Originally published on Jan 3, 2019.
Three generic drug wholesalers, Oak Drugs (“Oak”), Matrix Distributors (“Matrix”), and Primed Pharmaceuticals (“Primed”) are challenging Optum Rx’s VAWD Requirement. The plaintiffs have recently received encouraging news from the U.S District Court for the District of New Jersey.
Original Filing
The case, Matrix Distributors, Inc., et al. v. Nat’l. Assoc. of Boards of Pharmacy and Optum Rx, Inc., began with a complaint filed by Barclay Damon, the law firm representing the plaintiffs in the case, in the New Jersey State Superior Court for Middlesex County on December 14, 2018. The complaint boils down to three main causes of action:
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constitutional claims (express preemption under the Drug Supply Chain Security Act and violation of due process);
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tortious interference with the plaintiff’s business operations;
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and violations of New Jersey and New York statutes dealing with consumer fraud.1
Regarding the alleged constitutional violations, the plaintiffs sought an order enjoining the NABP from operating its VAWD program and enjoining Optum Rx from enforcing its VAWD requirement.2 The other causes sought monetary damages from both the NABP and Optum Rx.3
Current Status
The case was removed to federal court,4 where the action is currently proceeding. The plaintiffs most recently applied for a temporary restraining order (“TRO”) from the court.5 Although the request for a blanket temporary restraining order was formally denied, the court entered an order that referenced the “grandfathering” of the distributor’s current pharmaceutical inventory.6 According to the transcripts of the hearing regarding the TRO, it appears that this would allow Oak, Matrix and Primed to sell what they had in existing inventory, as of December 31, 2018, free of Optum Rx’s VAWD requirement. However, the specifics of this arrangement are still being discussed.
The court has ordered an expedited evidentiary proceeding, set for February 22, 2019.7 The February 22, 2019 hearing will consider plaintiffs’ request for a preliminary injunction barring Optum from implementing its VAWD-accreditation requirement.
Future Impact
Although this arrangement only applies to the plaintiffs in the case, this news will likely serve as some encouragement for other parties in the pharmaceutical supply chain that are dissatisfied with Optum Rx’s VAWD requirement. It’s possible that if the plaintiffs obtain a favorable ruling on the broader issues alleged in the complaint (specifically the preemption issue or the due process issue), there could be more far-reaching effects on all members of the pharmaceutical supply chain. However, at this time, it is impossible to say how the effects of this development will affect anyone but the plaintiffs; accordingly, Optum Rx network pharmacies are advised to exercise caution in purchasing products from wholesalers without VAWD Accreditation.
1 Complaint at 28-52, Matrix Distributors, Inc. et al. v. Nat’l. Assoc. of Boards of Pharmacy et al., No. C-000194-18 (N.J. Super. Ct. Ch. Div. Dec. 13, 2018).
2 Id.
3 Id. at 52-53.
4 Notice of Removal, Matrix Distributors, Inc. et al. v. Nat’l. Assoc. of Boards of Pharmacy et al., No. 2:18-cv-17462-KM-MAH (D. N.J. Dec. 20, 2018).
5 Motion for Preliminary Injunction, Matrix Distributors, Inc. et al. v. Nat’l. Assoc. of Boards of Pharmacy et al., No. 2:18-cv-17462-KM-MAH (D. N.J. Dec. 2018).
6 Order Denying Plaintiff’s Motion for Preliminary Injunction, Matrix Distributors, Inc. et al. v. Nat’l. Assoc. of Boards of Pharmacy et al., No. 2:18-cv-17462-KM-MAH (D. N.J. Dec. 28, 2018).
7 Id.
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