Minnesota Supreme Court To Hear Retail Pharmacy Pricing Case

In 2009, Walgreens, CVS, Rite Aid, Wal-Mart, Target, Sears, Kroger, and others were defendants in a class action lawsuit filed in Minnesota state court. Similar lawsuits were filed at the same time in Michigan and West Virginia. In the complaint, the plaintiffs alleged that a Minnesota statute, enacted in the late 1970s but never enforced, prohibits pharmacies from making any more profit on generic drugs than they would have made on the sale of the equivalent brand name drugs.

As a group, the pharmacy defendants successfully moved to dismiss three cases. A trial court found that there was no private right of action to enforce the statute at issue, and that the plaintiffs failed to state a claim under the Minnesota Consumer Fraud Act (MCFA). But more recently, in a 2-1 decision the intermediate court of appeals reversed most of the trial court's ruling, finding that the class action plaintiffs can proceed with a claim under the MCFA. 

Last week the Minnesota Supreme Court agreed to hear an appeal of the intermediate court ruling.

MnRA's Involvement

The Minnesota Retailers Association (MnRA), at the direction of its Board, joined other interested partners in support of retail pharmacy defendants in June by petitioning to submit an amicus (or friend of the court) brief. The petition asked for a review of the appellate court's decision based on MnRA's belief that the MCFA should not be applied in this case, and that there is a potentially an impact on other areas of retail if a precedent of applying MCFA in this manner stands.

The Minnesota Supreme Court will hear the case and MnRA will join a group in submitting an amicus brief. That group includes the Retail Litigation Center, National Association of Chain Drug Stores, National Community Pharmacists Association, Independent Pharmacy Cooperative, Thrifty White Pharmacy, Minnesota Pharmacists Association, and Minnesota Chamber of Commerce.

Why Retailers Should Pay Attention

If successful, this lawsuit could result in damages equivalent to all of the "excess" profits each of the defendants made on the sale of generic drugs in the State going back to 2004, and would prevent the same defendants from making such "excess" profits going forward.

Although the current lawsuit is only against the larger chains, the plaintiffs' theory of the case applies equally to smaller chains and independent pharmacies. Also, there are similar statutes in roughly a dozen other states, and a win for plaintiffs in Minnesota likely will embolden the plaintiffs' bar to pursue similar litigation in some or all of those states.
 
In addition, MnRA is concerned that this case will establish precedent where the pricing of other non-pharmacy retail goods and services could be impacted by frivolous claims under the MCFA.