good morning good morning robert gilmore with a law firm signed michel on behalf of plaintiffs and appellants i'd like to reserve three minutes of my time for a bottle this is a case about the largest pharmacy in the country s overcharging millions of patients for health maintaining and lifesaving prescription drugs by over one hundred twenty million dollars the district court's erroneous rulings denied plaintiffs in the class any remedy for those over charges i'm going to focus on the courts errors in granting c b s judgment one the district court disregarded the summary judgment standard instead impermissibly weighing evidence and making credibility findings and factual determinations in c v s his favor not the plaintiffs this ignored the well settled law of summary judgment and usurped the jury's role to the district court focused on the wrong legal question the court was preoccupied with whether the p b m is the pharmacy industry middlemen were deceived by c v s but the claims here are whether c v s deceived individual plant patients plaintiffs and class members at the point of sale and three the district court erred in its contract analysis the court found that the relevant terms in c v s is contracts with the p m were ambiguous and that finding should have stopped the summary judgment in its tracks because plaintiffs and c v s had competing evidence on what the contracts meant that required a jury to decide which did so i kind of like to look at these things a little bit after wal mart that in terms of when you're looking at the class certification and you're looking at those issues from your perspective if you can tell me what the common question was and then with all of these it seemed that the district court narrowed from eleven to four  so i'm also curious under i kind of know the answer but i don't exactly know the answer since walmart how many of these typicality was more popular before wal mart i think and so i want to know what in terms of you know if you're looking at a class like this what's the common question because obviously in wal mart they had all a million people or they had all these people and it was discrimination about promotions and with in it there were so many different there were people who didn't even apply for promotions there were people that weren't qualified for things ok here what would be the common question that would be answered and then in terms of i know that the contracts aren't exactly the same but how do you get past the typicality even of the contracts are different is there a way to look at each is  really the same issue with the contracts that's what i'm trying to understand short i think the core common question is whether c v s should have been submitting its h s p program prices as it usual and customary prices under all of the contracts with the p b s and then by not doing so and presenting false and inflated co payments to customers at the point of sale without telling them that they're essentially being denied the benefit of their insurance so essentially here people i'm just whoever all those people are you have people that don't have insurance and they pay a certain amount and they get a pretty good it's the cash amounts pretty good then people that have insurance who are paying for insurance to have private insurance so then c v s bills their insurance and it's charging them higher co pays from so they're paying more than the people that don't have insurance right that's right and our classes the people who are using insurance to make their purchases right and so and their complaint is they're having to pay a higher co pay then the people that don't have insurance at all pay for they're the same track but that's correct and it's because of a standard feature that's common in the pharmacy industry usual and customary pricing a pharmacy submits a us under the agreements the co pays never to exceed the usual and customary price so the way insurance works that in his fact is a pure person using insurance is never supposed to pay more than someone who isn't using insurance what ate what c v s did here class wide was not submit its cash discount price the has the price as it usually customer price that price fit the definition of usual and customary in each of the contracts at issue here  and we put forth evidence from the transaction data internal c v s documents plan documents describing program documents describing this h s b price as a cash discount program and all the u the plaintiffs need to be a third party beneficiary to bring in the other klyn the district court said that that wasn't relevant we think that they do need to be and are third party beneficiaries  question of fact in that it needs to it requires comparing that the circumstances of the class as a whole they are all patients using insurance to the terms of these contracts but the terms of the contracts are uniform they all involve how are people using insurance how are they paying for those prescription drug purchases and so if you look at that the usual customary provisions and all these contracts they evidence and intends to benefit these these patients in fact they want exist without these patients and i'm the judge poe case from the northern district of california is a good example there was actually looking at another pharmacy that was even mentioned in a it was a p b m pharmacy agreement just like those here co pay as a practical matter they're not probably going to get a ton of money each person right the individual damages for individual members are relatively i think this is kind of the classic case why you would have a class action because absent class treatment individuals are unlikely to go in the they may have been overcharged forty fifty s on one hundred so it's not in significant amounts but small amounts s i'm sorry can make money off the backs of the people that have insurance that maybe other pharmacies can't do or i mean obviously they're not other pharmacies here so they're not tagging along here this is just a consumer lawsuit correct this is just a consumer lawsuit i mean there are other pharmacies in the record i think is mentioned some such as kmart that have been hit with lawsuits and there are others as  some do allegedly if you look at other lawsuits engage in this activity and some don't see this is an enormously profitable company we cited cases that show how much money they were making by some internal studies l evidence that the court itself said was relevance internal documents data fact in which an expert witness testimony in a court just looked at that while admitted it was relevant  then decided it was inconsequential thought that c b s is evidence was better and that's that's classic usurpation of what the juries role but this is this a jury trial if you ask for a jury trial we did and i think all but one of the claims would be a jury trial so really we're talking on summary judgment where the district court can evaluate the evidence that you put before it big or should send it to the jury is that sure you set your argument that's exactly the argument yes your honor ok so because it seemed to me i want to make sure what you are really saying is the additional evidence that you would present over what you presented in summary judgment to the jury well i'm sure there there is but you're really not suggesting that you're going to present then let's if that's the are really your situation let's look at the expert opinion on the expert opinion that the district court threw out the expert opinion saying that there was no foundation for the expert opinion because the expert did not conduct a specific and i'm quoting investigation into insurers and pharmacy benefit managers understanding of the terms of their agreements correct yes your honor that and so if says that your expert should have conducted this kind of investigation before trying to give some expert testimony why is that an abuse it really arises from the same error that it's summary judgment erroneous ruling focusing well i could understand it that i can understand what you're arguing on the summary judgment because you're saying it may determine as to what's consequential and what isn't but now we're making if you will i doubt bird determination on an expert witness we're not looking at what will be the ultimate result we're making it outward determination and the disregard gave a very good reason why it was excluding that particular expert now you tell me why is that an abuse well if it isn't that it's not a very good read and the court essentially said we want you to do it and another analysis that you didn't do he wasn't purporting to say i know what the p b m his views are and based on the p b m his views my opinion is x he was going on i've analyzed data and i've analyzed conduct's that i see from the  transaction analysis and i've offered my expert opinions as to why these opinions should be these prices just by seems to me that what you're saying is the standard that was imposed twice not really as to the admissibility but as to the weight and it was court house does its ruling and does but it really was engaging weighing evidence it comes back to the same error with summary judgment the court said the p b m is say what c v s did is ok and so i'm not going to credit your expert or frankly your fact evidence and so that it decides professor hayes opinions as unreliable but really you just said you know i think there's other evidence that outweighs his evidence and so that was the basis for and then it's time for stand your expert was also giving expert testimony as to whether this was a true membership plan right he was and again based on the data analysis he looked at  he analyzed the data and he said he found this price that c b s is arguing is exclusive to members actually c b s is charging it to many people who weren't members now c v s had other witnesses who try to offer an explanation that's competing evidence in the court just pick c v s aside instead of ours those are kind of the classic weight of evidence credibility determinations that are for a jury not a bar log ever say that what hayes said had no foundation as a related to the crew membership plan i don't believe that mr barr legs said that and if he did that itself would be without foundation because the professor he looked at objective criteria what is the c b s data what did the numbers show the numbers show that c b s was charging of giving this price to nonmembers as well as members which we said is further undermines this notion that it was an exclusive price that could be carved out from the usual and customary reporting obligation still good morning yes thank you your honor may please the court grants garman from williams and connelly on behalf of c b s was in the district court correctly granted summary judgment because there was no genuine dispute of material fact that c b s made no misrepresentation of its usual and customary price as that term was defined in the c b s contract with the pharmacy benefit managers at issue if  you have to do we have to agree with the way you frame the question and order frayed prevail because they appellants framed the question differently and if the question is whether c v s properly excluded it is important to the resolution i'm not sure i would think those two different ways of framing the question are really all that different the alleged false statement in this case was the price that and it was on that precise point that the reg contained evidence only in c b s s favor there was testimony from the five biggest pharmacy benefit managers in the united states they were asked here's the contract with c v s here's the definition of usual and customary price is health savings passed within that definition of usual and customary price uniformly the answer was no therefore the testimony was all that s was not obliged to report its health savings past price as its usual and customary price under those contracts and critically that is the nature of the misrepresentation that is that the foundation of all four complaints that the plaintiffs in this case filed the felde one original and three amended in every single time the name of the alleged misrepresentation was this are supposedly submitting the wrong price as usual in custody right he discontinued the program why did we discontinue it the program was very small it wasn't making us any money and these these programs were no longer a hot topic by two thousand and sixteen when c v s discontinued it back in two thousand six wal mart shocked of the industry by lowering its price to four dollars and over the course of several years pretty much every company that had some form of pharmacy operations responded in some fashion s was late to the game in that fashion we didn't launch health savings pass until november of two thousand and eight but whereas c v s fell i need to have some sort of offering to be a player in two thousand and eight that that need was not involved by two thousand and sixteen let me ask you a question i asked the plaintiff counsel due to the plaintiff's need to be third party been underneath any of their claims why should we send it back to the district court chair look at that question sure well first of all counsel's answer to your honor's question i think and i want to know what you think w don't i don't think you don't have to get to the third party beneficiary question to affirm summary judgment because the question is what did the parties to the contract between c b s and the p b s understand the usual and customary definition to mean as applied to membership programs and third party beneficiaries came up in the district court because when we pointed out to judge gonzales rogers that the only evidence from the actual parties to the agreement is all in one way they came up and said well we are actually third party beneficiaries and so our opinion counts they're actually of the five p b m contracts issue four of them contain an express no third party beneficiary clause in them and they explicitly say insured members are eligible members which is referring to consumers with prescription insurance aren't included so there they were having an enormous hurdle to overcome were they to say that their claim has to require them to be third party beneficiaries because they have to get past that no third party beneficial clause and as your honor pointed out the exact legal tests that s had different usual and customary different cash prices that depending on the wording of the contract required them to submit what was called the senior citizen retail price versus the regular retail price and so in that context depending on what the language of the particular c v s to p b m agreement was different prices were submitted at this point c v s has a single retail price and all of the contracts require that submission of that same price although when one is measuring whether some other price should have been submitted it's undisputed between the parties that the definition that controls is the one that's in the contract which is why when the plaintiffs came forward with evidence they said that should cause them to survive summary judgment judge gonzales rogers identified what that evidence was she explained in bullet points what the evidence was but she alternately ruled it created no genuine dispute of material fact because the evidence wasn't even about the five p b m definitions that were at issue and she has warrants like well i don't have ten consequential i don't think it's as good as the other side or whatever that's sure sounds like the way the evidence i think when you look and you read judge gonzales rogers thirty one page opinion and you you look in context for the way in which she's using those words it's undeniable that she's applying the summary judgment standard she's applied over and over and that she was saying that this evidence is not actually  your honor i submit that there are ten pieces of evidence that the plaintiff has designated in the excerpts of record here none of them are about the five p b m definitions that ultimately this case came down to no one say that health savings past is in fact the usual and customary price under those definitions it sounds like a good closing argument for there is no i think i think when the when the ultimate question for the district court is is there a genuine dispute of material fact when you don't have any evidence that's actually about the five agreements that are at issue you're entirely within your realm to say that there has been no genuine forth a series of internal communications among the c v s employees these communications demonstrated that these days had concerned over concerns over whether the h s p c pricing should be reported at the u n c price and they were worried that the insurance companies would start demanding that that be the price now that seems to me to be the effect of what they put forward right that is a that is largely what they put forward now why does that relevant the i mean my worry is on the one hand i got c v s that affidavit testimony from the insurance company employees they have also  other affidavit testimony of their own but my worry is if i've got affidavit testimony from the insurance company employees that say should a chance high quality chance p c price i don't know what you call shouldn't be in the a u n c price and then i got these other series of internal communications i don't know why that's irrelevant if it relates to the same insurance companies so of the ten pieces of evidence i was referring to that have been designated are the series of the internal communicate therefore five of the ten mar certain analyses that were run before health savings passed was for i don't write and before it was implemented that not enough so as judge gonzales rogers explicitly noted after cy dennis firing those pieces of evidence to say that there is a possibility that my contract counterparty at the is going to take the position that health savings past is within the definition of usual and customary price is something that i say is qualitatively different than a document that says we actually believe this is our health savings pass price and so we need to submit it so they are saying to me that in order for these third parties to bring this lawsuit they need to have at least one of those contract parties who actually believed that health savings passed was within their definition of usual and customary and we talked a lot about the five key p m s today but there was there was testimony from a sixth and tittie which was at no one of the loop or just insurers of the car you go on there is there any reason different absolutely contrary things the only thing i see the disregard saying is all of this contrary information coming that's absolutely valuable really doesn't have any part of it because they weren't contracting parties they were only employees of the contracting party who are worried and i'm saying to myself so that says that the district court is saying that these people who may have objected somehow had a bias and would not object right and to respond to the biased point number one p b m are financially incented to pay pharmacies as little as possible when they pay pharmacies less they keep more so the fact that the contract counterparty is in agreement with c v s reflects a conceptual meeting of the minds that this type of program where you had to pay a fee to join you had to waive certain hipaa rights to join you agree to certain terms and conditions that took them outside of the realm of what these contracting parties understood to be a usual and customary i think what the consumer would say is yeah they're all against me to make me pay more than the cash payer does so when p b m go out and try this when clients like insurance companies and employer groups then one of their selling points is hey you should retain me as your p b m because i can negotiate lower prices for you and so antitheft a call to sort of the ultimate selling point of a p b m if they were to say it looked the other way and allow prices to rise that's just not that wouldn't be their rights model well you know you know that president trump in october signed a patient's right to no drug prices act right and in the act it says that  it's an act that is designed to ensure that health insurers health insurance and group health plans do not prohibit pharmacy providers from providing certain information to enrollees and in general a group health plan or health insurance provider shell insure that any entity that provides pharmacy benefit management services does not restrict directly or indirectly a pharmacy from informing and rollie of any differential between the enrollees thought of pocket costs under the plan or coverage with respect to acquisition of the drug and the amount an individual would pay for an acquisition of the drug without ensuring any health plan seems to me that this is the conduct in this case is the as for a law like this and some of the articles that came out i mean again i'm not supposed to go outside the record like this but some of the article specifically referenced that that say that although p b s arts opposed to negotiate drug prices between manufacture and pharmaci and health insurance companies they've come under increasing criticism and that's why congress passed this law so is this law i mean this is the kind of conduct that the impetus for this law the defendant in this case is c v s pharmacy c v s pharmacy is not f that legislation sounds directed at risk oh no i didn't read i didn't get the first part i mean just the whole point is to not restrict pharmacies from disclose the and i will and pharmacies in p b m are very sophisticated arm's length negotiating parties here they fight on a lot of things there's lots of money involved in these transactions and so if a pharmacy had its way i'm sure there would be a ton of restrictions that p b s try to place on the pharmacy that wouldn't be in play but look if a consumer within it with who had insurance if he if he or she went in the minute their prescription previous to this law the pharmacy couldn't tell them the pharmacy it's couldn't tell them you know what the p price is the lower price and if you pay ten dollars for this you'll get all this that's that's the impact of this law i don't i don't know that to be true as to how life was before this law your honor  haven't looked at the five ppm contracts to specifically see whether they were prohibited or not h s t was a public program in that it was on our website there were flyers at the pharmacy and so if someone with insurance came in and they paid a fifteen dollars co pay and the h s p price was nine dollars or ninety nine cents there was nothing hidden from them that their co payment was than more i don't think we're going a little off on this i think the one quite so we've taken you except the expert's opinion about the membership plan whether this is a true membership plans because even if all you say is right about the statistics about what the affidavit said the plaintiffs put forward if the plaintiffs could come up with an expert which says this isn't a true membership plan then you should have included anyway so i guess i'm having a tough time why i didn't see anything in there that said data was any better than hayes and darling never said that hayes had no foundation in what hasan's just thank you for that question there were two bases for dr hayes saying my calculation show it's not a true membership program one the statement that the health savings passed price was supposedly provided to non h s p members ok at page eighteen of the excerpts of record judge gonzales rogers noted that bret barr lega our own data expert when in and said ok on those transactions were nine dollars and ninety nine cents was charged to a non h s p member did c b s report nine dollars and ninety nine cents as it's u price to third party payors answer yes so it's it's to ratchet up your language in the expert report to the highest level of generality to say the h s p price was charged to nine h s p members because mr barr like provided the further explanation that said yeah sometimes nine ninety nine happened to be c v s is retail price and ninety nine point eight percent of the time it was submitted so judgments i was right didn't choose c v s as expert over the plaintiff's expert what she did was get into the details of the calculations and say dr hayes statement is misleading when you consider this additional piece of analysis this isn't an example of c v s not having a true me ok and then i didn't because we've got so much over i'm going to give you two minutes on rebuttal or if or i'll just get you up here if if the panel has any questions just because that's i know that you're all very sallust have your own there's reasons why p b s don't want usual and customary pricing because they they say well we're able to get this better pricing and if a pharmacy submits a price that is a low as its own cash pricing that sort of undermines the rationale our experts analysis and that's really for the jury to decide which analysis is more persuasive it's not a gate keeping function underdog finally we've talked about the evidence and i would suggest that your honour's as you as you go back and look at this a  case if you look at the document it's in the record beginning at five eighty and the specific page in the record is five ninety three it's a one of these internal presentations we're talking about council described all those as predating the launch  program that's not true this is a presentation from two thousand and ten that's two years after the program's been in place and c v s talks about passing the test the pricing on would lead to private payers demanding the same price  talks about in that presentation h s p becomes u n c and calculates if we do that it's going to cost us five hundred million dollars because that's how much we're making each year it shows there's evidence competing evidence on both sides as to