around and this is what was available on the market what did not negotiate was you go out somebody and anthems position which had tremendous bargaining power i mean this is one hundred billion dollars a year when x percent discount that's what it does and it says brand and generic drugs are characterized by and this is true in a bunch of the reported cases that defendants by reference to a medicare list of what is brand and what is generic if anthem had done that in its contracts with the plans then it would not be a fiduciary and by the same token if the contract between anthem and express scripts had done that it would not be a fiduciary as espresso cripps would not be a fiduciary and as was the case i want to correct a fundamental misstatement made by counsel which is we don't rely just on section five point six i mean there are page after page of our briefing to this court discusses section five point four which judge constrains but it is not a limit he did not say but does not eliminate discretion section five point four sets maximums but it within the maximums it gave express scripts discretion to set the prices and it also gave express scripts the discretion to change the maximum so for example or even the categorization of a drug as a brand on the one hand which costs a lot more obviously versus generic which costs a lot less in the standard contracts which it's anthem could have negotiated as a prudent fiduciary on the marketplace it basically says we look at the categorization that medicare publishes in this case however express scripts in that contract was given the right to determine brand versus discretion on their own and rich on its own according to a proprietary formula so they had a lot of discretion and we don't hint hang our hats solely or even principally on section five point six they committed was the disloyal and the breach of the food you sure duty of loyalty which is the highest duty according to this court known to the law they put their own self interests ahead of that of the plans and the participants they also have to point out did not a prudently which is of course one of the other main provisions of aristos for tishri duty provisions because they had tremendous clout and had they and the question isn't whether they were charging more or less i want to correct one thing then what they had been charging through their own subsidiary the issue for the prudent person standard is whether if they had conducted themselves prudently they could have negotiated with express scripts or some other pharmacy benefit manager prices that were lower than those in the express scripts contract right for you all to benefit the plans and their participants that's correct so it's not a comparison between what they were charging before this and what they were charging after they have a duty to maximize their profits for their shareholders well they may have that duty but there is a has different duty and as judge cardoza said a long time ago and this court has quoted him numerous times when you're on the that the the characteristic of a is something other than the morals they're held to something other than the morals of the marketplace so they may have been maybe it would be it's ok in a normal context to go out and try to maximize the amount of money that you get for a subsidiary sale but you can at the same time simultaneously and contingent on that contract breach your duty of loyalty to the plan participants so that's been if i understand their position their position deal well that's not correct because they were saying what they said was that if you compare the prices under least initially under the express scripts contract with what anthem was charging through their own subsidiary the plans and participants got a better deal but that's not the standard the standard is what a prudent and loyal fiduciary would have been able to negotiate with express scripts or some other p b m on the market the complaint alleges in great detail for example that express scripts gave much cheaper pricing to other large customers without even near who didn't have nearly the clout of anthem that's it's very there's a lot of detail in the clean about what terms express scripts give to those other people and similarly express scripts competitors may have offered better pricing so the relevant question isn't what people were paying before but what people were paying less but what a prudent and w negotiated had they not had they gone out and not negotiated at the same time they were negotiating more money for themselves so it's to market it's what's out in the market at a prudent fiduciary would have been able to managed argument will reserve decision the last two cases on our calendar on submission so i will ask the clerk to adjourn court