New England Carpenters Health Benefits Fund et al v. First Databank, Inc., et al

MEMORANDUM in Support re MOTION to Amend CLASS PLAINTIFFS' AMENDED MOTION FOR LEAVE TO FILE THIRD AMENDED COMPLAINT

D. Mass.October 9, 2007

1821-13 201037 V1 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS NEW ENGLAND CARPENTERS HEALTH BENEFITS FUND, PIRELLI ARMSTRONG RETIREE MEDICAL BENEFITS TRUST; TEAMSTERS HEALTH & WELFARE FUND OF PHILADELPHIA AND VICINITY; PHILADELPHIA FEDERATION OF TEACHERS HEALTH AND WELFARE FUND; DISTRICT COUNCIL 37, AFSCME - HEALTH & SECURITY PLAN; JUNE SWAN; MAUREEN COWIE and BERNARD GORTER, Plaintiffs, v. FIRST DATABANK, INC., a Missouri corporation; and McKESSON CORPORATION, a Delaware corporation, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) C.A. No. 1:05-CV-11148-PBS MEMORANDUM IN SUPPORT OF CLASS PLAINTIFFS’ AMENDED MOTION FOR LEAVE TO FILE THIRD AMENDED COMPLAINT Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 1 of 181 1821-13 201037 V1 TABLE OF CONTENTS PAGE I. INTRODUCTION ...............................................................................................................1 II. PROCEDURAL BACKGROUND......................................................................................1 A. Addition of the Cash Payor Class ............................................................................2 B. Antitrust Claims .......................................................................................................4 C. Other Changes to the Complaint..............................................................................4 III. ARGUMENT.......................................................................................................................4 A. Standard of Review..................................................................................................4 B. The Court should Allow Plaintiffs to add a Class of Uninsured Consumers...........5 1. Futility is not an Issue ..................................................................................5 2. Plaintiffs have not Engaged in Undue Delay in Bringing this Motion ........5 3. Nor Would McKesson be Unduly Prejudiced by the New Claims..............7 4. Amendment is Preferable to a New Action .................................................7 C. The Court should allow Plaintiffs to Add Antitrust Claims ....................................7 1. Amendment is Appropriate because no Additional Discovery is required ........................................................................................................7 2. Plaintiffs’ Antitrust Claim Presents a Viable Theory of Recovery and is Solidly Grounded in the Evidence.....................................................9 a. Defendants’ price fixing scheme violates the Sherman Act ............9 b. Plaintiffs have standing to bring federal antitrust claims because they have been directly harmed by anti-competitive conduct .......11 c. Under California law, Plaintiffs have standing to recover damages for antitrust violations .....................................................13 IV. CONCLUSION..................................................................................................................14 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 2 of 181 1821-13 201037 V1 - 1 - I. INTRODUCTION As discussed at the Court’s September 20 Status Conference, Class Plaintiffs intend to bring claims on behalf of consumers who most are affected by Defendants’ scheme to raise brand drug prices: the uninsured. Class Plaintiffs now seek leave to file a third amended complaint to include the class of uninsured or underinsured consumers who were required to pay full cost for the Marked Up Drugs. This added class could be brought as a separate action by the new Plaintiffs without leave of the Court, however Plaintiffs believe it would be a better use of judicial resources to include the cash payor class in the current lawsuit, which involves the same issues of liability and proof of damages. At most limited discovery would be required and could occur concurrently with expert discovery without postponing trial this summer. Class Plaintiffs also move for leave to add antitrust claims. No additional discovery will be necessary; the same evidence of Defendants’ misconduct that supports Class Plaintiffs’ RICO claim also supports a violation of antitrust law based on price fixing. Class Plaintiffs’ Proposed Third Amended Complaint is attached as Exhibit A in redline form showing the amendments. Attached for the Court’s convenience as Exhibit B are excerpts of the pages from the Third Amended Complaint highlighting the sections which have changed. II. PROCEDURAL BACKGROUND Class Plaintiffs originally filed this lawsuit in June 2005 on behalf of all purchasers of the subject drugs “at a price calculated by reference to the AWP published by First Data during the Class Period.”1 Later, Class Plaintiffs modified the class definitions to include a TPP Class and a 1 Class Action Complaint, ¶ 138. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 3 of 181 1821-13 201037 V1 - 2 - class of consumer purchasers, who paid “a percentage copayment for the subject drugs.”2 After the close of fact discovery,3 this Court certified the Consumer Class for the purposes of both liability and damages, and certified the TPP Class for the purposes of liability, while deferring ruling on certification of the TPP Class for the damages phase. Class Plaintiffs intend to bring claims on behalf of a proposed class of uninsured or underinsured consumers, who purchased the Marked Up Drugs at full cost (proposed “Cash Payors Class”). These consumers were particularly hard hit by the markup increase because they had to absorb the entire increase themselves and there is no contention that they could negotiate to recoup the effect of the McKesson-AWP Scheme. A. Addition of the Cash Payor Class After the Court’s order dropped a footnote excluding cash payors from the Class, Dr. Hartman and Class Counsel began working on the issue of whether uninsured consumers should be excluded from the Class. Dr. Hartman opines that this Class was equally impacted, suffered damages and comprised the most vulnerable group. Dr. Hartman thus opines: Upon reviewing the Court’s order regarding usual and customary (U&C) charges, I raised this issue with class counsel. There is no doubt in my mind that customers paying U&C were impacted and my original class certification analysis implicitly included such customers. It was not until the Court flagged this issue that I realized the definition of the Class did not include such class members, as I believe it should have. I have demonstrated in my March 2007 Declaration that well-recognized sources of pharmaceutical industry data have documented that U&C payments by uninsured cash payers are, on average, related to and greater than AWP over the Class Period. These sources can be used to calculate how U&C payments have been related to AWP in 2 Second Amended Complaint, ¶ 153. 3 Fact discovery is now closed with the exception of the deposition of Dennis Lindell, scheduled to take place on October 23, 2007. See Judge Colling’s electronic orders, dated July 30, 2007 (denying AmerisourceBergen’s motion to quash) and August 17, 2007 (setting the conditions of the deposition). Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 4 of 181 1821-13 201037 V1 - 3 - a formulaic way. Therefore, as a matter of economics, uninsured cash payers were impacted, injured and damaged on a Class-wide basis by the inflation of AWP. Indeed, the bulk of consumer damages are in this group, and these are the most vulnerable of payors. I address the issue of the relationship of U&C payments to AWP in greater detail in Attachment F, Section IV. [Expert Report of Raymond Hartman at ¶ 10.] The GAO took note of the price increase to this Class, although it did not know the cause was the McKesson-FDB Scheme:4 Thus Class Plaintiffs propose adding this Class of most vulnerable and clearly impacted consumers. Only limited discovery will be required and such discovery can be completed rapidly. 4 GAO Report is attached hereto as Exhibit C. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 5 of 181 1821-13 201037 V1 - 4 - B. Antitrust Claims Class Plaintiffs also intend to bring a separate antitrust claim against McKesson. Procedurally, these claims should be consolidated and the most expedient method would be to amend the complaint. No additional discovery is required; the same evidence of price fixing supporting the existing RICO claim also supports a violation of antitrust law. C. Other Changes to the Complaint Additionally, Class Plaintiffs seek leave to amend to address administrative matters. Shortly after Class Plaintiffs filed their Second Amended Complaint with the Court, Consumer Plaintiff Maureen Cowie withdrew from the lawsuit due to health concerns and TPP Plaintiff District 37 informed counsel for Class Plaintiffs that it was participating in the lawsuit solely on its own behalf and not also on behalf of the Cultural and Library Trusts that it also administers. Class Plaintiffs promptly advised McKesson of the new developments in writing and the parties proceeded with discovery accordingly. Class Plaintiffs’ Proposed Third Amended Complaint would address those changes and correct the record. Finally, Class Plaintiffs also seek leave to modify their factual allegations to conform with the evidence. Specifically, Class Plaintiffs would like to add additional allegations of PBM conflicts of interest and more detailed allegations regarding Defendants’ agreement and combined efforts to raise AWPs via the WAC/AWP markup. III. ARGUMENT A. Standard of Review “Consent to file amended pleadings ‘shall be freely given when justice so requires,’ Fed. R. Civ. P. 15(a), unless the amendment would be futile or reward undue delay[.]” Adorno v. Crowley Towing & Transp. Co., 443 F.3d 122, 126 (1st Cir. 2006). “The liberal granting of motions for leave to amend reflects the basic policy that pleadings should enable a claim to be Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 6 of 181 1821-13 201037 V1 - 5 - heard on its merits.” Calderon v. Kansas Dep’t of Soc. & Rehab. Servs., 181 F.3d 1180, 1186 (10th Cir. 1999). “A trial court should generally not deny a request to amend, even at the summary judgment stage, unless the court finds that there was bad faith, undue delay or prejudice.” Abrazinski v. Dubois, 876 F. Supp. 313, 321 (D. Mass. 1995). B. The Court should Allow Plaintiffs to add a Class of Uninsured Consumers Unlike the related AWP case, which involves multiple conspiracies by drug manufacturers, this lawsuit involves a single, unitary scheme by McKesson and First DataBank to raise drug prices by increasing the WAC/AWP markup of brand drugs across the board. Members of each of the classes, including the proposed class of uninsured consumers, sustained injury in the form of an increase in the price they paid for prescription drugs. To allow a single trial to establish liability and common means to establish damages would be the best allocation of scarce judicial resources. 1. Futility is not an Issue Introducing a second class of consumers who purchased the drugs at full cost is merely a logical progression from the prior complaint filed on behalf of consumers who paid a percentage- based co-payment. 2. Plaintiffs have not Engaged in Undue Delay in Bringing this Motion When an amendment requires a modification of the court’s scheduling order, e.g. a limited extension of class discovery, the burden on a plaintiff seeking to amend a complaint becomes more exacting and courts generally require plaintiffs to show good cause pursuant to Fed. R. Civ. P. 16(b). Steir v. Girl Scouts of the USA, 383 F.3d 7, 12 (1st Cir. 2004).5 “Rule 16(b)’s ‘good cause’ standard emphasizes the diligence of the party seeking the amendment.” 5 Rule 16(b) provides in relevant part that “[a] schedule shall not be modified except upon a showing of good cause and by leave of the district judge[.]” Fed. R. Civ. P. 16(b)(8). Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 7 of 181 1821-13 201037 V1 - 6 - O’Connell v. Hyatt Hotels, 357 F.3d 152, 155 (1st Cir. 2004). For example, in O’Connell the court denied the plaintiff’s motion to amend, where the case had been transferred from Pennsylvania to Puerto Rico and the plaintiffs had agreed to amend within 30 days of transfer but did not in fact move to amend until fourteen months had passed. By contrast, good cause is met when a plaintiff discovers new information, justifying a late motion for amendment or other equitable grounds. See Kennedy v. Josephthal & Co, 814 F.2d 798, 806 (1st Cir. 1987) (identifying the discovery of new evidence as a justification for an amendment that requires a modification of the court’s scheduling order). Unlike the plaintiff in O’Connell, Class Plaintiffs have vigorously prosecuted their cause on behalf of both the Consumer and TPP Classes. Class Plaintiffs are more like the party discussed in Kennedy who discovers new information late in the litigation. Class Plaintiffs originally intended to bring claims on behalf of all consumers but their initial investigation of the case suggested that the number of uninsured or underinsured persons affected by the price hikes of the Marked Up Drugs was insignificant and that such individuals would be difficult to identify and thus potentially complicate the notice process. Accordingly, Class Plaintiffs initially limited the Consumer Class to beneficiaries of prescription drug benefit programs, who would be relatively easy to identify and notify by means of their insurance or benefit plan administrators. However, when Class Plaintiffs’ expert, Dr. Hartman, recently reviewed the IMS data in preparing his expert report, he found a large number of cash purchases of the Marked Up Drugs. Class Plaintiffs were also encouraged by the Court’s August 16, 2007 ruling in Government Employees Hosp. Ass’n v. Serono Int’l, S.A. et al, No. 1:05-cv-11935-PBS, suggesting that consumers could be notified directly by the pharmacies from whom they made their purchases, rendering the institutional affiliation of insured consumers less critical. Given the potential size Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 8 of 181 1821-13 201037 V1 - 7 - of the Class, which is both larger than the Insured Consumer Class and the multiple means of notifying uninsured consumers, the obstacles previously encountered to bringing these claims, are no longer present. 3. Nor Would McKesson be Unduly Prejudiced by the New Claims The parties agreed at the September 20 hearing that if the Court grants leave to amend, Class Plaintiffs will move immediately to certify the new Class. The proposed class would require only limited additional discovery, which could occur concurrently with expert discovery without postponing trial this summer. Limited class discovery of a couple of representative plaintiffs would not be unduly burdensome in a case that has already involved extensive documentary and deposition discovery. 4. Amendment is Preferable to a New Action The new cash payor plaintiffs could file a new action and move to have it related to this case. For the reasons stated above it seems more logical and preferable to handle these claims as one case in one complaint. C. The Court should allow Plaintiffs to Add Antitrust Claims 1. Amendment is Appropriate because no Additional Discovery is required “Amendments seeking to add claims are to be granted more freely than amendments adding parties.” Union P. R. Co. v. Nevada Power Co., 950 F.2d 1429, 1432 (9th Cir. 1991). Generally speaking, reviewing courts have found an abuse of discretion in cases where the district court denied amendments based on facts similar to those comprising the original complaint. The inclusion of a claim based on facts already known or available to both sides does not prejudice the non-moving party. Popp Telcom v. American Sharecom, Inc., 210 F.3d 928, 943 (8th Cir. 2000). Because the amendment requires no modifications of the Court’s scheduling order, Class Plaintiffs’ motion is adjudged under the “the liberal default rule.” Steir, 383 F.3d at 12. Thus, even after the close of Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 9 of 181 1821-13 201037 V1 - 8 - discovery courts generally will allow plaintiffs to amend complaints to add additional claims if the proposed claims are based on the same set of facts and require little or no additional discovery. For example, in Adams v. Gould, Inc., 739 F.2d 858, 861 (3d Cir. 1984), the district court granted summary judgment to the defendant and denied the plaintiffs leave to file an amended complaint to assert an alternate claim. The appellate court reversed the order denying plaintiffs’ motion to amend. It found that there was no bad faith or undue delay in failing to amend the complaint before the defendant moved for summary judgment, reasoning that the claim the plaintiffs asserted would have allowed them full recovery of the damages sought by the new claim. Further, the court found that the defendant was not prejudiced by the amendment because it did not require additional discovery: Where the legal theory of a complaint is rejected by the district court on a motion for summary judgment, but where an alternative theory has been raised which, on the same facts, is legally sufficient, it would be unusual for a district court not to allow the plaintiff leave to amend because of “undue delay.” Id. at 868. Similarly, in Bodne v. Geo A. Rheman Co., 811 F. Supp. 218 (D.S.C. 1993), the plaintiff sought leave to reassert a cause of action previously dismissed without prejudice. The court granted the motion even though the plaintiff had taken 11 months to amend the complaint, reasoning that the addition of the claim “is not prejudicial because it does not add any new facts to the case nor does it require any additional discovery.” Id. at 221 Safeway Transp., Inc. v. West Chambers Transp., Inc., 100 F. Supp. 2d 442 (S.D. Tex. 2000) is also illustrative. There the court granted the plaintiff’s motion to amend to add a claim arising from the same set of facts, reasoning that there could be no prejudice to the defendant: “The claim Plaintiff seeks to add is intimately related to the claims already plead in Plaintiff’s Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 10 of 181 1821-13 201037 V1 - 9 - Original Complaint. Thus Defendants will not be unfairly surprised by the addition of a new cause of action.” Id. at 444. Plaintiffs propose amending the complaint to add a new claim that McKesson’s price fixing activity constitutes a violation of Section 1 of the Sherman Act, or in the alternative a violation of state antitrust law.6 Like the plaintiffs in Adams, Bodne and Safeway Transp., Plaintiffs did not engage in bad faith or undue delay, nor would the addition of Plaintiffs’ antitrust claim at this stage in the litigation prejudice McKesson. The price fixing allegations, which support both the RICO and antitrust claims, have been fully disclosed to McKesson from the onset of this litigation, and both parties have vigorously conducted extensive discovery into this issue. The antitrust claim, which is asserted as an alternative basis of recovery, provides for the same measure of compensatory and punitive damages as the RICO claim. 2. Plaintiffs’ Antitrust Claim Presents a Viable Theory of Recovery and is Solidly Grounded in the Evidence Futility may also be a ground for denying a motion to amend. However, when the factual record has been fully developed, motions to amend should not be denied on this basis when “the proposed amendment” is “not only theoretically viable but also solidly grounded in the record.” See Hatch v. Dep’t for Children, 274 F.3d 12, 19 (1st Cir. 2001). Plaintiffs’ proposed antitrust claim is both theoretically viable and supported by the record. a. Defendants’ price fixing scheme violates the Sherman Act Section 1 of the Sherman Act provides that “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce . . . is declared to be illegal.” 6 This Court has not decided whether to apply California law to Plaintiffs’ state law claims or whether to apply the laws of the Plaintiffs’ states of residence. Accordingly, Plaintiffs alternatively allege a claim under the Cartwright Act, Cal. Bus. & Prof. Code § 16720 et seq., on behalf of all Class Members, or the laws of other states (identified in Plaintiffs’ proposed Third Amended Complaint) to be applied to appropriate subclasses. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 11 of 181 1821-13 201037 V1 - 10 - 15 U.S.C. § 1. To prevail under Section 1, the plaintiffs must show (1) concerted action between two or more separate parties and (2) that such action unreasonably restrains trade that effects interstate trade or commerce. Podiatrist Ass’n v. La Cruz Azul de P.R., Inc., 332 F.3d 6, 12 (1st Cir. 2003). No antitrust violation is more abominated than the agreement to fix prices. With few exceptions, price-fixing agreements are unlawful per se under the Sherman Act and . . . no showing of so-called competitive abuses or evils which those agreements were designed to eliminate or alleviate may be interposed as a defense. The dispositive question generally is not whether any price fixing was justified, but simply whether it occurred. Freeman v. San Diego Ass’n of Realtors, 322 F.3d 1133, 1144 (9th Cir. 2003) (citations omitted) (alteration in original). However, per se condemnation is generally reserved to price fixing by market competitors. Stop & Shop Supermarket Co. v. Blue Cross & Blue Shield, 373 F.3d 57, 61 (1st Cir. 2004). Should the Court decline to treat Defendants’ price fixing arrangements as a per se violation, it should apply the “quick-look” analysis under the rule of reason, applicable in cases where per se condemnation is inappropriate but where no elaborate industry analysis is required to demonstrate the anticompetitive character of an inherently suspect restraint. Rather, the competitive harm is presumed and the defendant must set forth some competitive justification for the restraints. Gordon v. Lewistown Hosp., 423 F.3d 184, 209-10 (3d Cir. 2005) (citation omitted), cert. denied, 547 U.S. 1092 (2006). Even if a more detailed analysis under the rule of reason is required, there is substantial evidence in the record, including evidence presented in Class Plaintiffs’ motion to certify as well as IMS data reviewed by Dr. Hartman, to show that Defendants’ price fixing scheme directly affected consumers and TPPs by driving up retail prescription drug prices. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 12 of 181 1821-13 201037 V1 - 11 - b. Plaintiffs have standing to bring federal antitrust claims because they have been directly harmed by anti-competitive conduct McKesson is likely to argue that Class Plaintiffs lack standing to bring a federal antitrust claim for price fixing by a wholesaler and a drug price publisher. Generally, indirect purchasers lack standing to recover damages for antitrust violations because they are not harmed directly by the anticompetitive but rather by means of a pass-through from the direct purchaser. Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). In Illinois Brick the purchasers of concrete blocks sued manufacturers of the blocks for price-fixing. Id. at 726. The plaintiffs, however, had not been the direct purchasers of the concrete blocks; they purchased the blocks from general contractors, who in turn had bought the blocks from masonry contractors, who alone had purchased the concrete directly from the manufacturers. Id. The Supreme Court held that the plaintiffs did not have standing to pursue an antitrust action because the harm they suffered was indirect or derivative of the overcharge paid by the direct purchaser and passed onto them: [W]e conclude that the legislative purpose . . . is better served by holding direct purchasers to be injured to the full extent of the overcharge paid by them than by attempting to apportion the overcharge among all that may have absorbed a part of it. Id. at 746. Illinois Brick rejected the “idea that potential plaintiffs at each level in the distribution chain could recover from inflated prices resulting from price-fixing conspiracy.” Sanner v. Board of Trade, 62 F.3d 918, 929 (7th Cir. 1995). The Illinois Brick rule selects the better plaintiff between two possible types of plaintiffs – direct purchasers and indirect purchasers. The Court chose the direct purchaser primarily to simplify damages determinations and limit the possibility of multiple recovery against the defendant. But it also concluded that allowing the direct purchaser to bring the claim supported “the longstanding policy of encouraging vigorous private enforcement of the antitrust laws.” Clearly, the rule was not intended to Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 13 of 181 1821-13 201037 V1 - 12 - immunize anticompetitive tactics or to eliminate a private cause of action challenging those tactics. Sports Racing Servs. v. Sports Car Club of Am., 131 F.3d 874, 889 (10th Cir. 1997) (internal citations omitted) (quoting Illinois Brick, 431 U.S. at 745). Courts have recognized that a purchaser has standing when “the consumer is the only party who has paid any overcharge,” for example “[w]hen a dealer has illegally conspired with a manufacturer with respect to the price paid by a consumer.” Dickson v. Microsoft Corp., 309 F.3d 193, 215 (4th Cir. 2002) (quoting 2 PHILLIP E. AREEDA, HERBERT HOVENKAMP & ROGER D. BLAIR, ANTITRUST LAW P 346h, at 369-70 (2d ed. 2000)). The rationale of Illinois Brick is absent in such cases because the plaintiffs incur harm directly and not as a result of a pass-on. Id. The consumers argue that because they allege that the retail price was the one fixed, their theory of recovery does not depend on pass-on of damages; thus Illinois Brick does not apply. We agree. The plaintiffs have offered to prove that the wholesale conspiracy ended in the early 1960’s, and that the conspiracy was ineffective in raising prices charged to retail grocers. In these circumstances, Illinois Brick is no bar since there would be no wholesale overcharge to be passed on to the consumers. Arizona v. Shamrock Foods Co., 729 F.2d 1208, 1211 (9th Cir. 1984). Similarly, in Fontana Aviation, Inc. v. Cessna Aircraft Co., 617 F.2d 478 (7th Cir. 1980), an aircraft dealer, alleging a conspiracy between the aircraft manufacturer and the aircraft distributor, brought suit against the manufacturer charging antitrust violations. The Seventh Circuit held that Illinois Brick did not bar the plaintiff dealer’s claim because the plaintiff did not seek damages for unlawful indirect overcharges passed on to it. Id. at 480. Rather, the plaintiff sued on the basis of a conspiracy consisting of a combination of acts designed to cause plaintiff competitive injury. Id. In its discussion of Illinois Brick’s applicability to the situation, the Seventh Circuit stated: Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 14 of 181 1821-13 201037 V1 - 13 - We are not satisfied that the Illinois Brick rule directly applies in circumstances where the manufacturer and the intermediary are both alleged to be co-conspirators in a common illegal enterprise resulting in intended injury to the buyer. Id. at 481. Many other courts recognize that Illinois Brick does not bar suits for damages by plaintiffs against an initial seller when it is alleged to have conspired in violation of the antitrust laws with the seller directly upstream. See, e.g., Howard Hess Dental Labs. Inc. v. Dentsply Int’l, Inc., 424 F.3d 363, 376 (3d Cir. 2005), cert. denied, ___ U.S. ___, 126 S. Ct. 2320, 164 L. Ed. 2d 839 (2006); Paper Sys. v. Nippon Paper Indus. Co., 281 F.3d 629, 632 (7th Cir. 2002); Lowell v. American Cyanamid Co., 177 F.3d 1228, 1231 (11th Cir. 1999); In re Beef Indus. Antitrust Litig., 600 F.2d 1148, 1163 (5th Cir. 1979). These decisions recognize that the alleged “conspiracy does not involve pass-on damages because the so-called ‘indirect purchaser’ is the party directly injured by the antitrust violation.” In re Brand Name Prescription Drugs Antitrust Litig., 1996 U.S. Dist. Lexis 4335, at *88 (N.D. Ill. April 4, 1996). Similarly, Plaintiffs and Class Members were directly harmed by the scheme because they were the first purchasers to be affected by the scheme to raise AWP/WAC markups. Illinois Brick should not therefore bar their recovery under federal antitrust law. c. Under California law, Plaintiffs have standing to recover damages for antitrust violations In any event, there can be no doubt that Class Plaintiffs’ standing as “indirect purchasers” is irrelevant under California law. California’s Cartwright Act is an Illinois Brick repealer statute, under which indirect purchaser standing is permissible in private actions alleging violations of antitrust law. Cal. Bus. & Prof. Code § 16750(a). To prevail on a Cartwright Act claim, plaintiffs must prove (1) the formation and operation of the conspiracy; (2) illegal acts done pursuant thereto; and (3) damage proximately caused by such acts. Walker v. USAA Cas. Ins. Co., 474 F. Supp. 2d 1168, 1174 (E.D. Cal. 2007). Under California law, “agreements Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 15 of 181 1821-13 201037 V1 - 14 - fixing or tampering with prices are illegal per se,” and do not require the plaintiff “to define a relevant market or to show that the defendants had power within the market.” Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 986 (9th Cir. 2000); see also Cal. Bus. & Prof. Code § 16720(c) and (e)(2). The facts alleged in support of Class Plaintiffs’ RICO claim equally establish a violation of the Cartwright Act: Defendants entered into an illegal agreement to raise markups on brand drugs and took steps necessary to carry out their agreement; Defendants’ scheme resulted in damages to Class Plaintiffs in the form of excess payments.7 Nor is the state antitrust claim barred by the four-year statute of limitations. See Cal. Bus. & Prof. Code § 16750.1. Class Plaintiffs are entitled to an equitably tolling of the statute of limitations based on the doctrine of fraudulent concealment. Union Carbide Corp. v. Superior Court, 679 P.2d 14, 20 (Cal. 1984). Defendants actively concealed their price fixing scheme from Plaintiffs and Class members, who had no means of discovering the overcharge until the scheme came to light with the filing of the original complaint in 2005. IV. CONCLUSION For the foregoing reasons, the Court should grant Class Plaintiffs motion for leave to file their Proposed Third Amended Complaint. 7 The same analysis applies, should the Court decide to apply the law of the Plaintiffs’ states of residence. Plaintiffs have alternatively pled causes of action under every state that allows indirect purchasers to recover for antitrust violations. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 16 of 181 1821-13 201037 V1 - 15 - DATED: October 9, 2007 By /s/ Steve W. Berman Steve W. Berman Sean R. Matt Nicholas Styant-Browne Barbara A. Mahoney Hagens Berman Sobol Shapiro LLP 1301 Fifth Avenue, Suite 2900 Seattle, WA 98101 Telephone: (206) 623-7292 Facsimile: (206) 623-0594 Thomas M. Sobol (BBO #471770) Ed Notargiacomo (BBO #567363) Hagens Berman Sobol Shapiro LLP One Main Street, 4th Floor Cambridge, MA 02142 Telephone: (617) 482-3700 Facsimile: (617) 482-3003 Jeffrey Kodroff John Macoretta Spector, Roseman & Kodroff, P.C. 1818 Market Street, Suite 2500 Philadelphia, PA 19103 Telephone: (215) 496-0300 Facsimile: (215) 496-6611 Marc H. Edelson Allan Hoffman Hoffman & Edelson 45 West Court Street Doylestown, PA 18901 Telephone: (215) 230-8043 Facsimile: (215) 230-8735 Kenneth A. Wexler Jennifer Fountain Connolly Wexler Toriseva Wallace LLP 55 W. Monroe, Suite 3300 Chicago, IL 60603 Telephone: (312) 346-2222 Facsimile: (312) 346-0022 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 17 of 181 1821-13 201037 V1 - 16 - George E. Barrett Edmund L. Carey, Jr. Barret, Johnston & Parsley 217 Second Avenue, North Nashville, TN 37201 Telephone: (615) 244-2202 Facsimile: (615) 252-3798 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 18 of 181 - 17 - 1821-13 201037 V1 CERTIFICATE OF SERVICE I hereby certify that a true copy of the above document was served upon the attorney of record for each other party through the Court’s electronic filing service on October 9, 2007. /s/ Steve W. Berman Steve W. Berman Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 19 of 181 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 20 of 181 001821-13 198880 V1 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS NEW ENGLAND CARPENTERS HEALTH BENEFITS FUND, PIRELLI ARMSTRONG RETIREE MEDICAL BENEFITS TRUST; TEAMSTERS HEALTH & WELFARE FUND OF PHILADELPHIA AND VICINITY; PHILADELPHIA FEDERATION OF TEACHERS HEALTH AND WELFARE FUND; DISTRICT COUNCIL 37, AFSCME - HEALTH & SECURITY PLAN; JUNE SWAN; BERNARD GORTER, SHELLY CAMPBELL and CONSTANCE JORDAN, Plaintiffs, v. FIRST DATABANK, INC., a Missouri corporation; and McKESSON CORPORATION, a Delaware corporation, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) C.A. No. 1:05-CV-11148-PBS PROPOSED THIRD AMENDED CLASS ACTION COMPLAINT Style Definition: TOC 1 Style Definition: TOC 2: Indent: Left: 0", Hanging: 1", Tabs: 0.5", Left + 1", Left + Not at 0.75" Deleted: MAUREEN COWIE Deleted: and Deleted: ; Deleted: , and RICHARD E. BROWNE Deleted: [Leave to File Granted November 22, 2006] Deleted: SECOND Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 21 of 181 - i - 001821-13 198880 V1 TABLE OF CONTENTS PAGE I. INTRODUCTION .................................................................................................................. 1 II. JURISDICTION AND VENUE ............................................................................................. 7 III. PARTIES ................................................................................................................................ 8 A. Plaintiffs.............................................................................................................................. 8 1. Proposed Class 1 Representatives (Consumers) ............................. 8 2. Proposed Class 2 Representatives (Third-party payors) ................. 9 2. Proposed Class 3 Representatives (Consumers Paying U&C) ..... 11 B. Defendants ........................................................................................................................ 11 IV. STATEMENT OF FACTS ................................................................................................... 12 A. Drug Manufacturers and NDCs ........................................................................................ 12 B. The Wholesale Acquisition Cost ...................................................................................... 13 C. The Average Sales Price ................................................................................................... 14 D. The Average Wholesale Price........................................................................................... 15 E. The WAC-to-AWP Spread ............................................................................................... 15 F. Drug Wholesalers.............................................................................................................. 17 G. Wholesaler Sales Transactions ......................................................................................... 18 H. Retail Pharmacy Channel.................................................................................................. 18 I. The Private End Payors for Prescription Drugs................................................................ 20 J. End Payors Drug Reimbursements Are AWP-Based ....................................................... 20 K. Medicaid Drug Reimbursements Are AWP-Based .......................................................... 22 L. Medicare Drug Reimbursements Are AWP-Based .......................................................... 23 M. U&C Payors ...................................................................................................................... 24 N. Private and Public End Payors Rely on Published Drug Pricing Compendia .................. 25 O. The Emergence of First Data and MediSpan as Electronic Data Publishers.................... 26 P. The Merger of First Data and MediSpan Systems............................................................ 29 Q. First Data Gains the Trust of the Pharmaceutical Industry............................................... 30 R. First Data’s Representations to Gain Marketplace Reliance on Its Pricing Data ............. 32 S. In the Late 1990s, Retailers Looked to the WAC/AWP Spread to Increase Margin........ 35 T. By 2001, First Data WAC-to-AWP Markups Were Susceptible to Abuse ...................... 36 Deleted: 12 Deleted: 12 Deleted: 12 Deleted: 13 Deleted: 14 Deleted: 15 Deleted: 16 Deleted: 17 Deleted: 18 Deleted: 19 Deleted: 20 Deleted: 21 Deleted: 22 Deleted: 23 Deleted: 25 Deleted: 25 Deleted: 26 Deleted: 29 Deleted: 31 Deleted: 33 Deleted: 36 Deleted: 37 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 22 of 181 - ii - 001821-13 198880 V1 U. Implementation of the Five Percent Spread Scheme ........................................................ 38 V. Some Branded Manufacturers’ Response to the McKesson/First Data Scheme .............. 58 W. Hiding the Scheme and Continuing the Enterprise........................................................... 60 X. First Data’s 2005 Capitulation .......................................................................................... 62 V. CLASS ACTION ALLEGATIONS FOR THE AWP PAYOR SCHEME.......................... 63 COUNT I Violations of 18 U.S.C. § 1962(C) ............................................................................. 68 COUNT II Claim for Violation of Sherman Act, 15 U.S.C. § 1 ................................................ 78 APPLICABLE LAW FOR COUNTS II-VII................................................................................ 79 COUNT III Untrue and Misleading Advertising (Business and Professions Code § 17500, et seq.)................................................................................................................... 80 COUNT IV Violations of Unfair Competition Law (Business and Professions Code § 17200, et seq.)................................................................................................................... 81 COUNT V Violations of the Consumers Legal Remedies Act (Cal. Civ. Code § 1750, et seq.)..................................................................................................................... 83 COUNT VI Negligent Misrepresentation................................................................................... 84 COUNT VII Civil Conspiracy ..................................................................................................... 84 COUNT VIII Entitlement To Enhanced Relief Pursuant To California Civil Code § 3345 ....... 85 COUNT IX Violation of State Antitrust Law.............................................................................. 86 ALTERNATE COUNT X Consumer Protection Laws of Various States .................................. 88 VI. DEMAND FOR JUDGMENT.............................................................................................. 96 Deleted: 39 Deleted: 60 Deleted: 61 Deleted: 63 Deleted: 64 Deleted: 69 Deleted: 80 Deleted: 81 Deleted: 82 Deleted: 83 Deleted: 84 Deleted: 85 Deleted: 86 Deleted: 87 Deleted: 87 Deleted: 90 Deleted: 97 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 23 of 181 - 1 - 001821-13 198880 V1 Plaintiffs, by and through their counsel, upon personal knowledge as to their own acts and beliefs, and upon information and belief as to all matters based upon the investigation of counsel, allege as follows: I. INTRODUCTION 1. This is a proposed national class action brought on behalf of consumers, self- insured employers, health and welfare plans, health insurers and other End Payors of prescription drugs (“End Payors”) against First DataBank (“First Data”) and McKesson Corporation (“McKesson”) for wrongfully increasing the so-called WAC to AWP markup factor for numerous prescription pharmaceuticals through a scheme begun in late 2001 and 2002, thereby causing members of the proposed Class, whose payments for pharmaceuticals are tied to AWP, to make billions of dollars of excess payments for those pharmaceuticals. 2. In the pharmaceutical marketplace, those in the retail distribution chain – national chain drug pharmacies, independent pharmacies, mail order houses and other retailers – purchase drugs on the basis of the published wholesale acquisition cost or “WAC,” a benchmark price established by manufacturers and used by them and wholesalers to establish prices to retailers. Although retailers buy pharmaceuticals on the basis of WAC, they get paid (i.e., get reimbursed) for branded drugs based on a different benchmark, the average wholesale price or “AWP.” As the difference between AWP and WAC increases, the larger “spread” affords retailers and other middlemen like pharmaceutical benefit managers (“PBMs”) opportunities for larger profits. 3. Each year more than three billion prescriptions are written in the United States. End Payors must have a way of determining what the AWP is at any moment in time for the approximate 65,000 drugs used in the marketplace. AWPs are therefore compiled and published by several publishing companies, including First Data. Through these compilations, which are Formatted: Indent: First line: 0", Line spacing: single, Don't keep lines together, Allow hanging punctuation, Adjust space between Latin and Asian text, Adjust space between Asian text and numbers, Font Alignment: Auto Deleted: I. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 24 of 181 - 2 - 001821-13 198880 V1 available in both hard copy or electronic form, those in the distribution chain can determine the AWP for any given drug and effectuate reimbursement to retailers accordingly. 4. Consumers, health and welfare plans, health insurers and other End Payors for prescription drugs use and rely on AWP as a reasonable and accurate indicator of the underlying transaction prices for almost all drugs. Virtually all these entities’ contracts governing pharmaceutical reimbursement use AWP as a pricing standard. 5. First Data, McKesson and pharmaceutical companies know that End Payors utilize AWP as a pricing benchmark and utilize AWP as a reasonably accurate measurement of list and transaction prices in order to negotiate payment terms for drugs used by their constituents. 6. Until March 15, 2005, First Data represented to those in the pharmaceutical market that it derived the WAC/AWP markup either from manufacturers or by conducting “a survey” of wholesalers whose purpose was to verify prices reported by the manufacturer. First Data further represented throughout the Class Period that AWP represents the “average of prices charged by the national drug wholesalers,” and that the number of surveys it was conducting to determine the published AWP was “increasing.” McKesson is one of the wholesalers who was “surveyed” by First Data. 7. Historically, in order to arrive at the AWP for branded drugs, manufacturers and wholesalers applied a markup of 20% or 25% to WAC. Whatever markup was given to a particular branded drug “stuck” with that drug indefinitely. Until 2002, there was variation, supposedly based on manufacturer direction or on First Data’s wholesale surveys, in the difference between the WAC to AWP spread for hundreds of brand-name drugs. For example, Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 25 of 181 - 3 - 001821-13 198880 V1 manufacturer A might have a markup of 20%, while manufacturer B might utilize a markup of 25%. 8. In late 2001, First Data and McKesson reached agreement on how the WAC to AWP markup would be established for hundreds of brand-name drugs. The result of this was an agreement to artificially raise and fix the price on brand name drugs and therefore artificially raise prices in that market. As part of this agreement, First Data, to the extent it relied upon information other than that provided directly from various drug manufacturers for certain drugs, used the WAC-to-AWP markup provided only by McKesson as the basis for its published AWP and did not “survey” any other wholesalers. To the extent FDB did receive material from other wholesalers, such material was not the basis for the FDB published AWP, only McKesson’s information was. 9. And at the same time, McKesson and First Data, without any economic justification, raised the WAC-to-AWP spread to 25% for over four hundred brand-name drugs that previously had received only the 20% markup amount. To conceal the scheme, McKesson and First Data agreed to typically effectuate price changes only when some other WAC-based price announcement was made by a drug manufacturer. This camouflaged both the associated increase in the WAC to AWP markup and WAC-to-AWP spread and McKesson as the source of the increased markup. McKesson then communicated these new WAC-to-AWP spreads to First Data. First Data, without regard to any change in the actual average wholesale prices occurring in the pharmaceutical marketplace, and without reference to the manufacturers’ suggested AWPs (or WACs) for these drugs, and without surveying other wholesalers, then published new AWPs with the new WAC-to-AWP markup. First Data’s action had the effect of raising the WAC-to- AWP spread by additional percentage points so as to have a 25% difference between Deleted: or early 2002 Deleted: the exact time of which is unknown to payors in the pharmaceutical marketplace, Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 26 of 181 - 4 - 001821-13 198880 V1 pharmaceutical companies’ reported WAC and the First Data published AWP. First Data did so despite receipt of information, in some instances, directly from manufacturers specifying or suggesting a 20% markup as appropriate. On some occasions, some of the manufacturers secretly questioned this increase, but First Data refused to change the published AWP and the manufacturers failed to take any action to remedy defendant’s unjustified raise in AWP. 10. This collaboration between First Data and McKesson to raise the WAC-to-AWP spreads is referred to as the “Five Percent Spread Scheme” or “Spread Scheme.” The dramatic nature of the Spread Scheme is illustrated by the following chart depicting the hundreds of drugs whose WAC-to-AWP spread was raised as part of the Spread Scheme. The spike in 2002 reflects implementation of the Spread Scheme: Number of NDCs with Spread Change from 20% to 25%, Jan 1999 - Oct 2004 0 50 100 150 200 250 300 350 400 450 Ja n-9 9 Ap r-9 9 Ju l-9 9 Oc t-9 9 Ja n-0 0 Ap r-0 0 Ju l-0 0 Oc t-0 0 Ja n-0 1 Ap r-0 1 Ju l-0 1 Oc t-0 1 Ja n-0 2 Ap r-0 2 Ju l-0 2 Oc t-0 2 Ja n-0 3 Ap r-0 3 Ju l-0 3 Oc t-0 3 Ja n-0 4 Ap r-0 4 Ju l-0 4 Oc t-0 4 Month N D C s (# ) Note: “NDC” means National Drug Code and refers to a number assigned to each drug. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 27 of 181 - 5 - 001821-13 198880 V1 11. The spike resulting from the McKesson-FDB Scheme is reflected in a recent GAO study of the prices paid for drugs purchased by elderly cash customers. 12. Once First Data and McKesson raised the WAC-to-AWP spread to 25% on a given drug, that spread remained in place and still remains in place to this day. 13. Both McKesson and First Data each had economic and business reasons for reaching an understanding that McKesson would artificially raise the WAC-to-AWP spread and that First Data would publish the increased AWPs and as a result of their own business interests had a common purpose in running the Spread Scheme. A major part of McKesson’s business comes from large pharmaceutical retail chains and other retail pharmaceutical clients. McKesson implemented this Scheme in order to provide a benefit to those important retail pharmacy clients as well as its own pharmacy related business. For sales to non-cash paying customers, pharmacies are reimbursed by health plans and other pharmacy benefit providers based on AWP. Consequently, pharmacies make a profit on the spread between AWP and their Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 28 of 181 - 6 - 001821-13 198880 V1 acquisition cost for a drug. Under this system, a higher WAC-to-AWP spread results in increased profits to pharmacies. Thus, an increase in the WAC-to-AWP markup results in larger profits for retailers and for McKesson’s pharmacy-related businesses. 14. McKesson was proud of its efforts and boasted to its retail clients that McKesson “had been working on AWP expansion with some success.” The client was “very glad that McKesson was doing this.” MCKAWP 0069726. Confirming the secrecy of the Scheme McKesson cautioned that the “AWP expansion effort” and information about it is “not intended to be handed out to customers” but could be described to show “McKesson is doing our part.” MCKAWP 0069732. “AWP expansion” was a McKesson euphemism for the WAC-to-AWP markup Scheme. 15. First Data agreed to this Scheme to curry favor with McKesson so that McKesson would utilize First Data as the pricing source it has in some of its contracts with pharmaceutical companies and others in the distribution chain, as well as in the pricing database that it provides to its customers, thereby increasing First Data’s business. First Data also agreed to the Scheme as part of an effort to increase the demand for its business among entities in the pharmaceutical distribution chain whose reimbursement is based on AWP. Many of these entities, who make a profit off the spread between AWP and WAC, would be more likely to utilize First Data’s service if it had a higher markup or was perceived to be an industry leader with respect to markups. McKesson in turn where it could do so, specified in its dealings with pharmaceutical companies, that First Data’s AWP would be the AWP used for contract pricing purposes as opposed to the other published AWPs. Thus, each defendant shared multiple common purposes, though they may have had different reasons for doing so, and each acted to achieve those purposes by implementation of the 5% Scheme. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 29 of 181 - 7 - 001821-13 198880 V1 16. Health and welfare funds, insurance companies and thousands of third-party payors have contracts that expressly tie their payment for pharmaceuticals to First Data’s published AWPs. Cash payors prices are also tied to AWP. 17. As a result of this artificial increase in the markup of the WAC-to-AWP spread from 20% to 25%, thousands of third-party payors and consumers have had their drug prices increased by the Scheme. 18. Among the drugs whose prices are artificially inflated by the Scheme are some of the top brand-name drugs used by hundreds of millions of Americans, such as: Allegra (a leading allergy drug), Azmacort (a leading asthma drug), Celebrex (a leading arthritis/pain medicine), Coumadin (a leading anticoagulant), Flonase (a leading asthma drug), Lipitor (the world’s top selling drug, a statin, Neurontin (a leading pain medication), Nexium (a leading reflux drug), Prevacid (a leading ulcer/reflux drug) and Valium. Given the billions of dollars spent on prescription drugs, a 5% increase in the WAC-to-AWP spread results in a substantial increase in payments for pharmaceuticals. For example, AstraZeneca’s Nexium had annual sales in 2004 of almost $4 billion. A bump of 5% in the WAC-to-AWP spread results in an increase of over $100 million per year in reimbursements for just one drug. Another such drug is Pfizer’s Lipitor, whose annual sales in 2004 exceeded $10 billion. As a result of the 5% increase imposed by First Data and McKesson, hundreds of millions per year was spent on Lipitor that would not have been absent the Scheme. 19. In this action, plaintiffs and the Class seek to recover damages incurred from defendants’ unlawful acts and practices. II. JURISDICTION AND VENUE 20. This Court has subject-matter jurisdiction over this class action pursuant to the Class Action Fairness Act of 2005, which, inter alia, amends 28 U.S.C. § 1332 to add a new Deleted: II. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 30 of 181 - 8 - 001821-13 198880 V1 subsection (d) conferring federal jurisdiction over class actions where, as here, “any member of a class of plaintiffs is a citizen of a State different from any Defendants” and the aggregated amount in controversy exceeds five million dollars ($5,000,000). See 28 U.S.C. §§ 1332(d)(2) and (6). This Court has personal jurisdiction over the parties because plaintiffs submit to the jurisdiction of the Court and defendants systematically and continually conduct business throughout the Commonwealth of Massachusetts, including marketing, advertising, and sales directed to Massachusetts residents. 21. Venue is proper in this District pursuant to 28 U.S.C. §§ 1391(a) and (c) because defendants as corporations are “deemed to reside in any judicial district in which [they are] subject to personal jurisdiction” and because the misrepresentation and material omissions “giving rise to claim[s] occurred” in this District as well as throughout the State of Massachusetts. III. PARTIES A. Plaintiffs 1. Proposed Class 1 Representatives (Consumers) 22. Plaintiff June Swan is a resident of Corte Madera, California. Ms. Swan is covered by Aetna and pays a percentage of her drug prices through Aetna. She takes Celebrex. As a result, Ms. Swan paid a percentage co-payment based on AWP for a Subject Drug during the Class Period. 23. Plaintiff Bernard Gorter is a resident of Milwaukie, Oregon. Mr. Gorter currently pays 40% of the cost of his prescriptions. He is on Medicare and also has a Medicare supplement in which the state of Oregon pays part of his premium. Mr. Gorter takes Lipitor, which he has purchased both by mail order and at retail pharmacists. As a result, Mr. Gorter paid a percentage co-payment based on AWP for a Subject Drug during the Class Period. Formatted: Heading 1 Formatted: Bullets and Numbering Deleted: III. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 31 of 181 - 9 - 001821-13 198880 V1 2. Proposed Class 2 Representatives (Third-party payors) 24. Plaintiff New England Carpenters Health Benefits Fund (“Carpenters”) is an employee welfare benefit plan established and maintained pursuant to §§ 1002(1) and (3) of ERISA, for the purpose of providing health benefits to eligible participants and beneficiaries. As such, Carpenters is a legal entity entitled to bring suit in its own name pursuant to 29 U.S.C. § 1132(d). Carpenters maintains its principal place of business in Wilmington, Massachusetts. It provides comprehensive health coverage for over 22,000 participants and beneficiaries in the states of Main, New Hampshire, Vermont, and Massachusetts. During the Class Period, Carpenters has been billed for and paid charges for drugs. It reimburses retail pharmacies for pharmaceuticals on the basis of the published AWPs (minus a fixed percentage) and those AWPs are published by First Data. 25. Plaintiff Pirelli Armstrong Tire Corporation Retiree Medical Benefits Trust (“PMBT”) is a voluntary employee benefits association maintained pursuant to the federal Employee Retirement Security Act, 29 U.S.C. § 1132, et seq. and to the settlement of a federal court action (Case No. 3:94-0573) brought in the United States District Court for the Middle District of Tennessee against Pirelli Armstrong Tire Corp. (“Pirelli”) in the early 1990s by many Pirelli retirees for the purpose of providing health and medical benefits to eligible participants and beneficiaries. PBMT maintains its principal place of business in Goodlettsville, Sumner County, Tennessee. During the Class Period, PMBT has been billed for and has paid charges for drugs based on AWP. Since May 1, 2001, PMBT has contracted with ACS/Caremark, a PBM, to administer its drug program for its members. PMBT’s contract with its PBM provides that reimbursement is to be based on First Data’s published AWP. Formatted: Bullets and Numbering Formatted: Body Text Deleted: Maureen Cowie is a resident of Salinas, California. Ms. Cowie takes Neurontin, Klonopin, Lipitor and Lotensin. She has taken all of these drugs for a number of years. She was covered by Blue Cross when she began taking these drugs and paid 80% of the cost for each. As a result, Ms. Cowie paid a percentage co-payment based on AWP for a Subject Drug during the Class Period.¶ Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 32 of 181 - 10 - 001821-13 198880 V1 26. Plaintiff Teamsters Health & Welfare Fund of Philadelphia and Vicinity (“THWF”) is an employee welfare benefit plan and employee benefit plan established and maintained pursuant to Section 302(c)(5) of the LMRA, and is an employee welfare benefit plan established and maintained pursuant to §§ 1002(1) and (3) of ERISA, for the purpose of providing health benefits to eligible participants and beneficiaries. As such, THWF is a legal entity entitled to bring suit in its own name pursuant to 29 U.S.C. § 1132(d). THWF maintains its principal place of business at Fourth & Cherry Streets, Philadelphia, Pennsylvania 19106. It provides comprehensive health coverage for over 28,000 participants and beneficiaries in parts of Pennsylvania, New Jersey and Delaware. During the Class Period, THWF has been billed for and paid charges for drugs. It reimburses retail pharmacies for pharmaceuticals on the basis of the published AWPs (minus a fixed percentage) and those AWPs are published by First Data. 27. Plaintiff Philadelphia Federation of Teachers Health and Welfare Fund (“PFTHW”) is a voluntary employee benefits plan organized pursuant to § 501(c) of the Internal Revenue Code for the purpose of providing health benefits to eligible participants and beneficiaries. PFTHW maintains its principal place of business in Philadelphia, Pennsylvania. PFTHW provides health benefits, including prescription drug benefits, to approximately 20,000 active participants, and their spouses and dependents. During the Class Period, PFTHW has been billed for and paid charges for drugs. It reimburses retail pharmacies for pharmaceuticals on the basis of the published AWPs (minus a fixed percentage) and those AWPs are published by First Data. 28. Plaintiff District Council 37 Health & Security Plan is non-ERISA union- sponsored employee welfare benefit plan subject to the reporting requirements of the New York City Controller’s Internal Control and Accountability Directive No. 12. The right to bargain for Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 33 of 181 - 11 - 001821-13 198880 V1 said welfare benefits is recognized by Section 12-307 of the New York City Collective Bargaining Law. As such, DC 37 is a legal entity entitled to bring suit in its own name pursuant to 29 U.S.C. § 1132(d). DC 37 maintains its principal place of business in New York, New York. It provides supplemental health benefits, including a prescription drug benefit for over 350,000 participants and beneficiaries in all but one state in the United States. During the Class Period, DC 37, through its prescription drug benefit manager, has been billed for and paid charges for certain of the drugs on attached Exhibit A, and was injured as a result of the Scheme alleged herein. 2. Proposed Class 3 Representatives (Consumers Paying U&C) 29. Plaintiff Shelly Campbell is a resident of Keizer, Oregon. Ms. Campbell took Wellbutrin during from 2001 through 2004. She did not have insurance coverage and was required to purchase the drugs at full cost. B. 1. Plaintiff Constance W. Jordan is a resident of Cape Elizabeth, Maine. Ms. Jordan took Marked Up Drugs in 2001-2004, including Prevacid. Ms. Jordan has no insurance and was required to pay the full purchase of such drugs.Defendants 1. Defendant First Data (“First Data”) is a Missouri corporation with its principal place of business at 1111 Bayhill Drive, San Bruno, California 94066. First Data is a subsidiary of the Hearst Corporation and is the leading provider of electronic drug information to the healthcare industry. 2. Defendant McKesson Corporation is a Delaware corporation with its principal place of business at McKesson Plaza, One Post Street, San Francisco, California 94101. McKesson Corporation is the leading provider of supply, information and care management products and services designed to reduce costs and improve quality across healthcare. Founded Formatted: Bullets and Numbering Formatted: Body Text Deleted: In addition, under DC 37, the union, there exists two smaller employee welfare benefit plans, The District Council 37 New York Public Library Health & Security Plan Trust and The District Council 37 Cultural Institutions Health & Security Plan Trust both of which were established and are maintained pursuant to §§ 1002(1) and (3) of ERISA. The above-referenced benefit plans are collectively referred to as “DC 37.” Deleted: ¶ Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 34 of 181 - 12 - 001821-13 198880 V1 in 1833, with annual revenues of more than $50 billion, McKesson ranks as the 16th largest industrial company in the United States. IV. STATEMENT OF FACTS 3. This case involves the unlawful inflation of the “markup” factor between the so- called wholesale acquisition cost (or “WAC”) and the so-called average wholesale price (or “AWP”) of a large number of prescription pharmaceutical products, a scheme implemented in late 2001 and 2002 by McKesson (the largest U.S. pharmaceutical wholesaler) and First Data (the nation’s most widely used and “trusted” electronic drug data publisher). A. Drug Manufacturers and NDCs 4. Drug makers manufacture brand name and generic drugs. Generally, a drug product that is covered by a patent and thus is manufactured and sold exclusively by one firm is a brand-name drug. After the patent expires, multiple companies can produce the same drug product in the same manner, but the name of the brand name itself remains with the original manufacturer. Drug products not covered by patent protection and produced and/or distributed by many firms are generic drugs. Manufacturers tend to be either brand-name manufacturers or generic drug manufacturers, although some manufacture both types of drugs. 5. There are approximately 65,000 branded and generic drug products in the United States market, including different dosages of the same drug. Prescription drugs are dispensed to patients primarily through four different drug distribution channels: (a) retail pharmacies (including national chain pharmacies, independent pharmacies, supermarket chains, and mail order pharmacies); (b) physicians who administer the drug in an office; (c) home infusion; and (d) other medical providers. This lawsuit primarily involves branded drugs distributed through the first channel, the retail pharmacies. Formatted: Indent: First line: 0", Line spacing: single, Don't keep lines together, Allow hanging punctuation, Adjust space between Latin and Asian text, Adjust space between Asian text and numbers, Font Alignment: Auto Formatted: Bullets and Numbering Deleted: IV. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 35 of 181 - 13 - 001821-13 198880 V1 6. All drugs intended for retail pharmacy sale are identified by a National Drug Code (“NDC”) that is listed with the United States Food and Drug Administration (“FDA”) and contains eleven digits. The NDC is used to identify the drug delivered to the patient. The first five digits of the NDC show the identity of the company that manufactured and/or packaged the drug, the middle four digits identify the drug ingredient and dosage, and the last two digits identify the package size (e.g., whether the bottle of pills contained 100 or 1,000 pills). While there are currently about 65,000 active NDCs, many more NDCs have been issued over time (in large part because over the years many drugs and associated NDCs have been phased out). B. The Wholesale Acquisition Cost 7. Branded manufacturers arrive at an original launch price by taking into account research and development costs, launch and marketing costs, competitor prices and estimates of consumer and physician demand. (Generic makers, of course, use more commodity pricing approaches). Once an introductory price has been set, the branded manufacturer establishes the wholesale acquisition cost, or “WAC,” which is used as a baseline for sales to wholesalers (subject to many adjustments, as will be seen). The WAC for branded drugs is then published by the manufacturer. 8. Manufacturers establish the WAC as a baseline for sales to wholesalers and others in the distribution chain. Thus, while WAC may not represent actual acquisition cost (as wholesalers may obtain discounts through volume purchases or special deals, and as wholesalers’ customers who also buy based on WAC may receive other price concessions charged back to the manufacturers), it is the baseline for most branded drug sales by manufacturers to national wholesalers. In addition, WAC is a publicly available price for most branded drugs and is the closest reported price to the actual transaction price between a manufacturer and the wholesaler or other direct purchaser of a drug product. And because the Formatted: Body Text Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 36 of 181 - 14 - 001821-13 198880 V1 wholesalers’ price to the retail class of trade is also typically based on, or is a function of, the WAC, a change in WAC generally results in a similar percent change in price to both wholesalers and to retail pharmacies. 9. WACs are typically reported on invoices between the manufacturer and the drug wholesaler (and as between the wholesaler and the retailer, or between the manufacturer direct to the retailer). Some drug manufacturers have other names for the WAC price such as list price, catalog price, direct price, wholesale net price, or book price. C. The Average Sales Price 10. After all price concessions are considered, a manufacturer achieves a net sales price, i.e., a transaction price paid by a pharmacy or provider when purchasing a drug product from either a drug manufacturer or wholesaler. The net sales price takes into account the invoice price and all on-invoice, as well as off-invoice adjustments for discounts, rebates, purchasing allowances, or other forms of economic consideration. 11. Of course, manufacturers can (and do) calculate for internal purposes the net sales price at which they are able to sell their products, and the average of those net sales prices is usually called the average sales price (or “ASP”). While net acquisition prices and associated ASPs are known to each drug manufacturer, they are not typically published or made public.1 Some drug manufacturers may have a variety of terms for specific discounts that are based on class of trade, volume of purchase, market share movement, preferred formulary status, terms of payment, and other criteria. Because ASP is meant to be the net price after all forms of discounts, rebates, purchasing allowances or any other forms of economic consideration have been taken into account, discounts that contribute to ASP are considered proprietary and 1 The important exception to this is Congress’ recent enactment of the Medicare Modernization Act of 2003, in which Congress changed the Medicare reimbursement system for drugs and biologicals from an AWP-based system to an ASP-based system physician-administered. This exception is not relevant here. Formatted: Bullets and Numbering Formatted: Body Text Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 37 of 181 - 15 - 001821-13 198880 V1 confidential by drug manufacturers. As a result, for retail pharmaceutical products the exact relationship of ASP to WAC (or to the average wholesale price or AWP, discussed below) for a particular drug at a particular point in time is not publicly known. D. The Average Wholesale Price 12. In addition to causing to be published a wholesale acquisition cost or WAC for branded drugs, over the years branded (and generic) manufacturers have also caused to be published an average wholesale price (or “AWP”) for prescription pharmaceuticals. The average wholesale price or AWP is a list price used for invoices between drug wholesalers and pharmacies (or other appropriate drug dispensers, such as doctors for physician-administered drugs) and is typically used as a benchmark for the reimbursement by End-Payors for the dispensers’ (e.g., retail pharmacies or doctors) acquisition of the drug product. Historically, the AWP is set directly or indirectly by the drug manufacturer, with an effective date and remains in effect until a change in price is published. 13. WAC and AWP differ in that they represent list prices at different levels in the market. WAC represents a list price from manufacturer to wholesaler, while AWP represents a list price from wholesaler to dispenser (e.g., pharmacy, physician, hospital, or other provider). E. The WAC-to-AWP Spread 14. In the pharmaceutical industry, the amount by which the AWP exceeds the WAC is sometimes known as the WAC/AWP “markup” or “spread” for a particular drug product. 15. The relationship between AWP and WAC is sometimes expressed as the percentage by which the difference is above WAC (e.g., 20% or 25% above WAC, usually called “the markup”) rather than the percentage in which the difference is measured as an amount under AWP (e.g., 16.7% or 20% off AWP, sometimes called the “spread”). In this complaint, we Formatted: Bullets and Numbering Formatted: Body Text Formatted: Bullets and Numbering Formatted: Body Text Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 38 of 181 - 16 - 001821-13 198880 V1 usually refer to the WAC-to-AWP markup in the first sense, i.e., as expressed as a percentage above WAC. 16. For many years preceding the Scheme alleged in this complaint, the WAC-to- AWP spread for branded drugs had predictably set patterns, and the competitive pricing marketplace for pharmaceuticals had adjusted and accommodated for the patterns. For branded pharmaceuticals, the WAC/AWP spread tended to fall in two quantum places: 20%, and 25%. In other words, in the many years preceding the Scheme alleged in this case, a particular branded drug NDC would carry both a published WAC (e.g., $100 for a 100 count bottle) and a published AWP at either 1.16 or 1.20, or 1.25 of the WAC (e.g., $120). 17. These steps in the WAC/AWP spreads 20%, and 25%, percentages known to McKesson, First Data and others in the pharmaceutical industry as the WAC/AWP markup factors – were commonly associated with particular divisions of pharmaceutical companies. For example, a pharmaceutical division might be designated as a “20% markup” company, while another company working in a different therapeutical area, would be designated as a “25% markup” company. 18. Another part of the predictable aspects of the WAC/AWP spreads over the years was the unchanging nature of the WAC/AWP markup for a particular NDC. In other words, if a particular NDC first launched at a 20% markup value, that NDC would remain as a 20% drug during the lifetime of that NDC, almost as if it were part of the generic code for that NDC. Thus, the WAC and AWP for that drug moved in parallel fashion (usually up), keeping the same markup factor associated with that NDC. Indeed, prior to the Scheme alleged in this case, it was extraordinarily rare for the WAC/AWP spread to be changed for any particular NDC, and in the few isolated situations where that did occur, a particular market-based reason existed which was Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 39 of 181 - 17 - 001821-13 198880 V1 known to all participants in the marketplace (e.g., a merger of drug companies necessitating uniformity of particular prices). F. Drug Wholesalers 19. Branded manufacturers’ primary customers are wholesalers, although to a much broader extent, manufacturers also sell directly to retail pharmacy chains, mail-order pharmacies, hospital chains and some health plans. Wholesalers are manufacturers’ largest group of purchasers, and wholesale prices depend partially on volume purchased. 20. Like most other types of wholesalers, pharmaceutical wholesalers purchase goods from manufacturers and then resell them to other purchasers. Wholesalers, whose main customers are retail and mail-order pharmacies, buy pharmaceuticals in large quantities, sort them by customer needs and disperse them in usable quantities. 21. The price wholesalers pay to manufacturers for any given product at any given time can fluctuate with the quantity purchased. The manufacturer may quote a wholesaler a price close to or at WAC, but typically there will also be a small volume discount or early cash payment discount off that price. 22. National wholesalers are the primary intermediate level in the retail channel of distribution process accounting for 45.7% of prescription drugs ($98.5 billion) in 2002. Other intermediate channels of distribution include chain warehouses with 32.3% ($69.8 billion) of the market, regional and specialty wholesalers with 9.3% ($20.2 billion) of the market, and group purchasing organizations that usually contract with a wholesaler to perform the distribution function on their behalf. Only about 12% of prescription sales by drug manufacturers are made directly to providers (e.g., physicians or hospitals) or pharmacies. 23. Wholesale drug distribution is heavily concentrated. The three largest wholesalers are Defendant McKesson, Cardinal Health, Inc. (“Cardinal”) and AmeriSource Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 40 of 181 - 18 - 001821-13 198880 V1 Bergen Corporation (“ABC”). Each of these “Big Three” wholesalers has slightly less than one- third of the national market of prescription drug wholesale distribution. Collectively they account for about 97% of drug sales that flow through national wholesalers, and collectively they account for more than 80% of all drug wholesalers (national, regional, and specialty). G. Wholesaler Sales Transactions 24. National drug wholesaling is generally perceived as price competitive, with McKesson, Cardinal and ABC (or their predecessors) competing for business with retailers (primarily major chain drug retailers, independent pharmacies, supermarket drug retailers, and mail orders). As a result, sell-side national drug wholesaler margins to retailers tend to be thin (even at times non-existent), with a significant portion of national drug wholesaler revenue instead being derived from buy-side prompt pay discounts received from manufacturers and from wholesaler inventorying measures that anticipate price increases. 25. National drug wholesalers sell branded drugs to the retail class of trade based on prices pegged to the WAC. Given the tendency for narrow margins in the national drug wholesaling business, the published WAC for a manufacturer’s retail-channel branded drug is not only a strong market indicator for the wholesaler’s buy-side cost for a branded drug, it is also expected that the WAC, subject to certain adjustments, is a reasonable benchmark of the sell-side costs charged by national wholesalers of branded drugs to major pharmacy retailers. H. Retail Pharmacy Channel 26. The retail pharmacy channel (including chain drug store companies, independent pharmacies, mail orders and supermarkets), comprise roughly two-thirds of the estimated market share of dollars for prescription drugs. Currently, the four largest drug store chains account for most of the retail pharmacy market share today, and the recent consolidation trend appears to be continuing. Some large national or regional retail chains (including pharmacy, supermarket, Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 41 of 181 - 19 - 001821-13 198880 V1 mass merchandiser chains) purchase drugs in large enough volumes so that they can bypass the wholesaler and buy directly from the manufacturer, but these direct purchases remain a small portion of the overall picture. 27. Regardless whether the retail pharmacy is large or small, its purchase of prescription drugs is typically based using WAC as a benchmark, although that benchmark is subject to adjustments such as a variety of discounts, rebates, and direct or indirect offsets to pricing. 28. When large chain pharmacies buy directly from manufacturers, manufacturers offer these pharmacies both up-front discounts for purchasing their products and back-end discounts and formulary rebates to selling specific volumes of drugs or achieving a certain share of a specified market. When purchasing drugs directly from manufacturers, pricing using the same WAC benchmark system, but the actual transaction cost varies considerably from the WAC given these other arrangements. 29. Smaller retail entities, such as independent retail pharmacies and regional retail chains, purchase directly from wholesalers or joint group purchasing organizations (“GPOs”) in order to leverage their combined purchasing power, and some of these groups further reduce their costs through direct rebate deals offered by manufacturers. In making purchases from wholesalers, resellers and manufacturers, the starting benchmark for transactions is the WAC but, again, the actual transaction cost is highly variable due to the additional arrangements. 30. In short, entities in the retail distribution chain (including wholesalers, resellers (retailers), retail chain pharmacies, independent pharmacies, mail order houses, and GPOs) purchase brand-name drugs based upon WAC. While the actual transaction purchase price Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 42 of 181 - 20 - 001821-13 198880 V1 varies from the WAC, WAC acts as the actual baseline for the many millions of transactions by which entities in the retail distribution chain acquire branded drugs. I. The Private End Payors for Prescription Drugs 31. At the most basic level, prescription drug expenditures are funded by either private or public sources. In the United States, more than $200 billion dollars is spent annually on prescription drugs, and about three quarters of this amount is privately funded. 32. Private payors for prescription drugs include drug benefit plan sponsors and consumers. The drug benefit plan sponsors (who pay for part or all of the cost of prescription drugs for their covered beneficiaries) include self-insured employers, health and welfare plans, health insurers and managed care organizations (MCOs). Most of these plan sponsors reimburse retailers (for retailers’ drug purchase costs) through pharmacy benefit administrators (either health plans or pharmacy benefit management companies) who negotiate discounts with retail pharmacies and rebates from drug manufacturers. The vast majority of such purchases are for out-patient drugs that are self-administered, i.e., drugs distributed through the retail distribution channel. J. End Payors Drug Reimbursements Are AWP-Based 33. Although retail pharmacies purchase pharmaceutical products based upon pricing formulae that employ the WAC, retail pharmacies get paid (i.e. receive reimbursement) from plan sponsors and consumers based upon an AWP reimbursement formula plus a dispensing fee. This is a fundamental anomaly of the retail distribution channel for drug products – that retail pharmacies’ purchases are based on prices pegged to the published WAC, but retail pharmacies’ reimbursements or charges are based on the published AWP. 34. Health plans typically contract with intermediaries called pharmacy benefit managers (“PBMs”) to negotiate prices with manufacturers and retail pharmacies and thereafter Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 43 of 181 - 21 - 001821-13 198880 V1 adjudicate the numerous transactions that occur during administration of a plan. Although the PBM negotiates prices and adjudicates claims, the plan sponsor (i.e., insurer, self-insured employee, health and welfare plan) remains at risk for the charges paid to retail pharmacies and mail orders. In the contracts between PBMs and plan sponsors, the retail pharmacies’ drug ingredient costs for brand-name drugs are reimbursed at the AWP less a certain percentage, or “discount.” 35. Brand drug reimbursement for retail pharmacy ingredient cost contained in the contracts between PBMs and plan sponsors, and PBMs to pharmacies, use an AWP-based reimbursement structure. For example, since 2002, Express Scripts’ standard form contract has expressly stated that its reimbursement formula is based on AWP from the “current information provided to ESI by drug pricing services such as First Data Bank....” Similarly, Caremark’s website states: “For both brand and generic drugs, the pricing formula at retail and mail is based on the discounted Average Wholesale Price (AWP) as reported by First Data. Caremark loads First Data’s updated data into the system on a daily basis.” Other PBMs expressly utilize First Data’s published AWPs as the source of AWP pricing to be utilized in payment. 36. The AWP-based reimbursement benchmark for private payments to the retail class of pharmaceutical trade has long been acknowledged. Most recently, at a hearing on December 7, 2004, before the United States House of Representatives Committee on Energy and Commerce, a former Senior Vice President of Aventis Pharmaceuticals, testified that “AWP has been codified as the benchmark price, by statute and regulations, in the public sector and by contract in the private sector.” 37. Third Party AWP based reimbursement has also been acknowledged by McKesson. For example, in September 2001, James Robert of McKesson, internally noted that Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 44 of 181 - 22 - 001821-13 198880 V1 “I think it is important to understand that the AWPs that are used for third party reimbursement are the First Data Bank (“FDB”) AWPs.” MCKAWP 0068514. 38. In summary, thousands of pharmaceutical reimbursement contracts are based on AWP minus a specified discount. As a result, a leading expert on pharmaceutical pricing has concluded that “AWP is the glue that binds the system of pharmaceutical reimbursement rates. All or predominantly all, reimbursement rates for pharmaceuticals purchased under public sector and private drug benefit insurance plans are negotiated based upon AWP and discounts from AWP.” K. Medicaid Drug Reimbursements Are AWP-Based 39. Public purchases for prescription drugs provide a variety of programs for low- income and elderly patients, veterans, members of armed services, and federal, state and local government employees. While public purchaser programs are not directly at issue in this case, the significant reliance on those systems of AWP-based reimbursement underscores the ambiguity and magnitude of reliance on the AWP-based reimbursement system to pay for dispensers’ ingredient costs for branded pharmaceutical products. 40. Medicaid has the most significant impact on prescription drug pricing for out patient drugs. The Medicaid Program, jointly financed through federal and state funds, is designed to aid certain low-income people and the disabled, and covers about 40 million individuals. Between 1997 and 2002, Medicaid expenditures for prescription drugs in the fee- for-service part of the program increased at an average annual rate of 18%, going from $10.2 billion to $23.4 billion. (While these are significant sums, they amount to less than 10% of the overall annual prescription drug expenditure.) 41. Medicaid’s reimbursement system relies upon the published list prices of drugs (which are largely directly set by manufacturers) to determine pharmacies’ reimbursement. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 45 of 181 - 23 - 001821-13 198880 V1 States reimburse pharmacies using formulas that are typically based on the average wholesale price or AWP of a drug. For example, a state might reimburse a pharmacy 85% to 90% of the average wholesale price of a drug plus a fixed dollar amount of $3 to $5 (as dispensing fee) to cover the pharmacy’s other costs. L. Medicare Drug Reimbursements Are AWP-Based 42. The other significant public purchaser for prescription drugs is the federal Medicare Program. 43. Until recently, the Medicare Program generally did not cover the cost of out- patient prescription drugs that a Medicare beneficiary self administers (e.g., by swallowing the drug in liquid or pill form). However, Medicare Part B does cover some drugs, including injectables administered directly by a doctor, certain oral anti-cancer drugs, and drugs furnished under a durable medical equipment benefit. Approximately 450 drugs are covered by Medicare Part B. 44. Medicare Part B reimburses medical providers 80% of the allowable amount for a drug. The remaining 20% is paid by the Medicare Part B beneficiary, and is called the “co- payment” amount. All medical providers are required by law to bill the 20% co-payment and make attempts beyond merely billing to collect that amount. In addition, beneficiaries under Part B are required to pay an annual deductible amount before Part B benefits are payable. 45. Some Medicare beneficiaries are able to purchase private Medigap insurance, which covers, among other things, all or part of the 20% co-payment for Covered Drugs. 46. For many years up to and through 1997, Medicare’s reimbursement system for the relatively narrow band of physician-administered drugs sought to estimate providers’ acquisition costs by pegging reimbursement to either the estimated acquisition costs or to the national average wholesale price sale price. In practice, carriers that administered the Medicare Program Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 46 of 181 - 24 - 001821-13 198880 V1 reimbursed physicians and clinics for physician-administered drugs covered by Medicare on the basis of the published wholesale price or AWP. 47. Beginning in 1998, Medicare’s practice of reimbursing based upon the published AWP was codified by statue and implemented by regulation. Beginning in 1998 and until recently, Medicare reimbursed for drugs and biologicals under its program of the reimbursing physician administered drugs based upon 95% of the published average wholesale price. 48. At the end of 2003, Congress enacted the Medicare Modernization Act. Among other things, that changed the AWP-based reimbursement system for Medicare to a system based upon each manufacturers’ actual calculation for the average sales price for each drug or biological covered by the program. Interim rules transitioned the AWP-based system with modifications to the percentage off of AWP. Beginning in 2004, Medicare has been transitioning to the ASP-based reimbursement system. 49. In summary, the two largest public purchaser programs for prescription pharmaceuticals – Medicaid and Medicare – historically relied upon published average wholesale prices as the fundamental basis upon which to reimburse for branded drug ingredient costs incurred by dispensers (retail pharmacies for Medicaid, and medical providers in the Medicare area). M. U&C Payors 50. In increasing numbers throughout the class period there is a portion of the population who are uninsured or underinsured and who pay for drugs in cash. This is referred to in the industry is the usual and customary (“U&C”) charge. 51. U&C payments are tied to the reported AWPs, and are usually set at a price above AWP. Hence an artificial increase in the AWP uniformly impacts such class members. Deleted: , Deleted: , Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 47 of 181 - 25 - 001821-13 198880 V1 52. These are the most vulnerable of all consumers purchasing drugs and have no power to negotiate discounts. N. Private and Public End Payors Rely on Published Drug Pricing Compendia 53. The private (and public) pharmaceutical reimbursement systems have at their core critical dependence upon accurate and timely publication of the current AWP for every active formulation of drugs dispensed by retail pharmacies in the country. Given the breath of this dependence (private insurance systems covering more than 200 million lives as well as millions of cash payors) given the healthcare system’s growing reliance on pharmaceutical products as a treatment of first resort, and given the scores of thousands of available drugs on the market, the private (and public) reimbursement systems for pharmaceuticals depend on the honesty and integrity of the AWP and WAC data provided by drug manufacturers. The reimbursement systems (including the plan sponsors and consumers who reimburse drug dispenser costs) also rely upon the accuracy and integrity of the pharmaceutical pricing publishers to accurately and fairly publish AWPs and WACs for NDCs. 54. Several pharmaceutical industry compendia periodically publish the AWPs for active NDCs in the United States. Generally these publications are available in either hard copy format or in electronic media. 55. Generally speaking, the two printed compendia include Drug Topics Red Book (the “Red Book”) (published by Thompson Healthcare) and American Druggist First Data Bank Annual Director of Pharmaceuticals and Essential Director of Pharmaceuticals (the “Blue Book”) (which for several years has been defunct). While the Red Book is used to determine published AWPs (primarily for physician-administered drugs), and while certain limited electronic information is available regarding Red Book published prices, the Red Book remains primarily an annual printed publication with periodic printed updates. Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 48 of 181 - 26 - 001821-13 198880 V1 56. In periodically announcing the AWP for each drug, publishers generally report prices that are supplied to them by manufacturers for their respective drugs. For instance, the forward to the 1999 edition of the Red Book states that “all pricing information is supplied and verified by the products’ manufacturers, and it should be noted that no independent review of those prices for accuracy is conducted.” In addition, a June 1996 Dow Jones news article reported that Phil Southerd, an associate product manager of the Red Book, stated that Red Book only publishes prices that are faxed directly from the manufacturer. O. The Emergence of First Data and MediSpan as Electronic Data Publishers 57. In addition to printed publications of pharmaceutical prices, the AWP for NDCs is also widely made available to manufactures, wholesalers, retailers (including major chain pharmacies, independents, mail orders), pharmacy benefit managers and third-party payors, (i.e., plan sponsors of drug benefit plans such as insurers, Taft-Hartley Funds and self-insured employers), through large electronic drug databases. 58. Drug databases started back in the mid-1970s with the advent of significant drug benefit programs. These programs, along with the pharmacists who are dispensing the drugs and the third-party payors (primarily insurance companies) who are paying for them, needed comprehensive and accurate descriptive and pricing information in order to ensure the accuracy of the claims they were paying. 59. The processing of claims became a massive job as drug prescriptions increased. The need for a consistently accurate and comprehensive drug price database became a major need. As First Data documents acknowledge, the “specter of inaccurate drug prices drove the database companies to develop techniques to assure the accuracy and comprehensiveness of the data.” Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 49 of 181 - 27 - 001821-13 198880 V1 60. During the 1990s, there were only two major electronic drug database companies: (1) First Data, which describes itself as “started as the only purely electronic database company,” and (2) MediSpan, which had its roots in the printed drug price catalog business. 61. The principal products sold by First Data are based upon information contained in its National Drug Database Files, or “NDDF.” The NDDF is a massive electronic database dating back many years and containing scores of fields of information for both active and non- active NDCs. Among many other pieces of quantitative and non-quantitative information contained in the NDDF, are the current and each historical WAC (known in the NDDF as the wholesale net price, or “WHN”) and AWP (set forth in various fields, including an AWP field designated by First Data as Blue Book AWP or “BBAWP”) for each NDC. 62. The principal electronic database products sold by MediSpan are based upon its Master Drug Database Files or “MDDF.” The MDDF electronic database is smaller than the NDDF, but nevertheless contains numerous fields of data for each NDC, including current and historical WAC and AWP. Both the NDDF and the MDDF are comprehensive, intragratable drug information databases. 63. Comprehensive, intragratable drug information databases (“intragratable drug data files”) are electronic databases containing purportedly comprehensive clinical, pricing, and other information on prescription and non-prescription medicines. Intragratable drug data files are uniquely capable of being readily integrated with other computerized information systems to help pharmacists and third-party payors quickly obtain information important to decisions regarding the prescription, dispensing, price reimbursement and purchase of medicines, and also to automatically provide drug information that patients need for safe use of their drugs. Retail pharmacies and PBMs usually use intragratable drug data files to determine third-party payor Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 50 of 181 - 28 - 001821-13 198880 V1 reimbursement (when using AWP fields), as well as their own acquisition costs (when using WAC fields). 64. Drug information in other forms is usually not an adequate substitute for the provision of much information obtainable only in intragratable drug data files. For example, a pharmacist filling a prescription can more quickly and reliably check for harmful drug interactions through an instant, automatic check of a drug data file when he or she enters the prescription into the pharmacy’s computer system, than through consulting a separate, unintegrated, and less up-to-date information source such as a book or data on a compact disk. Relying on such a separate reference would be more time-consuming, and would increase the risk that a harmful drug interaction would not be detected until after the patient purchased and used the drug. 65. During the 1990’s and up to 1998, First Data and MediSpan were substantial, direct competitors within the relevant market of intragratable drug data files in the United States, and faced little or no competition from other firms. Until 1998, two electronic drug databases – First Data’s NDDF and MediSpan’s MDDF – played the integral role in providing essentially all electronically-based drug reimbursement transactions in the United States, accounting for billions of transactions each year and many billions of dollars of payments. 66. Of course, First Data’s NDDF and MediSpan’s MDDF both contained data fields for critical price points for the approximate 65,000 NDCs then active in the marketplace.2 The retail class of trade has primary reliance on these systems for health and reimbursement among the data fields for each active NDC (in the NDDF and the MDDF) information, using the AWP for the associated NDC when seeking reimbursement for drug ingredient cost. 2 First Data’s NDDF also contains historical information and thus, it contains data for almost 200,000 NDCs since many are no longer active in the marketplace. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 51 of 181 - 29 - 001821-13 198880 V1 P. The Merger of First Data and MediSpan Systems 67. In 1998, the Hearst Corporation caused First Data to be merged with the smaller MediSpan. After the merger, First Data began the process of combining its NDDF with MediSpan’s MDDF (resulting in a product sometimes known as NDDF Plus). Through this process, the Hearst Corporation caused First Data to become the sole United States provider of intragratable drug data files, including the publication of electronic drug database pricing information such as the WAC and associated AWP for branded pharmaceutical products. Thus, beginning in or around 1998 and thereafter, virtually every participant in the pharmaceutical distribution chain who used electronic database systems used and relied upon the accuracy of data from First Data’s NDDF and MDDF, including the published WAC and AWP price fields in undertaking reimbursement transactions for billions of dollars of pharmaceutical products. 68. In 2001, the Federal Trade Commission (after a lengthy investigation) brought suit against the Hearst Corporation and First Data claiming, among other things, that the First Data and MediSpan merger had been unlawful. Shortly thereafter, the Hearst Corporation agreed to the divestiture of the MediSpan assets, culminating in a consent decree late that year. However, by this time, First Data’s merger of the NDDF and MDDF, along with changes of personnel and related systems effectuated over the prior three years, was nearly complete. As a result, as part of First Data’s divestiture of the MediSpan assets, First Data was required to provide the purchaser of the MediSpan assets with transitional and editorial services for many years into the future. 69. As a practical matter, therefore, pricing data contained in both the NDDF and the MDDF post-divestiture remained the same. Since 1998 and despite the late 2001 divestiture, First Data has functioned as the sole editor of data populating the only available comprehensive intragratable electronic drug data systems (the NDDF and the MDDF) for the pricing Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 52 of 181 - 30 - 001821-13 198880 V1 information ubiquitously used in the United States for reimbursement transactions in the retail pharmacy channel for branded drugs. 70. During the Class Period, all changes in the FDB electronically published AWPs and the WAC-to-AWP spread were the same. The Consent Decree that implemented the divestiture of Medispan from FDB required that FDB continue to provide Medispan with all FDB pricing information until Medispan (now called Facts and Comparisons), was able to develop its own pricing production system. Thus, during the Class Period, when the Scheme described below effectuated an increase in the FDB published spread, this increase also occurred in the Medispan published prices. FDB and McKesson knew that this would be a consequence of the Scheme. 71. During the 1990s and up to the end of 2001, both First Data and MediSpan maintained the historical proportion between AWP and WAC when branded price increases were announced. This enabled the publishers (when receiving, for example, information only regarding WAC changes to a branded drug) to automatically calculate the corresponding AWP. As a result, the marketplace had predictability, and marketing pricing dynamics had adjusted according to that expected practice. Q. First Data Gains the Trust of the Pharmaceutical Industry 72. Prior to and throughout the Class Period, pharmaceutical End Payors operated on the belief that the AWPs were the result of honest reporting both by the pharmaceutical companies with respect to the publication of their WACs or submission of their suggested AWPs to publishers, and an empirical and professional analysis undertaken by First Data. 73. The reliance upon the accuracy and legitimacy of First Data’s data was not only known to First Data, but used as the foundation of its business model and its marketing and promotion plans. For example, First Data stated: Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 53 of 181 - 31 - 001821-13 198880 V1 -- “For over two decades, healthcare professionals have come to depend on First DataBank’s comprehensive knowledge bases to deliver the timely, accurate drug information they need to support their business and clinical decision-making.” -- “Thus developers can respond quickly to their customers’ demands for reliable, easy-to-access drug information, available on multiple platforms. -- “[First Data:] A partner you can trust.” -- Trusted Drug Knowledge…Comprehensive drug knowledge bases that have been trusted for decades by healthcare professionals – in thousands of installations – to provide the timely, accurate information they need to support their clinical and business decision-making. 74. First Data promoted its pricing information as “accurate,” of “high-quality,” and as “set[ting] the standard in the healthcare industry for comprehensive coverage of descriptive, pricing and clinical information on drugs.” It also recognizes that its pricing information is “relied upon by professionals in th[e] industry,” and that, “[t]o be useful to its audience, First Data’s data must be accurate and up-to-date.” 75. In pleadings filed in the In re Pharmaceutical Indus. Average Wholesale Pricing Litig., MDL No. 1456 (D. Mass.), First Data has admitted that buyers and sellers in the pharmaceutical marketplace rely on its pricing data: “FDB knows the pharmaceutical industry well and is relied upon by professionals in that industry to report reliable information.” 76. Throughout the 1990s, First Data gained the trust and reliance of participants in the pharmaceutical marketplace – most notably pharmacies and the third-party payors that reimbursed them – upon First Data’s electronic publication of AWP for each active NDC. 77. Throughout all this time, First Data knew, of course, that the primary purposes of publication of the WAC and of the AWP, and of the associated WAC-to-AWP markup (embedded in the difference between the AWP and WAC data fields), was to serve as an electronic basis for the mass-reimbursement of retail pharmacies for thousands of daily Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 54 of 181 - 32 - 001821-13 198880 V1 transactions and billions of yearly transactions. After all, First Data acknowledged: “AWP was developed because there had to be some price which all parties could agree upon if machine processing was to be possible.” It is stated elsewhere: “AWP represents the average wholesale price; the average price a wholesaler would charge a customer for a particular product. The operative word is average. AWP was developed to provide a price at which all parties could agree upon for electronic processing to be possible.” R. First Data’s Representations to Gain Marketplace Reliance on Its Pricing Data 78. First Data gained this reliance upon the empirical integrity of its electronic publication of AWP due to the representations it made to its customers and others in the pharmaceutical marketplace regarding how First Data populated the fields of information relating to WAC and AWP. 79. Among other things, First Data held out that its electronic databases contained accurate field information for the AWP for each NDC. Emphasizing that as to the AWP the “operative word is average” (First Data’s emphasis), First Data indicated that its empirically derived information was obtained directly from its specific contacts “within each major drug manufacturer/labelers organization.” First Data represented that when it was apprised that the AWPs suggested by manufacturers were also those used by the wholesalers, First Data published as the AWP the exact AWP that had been suggested by the manufacturer. On other occasions, First Data represented that its AWPs were based upon empirically determined markup factors obtained by First Data after it undertook a comprehensive and sound survey. In these situations, while the manufacturer effectively established both price points (the WAC and the AWP, since the manufacturer established the WAC and knew of the existing mathematical markup factor resulting in the AWP), First Data held out that its markup factors have been corroborated through empirical research of wholesalers’ actual markup of WAC to AWP. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 55 of 181 - 33 - 001821-13 198880 V1 80. During these years, First Data occasionally published information regarding how it derived the markup factors for the WAC-to-AWP spread. This information always emphasized the empirical nature of the data populating its electronic database. Thus, First Data represented: -- That industry changes “have made the wholesale survey fundamental in maintaining current pricing data”; -- That when a manufacturer had not provided a suggested wholesale price for a new product, “wholesaler surveys” were undertaken in order to derive an empirically based markup actually used by wholesalers; -- That wholesaler surveys were also undertaken in order “to confirm that the markup that First DataBank utilizes for AWP is representative of the wholesaler industry”; -- In the early 1990s, First DataBank represented that it “surveys a minimum of five drug wholesalers that represent over two-thirds of the total dollar volume of drug wholesalers,” and that the “number of surveys performed is increasing”; -- Throughout the 1990s, and again in order to paint a picture that the markups are empirically derived, First DataBank represented that because “individual wholesalers may markup each manufacturer differently, a weighted average, not a consensus average, is calculated,” and that then “the market share held by the wholesalers surveyed affects the markup proportionally,” and that thereby “a higher degree of certainty is achieved.” -- While in most cases the “surveys” matched current data, where they did not, “it is the policy that First DataBank will change the markup on file to report marketplace reality.” 81. First DataBank’s representations and marketing efforts regarding empirically driven markup factors obtained by “wholesaler surveys” continued throughout the 1990s. A late- 1990, widely published editorial by First Data regarding AWP pricing stated: Average Wholesale Price I have many conversations regarding what is “AWP” and how does FDB determined [sic] it. There is much folklore and misunderstanding as to the determination of AWP and where we get the data. AWP is the average wholesale price. That is, AWP is the average of the prices charged by the national drug wholesalers Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 56 of 181 - 34 - 001821-13 198880 V1 for a given product (NDC). The operative word is average. AWP was developed to provide a price which all parties could agree upon for electronic processing to be possible. In order to determine the AWP, First DataBank surveys national wholesalers to ascertain what they use as a price basis in their AWP files. We contact the wholesalers to determine what the markup should be for a new company or to confirm that the markup that we are applying is current. A survey may be performed on a single NDC number or for a manufacturer’s entire line of products. In either case, each national wholesaler is surveyed on a number of products from each manufacturer. The number of surveys performed is increasing. First DataBank surveys drug wholesalers that represent over two-thirds of the wholesaler total dollar volume. The markup that First DataBank utilizes is representative of wholesalers on a national level. Because individual wholesalers may mark up each manufacturer differently, a weighted average, not a consensus average, is calculated. That is, the market share held by the wholesalers surveyed affects the markup proportionally. Wholesalers with higher drug dollar volumes have more weight in the determination of the final markup. Thus, a higher degree of certainty is achieved. We also consider the manufacturer’s suggested wholesale price (SWP) in our determination. Many are under the impression that the manufacturer sets the AWP. FDB considers the wholesale price suggested by the manufacturer a “Suggested Wholesale Price (SWP)” and has a different data element called “SWP” on the NDDF file for those customers who chose to use the SWP instead of AWP. Frequently, the SWP and AWP are the same; however, we are having more instances where they are differing. We will populate the SWP with the new markup, but will survey the national wholesalers to determine AWP. The AWP will be populated with the wholesaler survey price even if it disagrees with the SWP. In most cases, the results from surveys match what First DataBank is using. In the instances that they do not, it is policy that First DataBank will change the markup to report marketplace reality. (Emphasis added.) 82. First Data’s representations regarding the accuracy of its electronic publication of AWP were highly successful. By 1998 (and along with its acquisition of its only competitor, MediSpan), First Data was the sole provider of comprehensive, intragratable electronic data files providing AWP information throughout the retail pharmacy distribution chain, including most private third-party payors. Of course, when marketing its products, First Data made this known Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 57 of 181 - 35 - 001821-13 198880 V1 stating that it “provides you the same AWP prices used by Aetna, PAID PCS, MEDI, MET, most Blue Cross Blue Shield Plans, wholesalers and approximately 49 Medicaid programs.” S. In the Late 1990s, Retailers Looked to the WAC/AWP Spread to Increase Margin 83. Also during the 1990s, national wholesalers and drug retailers continued to report significant declines in margin (despite the overall escalation in drug costs). In order to address escalating healthcare costs, including the significant rise in prescription drug expenditures, third- party payors and managed care organizations had, to some extent, placed significant pressure on national wholesalers and the retail distribution industry, causing widely reported reductions in margin for wholesalers and retailers. 84. With this increased pressure on margin, retail pharmacies began to look for ways to stave off the reduction. To insiders in the pharmaceutical industry, it has long been recognized, as one manufacturer has stated, that “the AWP-WAC spread is the primary determinant of the end retail pricing of prescription drugs. As a result, changes in the spread will have a direct impact on retailer profitability as well as drug expenses for not only consumers but even more uniformly for health insurers and other third party payors.” 85. Another industry insider stated: Payors currently use AWP or average wholesale price as a basis for reimbursing retail pharmacy for providing RX’s to patients with insurance and by retail pharmacy as a basis for pricing cash prescriptions. Pharmacy reimbursement – a higher spread translates into higher reimbursement to retailers and mail order pharmacies. The usual reimbursement formula for private third party Medicaid RX’s in anchored off of AWP – so a higher markup will increase the reimbursement level at least in the short term. 86. In 1998, McKesson tested the waters to see whether increased WAC-to-AWP spread might help its relations with its retail customers. In March 1998, McKesson announced that it would begin utilization of First Data’s AWP. McKesson knew that which was quietly Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 58 of 181 - 36 - 001821-13 198880 V1 known by a few of the national chain drug retailers and First Data itself – that many of the AWPs, and the timing of the reported AWPs, provided by First Data’s electronic files were often, albeit marginally, higher than other publications. While the stated purpose was to provide customers “with consistency in AWP pricing”, McKesson made clear to its retail pharmacy customers “that in almost every case retail prices will go up helping increase gross profit.” McKesson even gave instructions to its retail customers as to how to electronically access the changed “markup percentages” in order to access the increased gross profit that would be earned at the expense of plan sponsors and consumers by shifting to First Data publication of AWP. 87. Following McKesson’s switch to exclusive use to First Data data, a handful of the largest national chain drug retailers continued to push for increased AWP/WAC markups on drugs, including increased WAC-to-AWP markups for branded drugs that were not already at the 25% level. In and around 1999, national chains and retailers requested increased AWP spread for branded products, and some of them engaged in practices in order to ensure that the increased markups would occur. For example, some large retailers would refuse to stock drugs that had therapeutic equivalents products if the product only had a 20% markup, and more powerful retailers could lock out the products unless the AWP/WAC spread were adjusted upward. T. By 2001, First Data WAC-to-AWP Markups Were Susceptible to Abuse 88. By late 2001, the First Data editorial process for imputing the WAC/AWP markup factor was susceptible of significant abuse. Although First Data held out to the public that its determination of the WAC/AWP markup factor was empirically driven through multiple sources, in truth there was no empiricism and the WAC/AWP markups for numerous NDCs of retail branded drugs became susceptible to manipulation by First Data and those with whom it worked, most notably McKesson. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 59 of 181 - 37 - 001821-13 198880 V1 89. The truth about First Data’s determination of the WAC/AWP markup is that many of their historical claims were simply false. For example: -- Although First Data claimed that because “individual wholesalers may markup each manufacturer differently, a weighted average, not a consensus average, is calculated”, in fact First Data never undertook weighted averages of reported markups. Thus, First Data’s publications over a decade had falsely claimed mathematical precision on empirical data for the markups. -- Although First Data claimed that it undertook “surveys” , in fact no “surveys” in the reasonable sense of that word were undertaken. First Data’s questions were not set forth in a survey design, nor were they even in writing. Responses received were not memorialized in writing. No other paper trail was kept. -- The purported “surveys” undertaken by First DataBank rarely occurred. When a inquiry was made, it was a monetary phone call lasting only a few moments. -- Although First Data claimed, during the 1990s was “increasing” in fact the “surveys” were was decreasing given the ongoing consolidation among national drug wholesalers. Moreover, First Data was not taking a calculated average of the markups reported, it only used a “consensus” approach which did not require a response from all the major national wholesalers. -- During most times during the 1990s, even the wholesalers that were “surveyed” apparently did not know that they were being surveyed. Since the wholesalers themselves purchased their information about AWP from First Data itself, most found circular at best the notion that First Data would “survey” them to find out AWP information that the wholesalers themselves had already purchased from First Data. -- By around 2000, only a few national wholesalers existed and were on the short list for First Data “surveys.” Most of these wholesalers professed never to have participated in First Data “surveys” at any time. By the end of 2001, it appears that virtually all communications by wholesalers back to First Data regarding the WAC/AWP markup and/or AWP generally were expressly prohibited by management with the singular exception of McKesson. 90. First Data continued to mislead its customers and the public about the nature of its AWP and WAC-to-AWP markup data. For example, in a 2002 letter to subscribers of its publication Price Alert, First Data’s Kay Morgan describes AWP as follows: Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 60 of 181 - 38 - 001821-13 198880 V1 I have had many conversations regarding what “AWP” is and how First Data determines it. There is much folklore and misunderstanding as to the determination of AWP and how we obtain the data. AWP is the average wholesale price. That is, AWP is the average of the prices charged by the national drug wholesalers for a given product (NDC), often referred to by First Data as the “Blue Book Price.” The operative word is average. AWP was developed to provide a price, which all parties could agree upon. In order to determine the AWP, First DataBank surveys national wholesalers to ascertain what the price is. This is based on their AWP price files. We contact the wholesalers to determine what the markup should be for a new company. First, DataBank then confirms that the markup is accurate and current. A survey may be performed on a single NDC number or on a manufacturer’s entire product line. In either case, a survey will be performed with all national wholesalers to determine the appropriate AWP. With increased numbers of surveys done, the determination represents over two-thirds of the volume of the wholesalers, and is also representative of wholesalers on a national level. Because individual wholesalers may mark up each manufacturer differently, a weighted average, not a consensus average, is calculated. That is, the market share held by the wholesalers surveyed affects the markup factor proportionally. Therefore, wholesalers with higher drug dollar volumes have more weight in the determination of the final markup. Thus, a higher degree of certainty is achieved. We also consider the manufacturer’s suggested wholesaler price (SWP) in our determination. [Emphasis added.] 91. This 2002 publication, mimicking the similar 1991 First Data publication of eleven years earlier, continued most of the falsehoods about First Data. In its 2002 website, again First Data claims that its published AWPs result from surveys of national wholesalers and that the number of surveys is “increasing.” U. Implementation of the Five Percent Spread Scheme 92. On the eve of the McKesson and First Data Scheme, McKesson observed that: “[E]verything was straight forward for many years. Manufacturers’ product lines were very consistent in their markups, and so were the FDB AWP’s.” This would soon change. 93. The genesis of the conspiracy to raise the WAC-to-AWP markup was FDB’s desire to raise the markup or the AWP to “support our customers.” MCKAWP 0068514. By Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 61 of 181 - 39 - 001821-13 198880 V1 “support” McKesson meant an increase in the margin earned by its retail clients. Thus, in September 2001, McKesson’s James Robert in an internal e-mail now marked “Highly Confidential” by McKesson, reported that McKesson chose to increase “the markup on the Park- Davis line (Lipitor) last January, when Pfizer took over. This was our attempt to raise AWPs to support our customers.” 94. Shortly after his September 2001 e-mail, Roberts approached FDB to discuss FDB’s willingness to “normalize the brand product AWPs.” MCKAWP 0068599 (marked “Highly Confidential”). “Normalization” eventually become one of the buzzwords used by McKesson and FDB to describe their manipulation of the WAC-AWP spreads on hundreds of brand name drugs. 95. McKesson, knew that as one of the largest national wholesalers it had “an opportunity to ‘normalize’ AWP spreads on brand pharmaceuticals at a 25% markup (or 20% spread)” and, if it were to succeed, that “most [of its] customers would love it.”3 McKesson also knew it would not be difficult to impose its suggested sell prices on First Data’s published AWPs because First Data’s “wholesaler surveys” were not to be taken seriously and consisted of nothing more than a brief phone call or e-mail. Initially McKesson merely changed its suggested sell price “in the hopes that one of the other wholesalers happens to raise their markup on an item (maybe due to pressure from retail customers), and FDB happens to resurvey the items.”4 But when the competition did not respond as expected or First Data failed to survey the change as quickly as hoped, McKesson decided to take direct action. 96. McKesson was aware that First Data had a virtual lock on the determination of AWPs because it was one of only two electronic sources for price information, and although it 3 MCKAWP 0068514. 4 MCKAWP 0068514. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 62 of 181 - 40 - 001821-13 198880 V1 was “not widely known,” First Data had “a contract with the Medispan group [the only other electronic pricing source] requiring that FDB supply the data over the next 3 or 4 years [i.e. through 2005 or 2006]. This means that essentially the Medispan data is the First DataBank data.” 97. In August 2001, despite McKesson’s knowledge that AWPs were supposed to be the result of publisher’s surveys of actual wholesale prices, McKesson and FDB “mutually agreed” to move the AWP or WAC-to-AWP spread on all Searle products from 20% to 25%. Thereafter, McKesson and First Data agreed to implement a fundamental change in the WAC-to- AWP markups for branded drugs of all of the major manufacturers. 98. That defendants’ collusion began as early as August 2001 is documented by an internal memorandum drafted by Bob James, McKesson’s Director of Brand Pharmaceutical Production Management, stating: After a discussion with FDB last August [2001], we mutually agreed to standardize Searle (16⅔% spread) product line because it had been acquired earlier by Pharmacia (20% spread). There seemed to be momentum in the industry to move to a normalized markup of 25% on brand Rx products. In December [2001], after several discussions with FDB about our [normalization] strategy we began to move many of the manufacturers with mixed spreads (16⅔ and 20% products in the same line) to a consistent 25% markup. These were companies like GlaxoSmithKline,5 AstraZeneca, Aventis, Berlex, Bristol Myers Squibb, Merck, JOM, and 3M, Forest, Novertis, Roche, Schering and several others. These were mixed product lines and we just set their Suggested Sell Prices at a consistent 25% markup. First DataBank re-surveyed most of these companies during January and February when price increases occurred. Many of the AWP’s have been increased by FDB. Because a large number of price increases occurred, some AWP’s were affected twice, once when the price increase[] took effect and then a second time when FDB raised the AWP after the survey process. . . . . Not all products in these companies have had AWP increases at this point 5 GlaxoSmithKline (“GSK”) wrote on March 1, 2002 to First Data asking it to explain the “unexpected change” which led First Data to list GSK products with a 25% markup. (FDB-AWP 053695). Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 63 of 181 - 41 - 001821-13 198880 V1 in time. However, as price increases occur FDB will re-survey those products and make their determination.6 99. Beginning sometime in late 2001 or early 2002, First Data, by agreement with McKesson, limited its’ purported “surveys” to McKesson and did not “survey” other wholesalers. And, irrespective of when exactly it stopped “surveying” other wholesalers, First Data agreed to utilize for markup purposes data received from McKesson. At the same time and as part of a common plan, McKesson implemented a 5%7 increase in the WAC-to-AWP markup for hundreds of brand-name drugs that it distributed. This increase was from 20% above WAC to 25% above WAC for the affected drugs. As part of the agreement and following their agreed course of conduct and common plan, First Data then published the new figures for hundreds of brand-name drugs without contacting any other wholesaler, in spite of publicly stating it contacted more than one wholesaler to obtain a “weighted average.” First Data knew that this increase across the board from 20% to 25% was not due to any real economic change in the average wholesale price, and that by publishing this increase, it was not providing “reliable” and “accurate” information as it had promised. McKesson for its part knew that the 5% increase was not justified by any change in the price of drugs or other change in the marketplace. Rather, this 5% increase was implemented by McKesson solely to benefit its own pharmaceutical business and the business of its prominent retail pharmacy clients. 100. By November 2001, FDB’s Kay Morgan, and McKesson’s James Robert, were exchanging e-mails confirming the results of their collaboration: “Hello Kay.... Just went through the Merck items and updated a couple of our items to 25% markup. However, found some items that you might want to review. They include Noroxin’s Prinvil and Prinzides. The 6 MCKAWP 69608-09. 7 Sometimes the increase was more than 5%, as the intent was to raise all markups to 25%. So if a drug was at 18%, it was moved up to 25%. Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 64 of 181 - 42 - 001821-13 198880 V1 latter two should probably be consistent with the new AZ 1.5 markups.” MCKAWP 0068621. (Marked “Highly Confidential”) 101. McKesson’s own internal documents describe the profitability of increasing spreads for its key customers. Thus, McKesson noted the following: Here are a few examples of increased profits that our customers should be realizing now and into the future. The following results are based on a reimbursement formula of AWP minus 15% plus a $2.00 fee. Old 16 2/3% spread New 20% spread Lipitor 20mg 90’s $6.86 $17.18 Prilosec 20mg 30’s $4.22 $8.92 Allegra 60mg 100’s $3.97 $8.16 Advair Diskus 500/50 60dose $5.11 $11.70 Befaseron (previously a flat $7.00 fee) $20.00 $58.25 Most would agree that these improvements are extremely significant. 102. In December 2001, FDB and McKesson engaged in “discussions” that resulted in an increase in the markups of companies “like GlaxoSmithKline, AstraZeneca, Aventis, Berlex, Bristol Myers Squibb, Merck, JOM, and 3M, Forest, Novartis, Roche, Schering and several others.” MCKAWP 0069608. 103. McKesson’s collaboration with First Data was highly effective. In March 2002 Bob James reports: My guess is that things should look very good in the next couple of months. I am working with FDB to point out problem suppliers as Erlinda’s group [Business Information Services] provides me with weekly information comparing our List price with the FDB AWP. . . . . [The] results should have a very positive impact on our customers[’] profitability.8 8 MCKAWP 0042663. Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 65 of 181 - 43 - 001821-13 198880 V1 In April he reports that First Data gave up all pretense of conducting a survey for new products: “All new brand vendors will be set up as 1.25 markup factor vendors, both at McK and FDB.”9 104. An increase in the WAC-to-AWP spread directly results in higher prices to plaintiffs and members of the Class. For example, in the case of AstraZeneca’s Prilosec (as reflected in the chart below), the AWP spread increase raised the AWP for that drug by $295.72. The following chart reflects, for a single drug manufactured by certain companies, the AWP spread increase and related AWP increase: Defendant Drug AWP Before 2000 WAC Before 2000 AWP Spread Before 2000 AWP After 2000 WAC After 2000 AWP Spread After 2000 Abbott Biaxin 500 mg #60 $396.72 $334.08 18.8% $437.98 $350.38 25% AstraZeneca Prilosec 40 mg #1000 $6,171.66 $5,143.05 20% $6,621.67 $5,297.34 25% Aventis Allegra 60 mg #100 $118.36 $98.63 20% $123.29 $98.63 25% BMS Tequin 400 mg #100 $818.86 $682.27 20% $895.48 $716.38 25% GSK Combivir #100 $1,241.26 $1,034.38 20% $1,370.55 $1,096.44 25% J&J (Janssen) Risperdal 2 mg #500 $2,320.10 $1,933.42 20% $2,535.20 $2,028.16 25% Novartis Exelon 2 mg/ml $246.96 $205.80 20% $267.29 $213.83 25% 105. Another way to understand the widespread nature of the change in the WAC-to- AWP markup as a result of the McKesson-First Data agreement, is to examine the change in the WAC-to-AWP markup of all drugs manufactured by the following illustrative pharmaceutical manufacturers over time: The increases, all occurring in hundreds of drugs, among multiple manufacturers, at the same time, could not have happened by chance or independent conduct, but instead are the result of a common plan: 9 MCKAWP 0069616. Formatted: Bullets and Numbering Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 66 of 181 - 44 - 001821-13 198880 V1 Number of NDCs Experiencing an WAC/AWP Spread Change from 20% to 25% ASTRAZENECA Number of NDCs with Spread Change from 20-25%, 1999 - 2004 0 50 100 150 200 250 1999 2000 2001 2002 2003 2004 Year N D C s (# ) JOHNSON & JOHNSON Number of NDCs with Spread Change from 20-25%, 1999 - 2004 0 20 40 60 80 100 120 140 160 180 200 1999 2000 2001 2002 2003 2004 Year N D C s (# ) Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 67 of 181 - 45 - 001821-13 198880 V1 GLAXOSMITHKLINE Number of NDCs with Spread Change from 20-25%, 1999 - 2004 0 20 40 60 80 100 120 140 1999 2000 2001 2002 2003 2004 Year N D C s (# ) BRISTOL-MYERS SQUIBB Number of NDCs with Spread Change from 20-25%, 1999 - 2004 0 20 40 60 80 100 120 1999 2000 2001 2002 2003 2004 Year N D C s (# ) Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 68 of 181 - 46 - 001821-13 198880 V1 NOVARTIS Number of NDCs with Spread Change from 20-25%, 1999 - 2004 0 20 40 60 80 100 120 140 1999 2000 2001 2002 2003 2004 Year N D C s (# ) PFIZER Number of NDCs with Spread Change from 20-25%, 1999 - 2004 0 5 10 15 20 25 30 35 40 45 50 1999 2000 2001 2002 2003 2004 Year N D C s (# ) Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 69 of 181 - 47 - 001821-13 198880 V1 ELI LILLY Number of NDCs with Spread Change from 20-25%, 1999 - 2004 0 5 10 15 20 25 30 35 40 1999 2000 2001 2002 2003 2004 Year N D C s (# ) 106. Examining the Scheme on an annual basis also illustrates the timing and extent of the Scheme’s implementation: Number of NDCs with Spread Change from 20% to 25%, 1994-2004 0 200 400 600 800 1000 1200 1400 1600 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year N D C s (# ) Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 70 of 181 - 48 - 001821-13 198880 V1 107. The dramatic across the board increase in the spread on hundreds of brand-name drugs was implemented pursuant to the joint Scheme between McKesson and First Data. As noted, McKesson reported the across the WAC-to-AWP increase to First Data, and First Data in turn agreed to report the new AWPs. 108. First Data was aware that the markups McKesson reported were inflated to improve relations with McKesson’s customers – the pharmacies – by increasing their profits. In February 2002 Bob James sent Kay Morgan a document he drafted entitled, “AWP Discussion,” which explained that 20% markups “had a negative impact on McKesson’s customers’ profitability” and that “McKesson has chosen to ‘normalize’ the markups in the Brand Rx area resulting in a consistent 25% markup or use of the 1.25 factor.”10 Later, on May 1, 2002, he writes to her about the “normalizing process,” the term McKesson coined to refer to its efforts to impose a uniform 25% markup on all brand prescription drugs.11 In an e-mail sent to Alicia Nielson, Senior Research Associate, Product Knowledge Base Services, First Data, in July 2002 Bob James enclosed a prior internal communication in which he explained that McKesson had “been normalizing all Brand Rx mark ups at 25% for the suggested sell price.”12 First Data enthusiastically embraced the “normalization” program, as reported in the following Aventis e- mail dated March 11, 2002 from Guerdon Green, Director of Trade Administration & Development at Aventis: First Data Bank has advised me after surveying the wholesalers, they feel that there are very few manufacturers that still have a 20% AWP to WAC spread [sic, markup]. As a result, First Data Bank has determined to employ a higher 25% AWP to WAC [markup] for all Aventis products. This will be implements as we have price increases. Immediately the entire Allegra line will be moved to a 25% [markup] from its current 20%. This will be 10 MCKAWP 0069613. 11 MCKAWP 0069642. 12 MCKAWP 0069775. Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 71 of 181 - 49 - 001821-13 198880 V1 effective immediately. The most noticeable impact will be that it will be more profitable to the retail pharmacist to dispense Allegra. 109. Eventually First Data ceased consulting with any other wholesalers and relied entirely on the information that McKesson provided it to determine AWPs. McKesson was aware that First Data routinely disregarded manufacturer’s suggested sell prices – Kay Morgan frequently shared such snubs with her friend Bob James: Let’s start a list of the hated manufacturers, we will update it weekly or monthly. Today, Organon is the top of my list. The person in charge of EDI is trying to tell me to put O in the first position. McKesson and we have it wrong. Wound up telling her that the world does not turn around Organon and sending a note to my contact telling him the product was coming off.13 * * * * * [in response to an e-mail from Gilead Sciences announcing that it would not longer report AWPs for its products and requesting that any publication of an AWP calculated by First Data be accompanied with the statement that the price was not authorized by Gilead, Kay Morgan writes:] Wonderful. If we don’t report an AWP, the NDC will not be listed. It is the rules of the database. . . . [to Bob James] FYI –Just thought you should be aware. They appear to be playing hardball and I just don’t play.14 110. Before 2000 McKesson estimated that only 20% of the prescription drug manufacturers were 25% mark-up companies.15 By early 2002, however, McKesson estimated that through defendants’ efforts 90% of the industry had turned to the 25% markup.16 By late 2002, McKesson estimated that the number had increased to 95%.17 In 2004, McKesson estimated that 99% of the prescription drugs were set at a 25% markup.18 McKesson 13 MCKAWP 0069586. 14 MCKAWP 0001183. 15 MCKAWP 0069502. 16 MCKAWP 0069609. 17 MCKAWP 0069502. 18 MCKAWP 0069766. Formatted: Bullets and Numbering Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 72 of 181 - 50 - 001821-13 198880 V1 acknowledged that without its efforts, “the AWP’s most likely would not change”19 and that the industry shift “probably speaks to First Data Bank’s willingness to work with us to normalize the brand product AWPs.”20 111. Each defendant had a reason to implement this Scheme. For sales to non-cash paying customers, pharmacies are reimbursed by health plans and other pharmacy benefit providers based on AWP. Consequently, pharmacies make a profit on the spread between AWP and the actual acquisition cost for the drug. Under this system, a higher WAC/AWP spread results in increased profits to pharmacies. Thus, McKesson and First Data by operation of the Scheme benefits retail pharmacies. “PBMs” (Pharmacy Benefit Manufacturers) also make money off the spread between AWP and WAC. The Scheme also benefited PBMs, particularly it benefits PBMs who operate by mail order, allowing them to make substantial profit off the spread. 112. Indeed, for several years many of the major retail pharmacies had jointly approached various pharmaceutical manufacturers and urged that they raise the WAC/AWP spread by 5%. The manufacturers did not do so. On information and belief, these same retailers then urged McKesson to do so and McKesson had a strong financial incentive to cooperate with retail pharmacy clients and this incentive was one of the motivating factors for McKesson in terms of implementing the Scheme: (a) In recent years, the wholesale drug industry (including McKesson) and retail pharmacies have been economically threatened by the managed care industry. McKesson, as have other wholesalers, has seen their relationships with retail pharmacies as a key to their future. In this regard, over the past five years, the wholesale drug industry and McKesson have 19 MCKAWP 0069732. 20 MCKAWP 0068599. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 73 of 181 - 51 - 001821-13 198880 V1 sought to compete by downplaying the traditional product distribution functions and by developing new programs to strengthen their retail pharmacy customer base. These include dozens of specialized services ranging from departmental “planogramming” to special contract administration programs for buying groups. The provision of these value-added services is a key element in the campaign by drug wholesalers like McKesson to build the kind of customer loyalty in retailers that will help them to shore up their own sagging profit margins. McKesson offers dozens of value added programs to retail pharmacies, including technology and care management solutions that it offers to “25,000 retail and 5,000 health systems pharmacies nationwide.”21 McKesson’s customers for these programs include “large national chains and community drugstores, as well as hospital pharmacies, outpatient clinics, and other institutional providers.”22 If McKesson could cause First Data to report a higher AWP, McKesson could use this to curry favor with retailers who use McKesson as their wholesaler or other services and to further establish or maintain business ties between retailers and McKesson. As noted in McKesson’s 2004 Annual Report, in recent years a significant portion of its revenue growth came from large customers, including such large retail pharmacy chains like Rite-Aid. Rite-Aid represented 8% of McKesson’s 2003 revenues. In 2003, Rite-Aid named McKesson its wholesaler of the year. In a 2003 article in Chain Drug Review, McKesson executive Pat Blake described McKesson and retailers as “we’re really positioned to be a business partner” due to the company’s automation and information technology offered to retailers as well as its Access Health Programs linking retailers with third-party payors. Indeed, Rite-Aid was one of the companies that had asked, without success, certain of the defendant manufacturers to increase the WAC/AWP spread by 5%. McKesson agreed to the 5% Scheme when the manufacturers 21 McKesson website: http://www.pharmaceutical.mckesson.com/wt/home.php. 22 Id. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 74 of 181 - 52 - 001821-13 198880 V1 apparently would not (notwithstanding the manufacturers’ own inflation of AWPs and WACs for drugs specified in the ongoing AWP litigation and their, at a minimum, acquiescence to the results of the Scheme), McKesson offered large retail pharmacy chains a chance to make a profit off the increased spread. (b) On occasions McKesson implemented the Scheme at the direction or request of its retail customers and was proud of it. For example, in September 2002, Bartell’s complained that an “entire line is low ... even the generic side.... Kill them.” McKesson responded by stating that as a follow up Celexa and Lexapro will have an AWP markup of 25% or a spread of 20% as FDB information is updated. Look for change to happen next week.” MCKAWP 0069817. McKesson closed by telling Bartells “keep smiling [sic] ... and who said we never listen to our customers and old friends.” Thus, the 5% Spread Scheme was a benefit direct to McKesson’s largest clients, many of whom, like Bartell, had previously approached the drug manufacturers seeking imposition of the 5% increase. (c) Internally McKesson calculated how it could pitch the Scheme’s benefits, new AWPs and larger spreads, to obtain large retail accounts. So, for example, the following was the pitch to one account: WAC x old markup of 1.20 (162/3 spread) 19,582,854 (old AWP) ... = $326,381 Profit WAC x new markup of 1.25 (20% spread) = 20,398,806 (new AWP) ... = $1,019,940 or 3 times the profit as before (bold in original). MCKAWP 0068312. This benefit was the result of the “FDB process,” i.e. the Scheme at work. (d) McKesson’s “Blue-Chip” customer based includes retail national chains such as Rite-Aid, Eckerd, Brooks, Albertson’s, Safeway and Giant Eagle. Other “Blue-Chip” clients included “retail small chains,” such as Bartells, Bi-Mart, A&P, and Haggen. All of these Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 75 of 181 - 53 - 001821-13 198880 V1 blue-chip accounts benefited from the spread and McKesson touted its role in increasing the spreads. (f) Further, by simply raising the spread on hundreds of drugs, McKesson saved money from reductions in administrative expenses in reporting AWPs to First Data. It was far easier to simply flip a switch converting hundreds of drugs from 20% to 25% over WAC than to deal with the drugs one at a time. Thus McKesson had its own interests that were served by the 5% Scheme. 113. First Data also saw advantages to participating in the 5% Scheme: (a) By virtue of reporting a higher AWP, First Data incentivized other powerful forces in the distribution chain to use First Data’s AWP as the pricing standard and thereby created greater demand for First Data’s reporting services. For example, PBMs in their contracts with end payors often designate which publisher’s AWP will be used to set the AWP. PBMs frequently take a percentage of the spread between AWP and acquisition cost so the larger the spread the more profit they make. As of 2002, many if not most of the major PBMs specified the use of First Data. In addition, by virtue of its partnership with McKesson, McKesson designated First Data’s AWP to be the pricing standard for the Together Rx program, a prescription drug savings program for Medicare enrollees, thereby again increasing the use of First Data’s services. Thus First Data, like McKesson, had its own interests that were served by the 5% Scheme. (b) Second, at some point in 2002-2003, certain manufacturers and wholesalers who were angry at the bump in the WAC–to–AWP spread, refused to provide First Data with pricing information. If First Data publicly revealed that certain manufacturers and wholesalers were disavowing the current WAC-to-AWP spread, the use of the AWP system Formatted: Font: Bold Formatted: Bullets and Numbering Deleted: (e) The Scheme also directly benefited McKesson’s own pharmacy business. McKesson has an operation called McKesson Valu-Rite, which consists of a nationwide network of independent pharmacies that are connected to McKesson. McKesson manages 275 pharmacies in 35 states and employs 900 pharmacists. Again, an increase in the spread was a direct benefit to these pharmacies by increasing profits off the spread. This in turn also increased McKesson’s profits from its Valu-Rite program.¶ Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 76 of 181 - 54 - 001821-13 198880 V1 could be threatened which in turn would threaten, if not eliminate the use of First Data’s published prices. By participating in the Scheme and continuing the illusion of surveys, First Data maintained the demand for its services. (c) Alternatively, First Data agreed to this Scheme because it had an interest in perpetuating AWPs as an industry price bench and because its other industry contacts, both manufacturers and wholesalers, were unwilling to provide it with pricing information on which to base AWPs. By agreeing to adopt McKesson’s markups, First Data could perpetuate the illusion that it was still “calculating” AWPs based on industry input, when in fact it was allowing McKesson to completely redefine retail pharmacy profit margins on brand name drugs. Indeed Alisha Nielson, who worked alongside of Kay Morgan to determine AWPs, testified that even though First Data was not receiving markup information from the other wholesalers, she believed that they had adequate information on which to base their AWPs because . . . we had reached out to other companies, we were not getting information from them, we addressed it as being an issue. Kay had taken it up [with senior management]. We knew that the policy was going to be eventually changed into the new pricing policy that is in place today. So until that had changed, we acquired information from the company that we could receive it from. Q And that was McKesson. A Correct. Nielson Dep. at 100:3-19. 114. McKesson and First Data also agreed to hide the Scheme by implementing the WAC-to-AWP increases only when the manufacturer increased WAC. McKesson and First Data were fearful to implement the Scheme without such an increase because such action “would trigger a lot of questions on why there was a change to the item when the MFG (manufacturer) hasn’t sent any price changes.” To avoid having end payors ask questions, McKesson and First Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 77 of 181 - 55 - 001821-13 198880 V1 Data camouflaged the Scheme by imposing the 5% increase when other price changes were reported, thus in effect compounding price increases. This part of the Scheme is depicted by the following chart showing a dramatic increase in the number of 25% spreads associated with price changes in 2002 and 2003: 115. After the scheme was implemented (and despite the flack from some drug manufacturers), First Data and McKesson continued their collaboration to ensure that First Data’s WAC/AWP markups mimicked those of McKesson, and vise-versa. In these efforts to effectuate the scheme, McKesson and FDB communicated on a frequent basis. 116. These post-2001 communications were in no sense a “survey” being conducted by First Data. Indeed, the communications were bilateral, with First Data equally enforcing the new WAC/AWP markup protocol. And even when disparities were shown in the databases, First Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 78 of 181 - 56 - 001821-13 198880 V1 Data would counsel against making changes because “it would trigger a lot of questions on why there was a change to the item when the MFG [i.e., manufacturer] hasn’t sent any price changes.” 117. At times, when McKesson was “catching some flack from our large retail friends,” McKesson would ensure that both it’s and First Data’s databases contained the higher WAC/AWP markup. At other times, a large national chain pharmacy would call “complaining about” the particular AWP for a product, and McKesson, in turn, would contact First Data in order to get it “fixed.” 118. McKesson sought to hide the Scheme. When Brian Ferreira of VPS Retail wrote to Bob James, asking him to “[p]lease provide the list of items and/or manufacturers that were included in the AWP standardization process,” he knew better than to respond to the request in writing, writing only: “Brian, this is an interesting request. . . . Please give me a call when it is convenient.”23 McKesson knew that if it did not keep its manipulations of the AWPs a secret, there would be serious repercussions: Confidentially. Not to pass on. We have [only] about 470 brand Rx items * * * * * [John Bonner, Director, McKesson’s Branded Rx Product Management and Investment] Bob James is working with FDB to make this happen over time and I’m not sure it is something we want discussed. Please contact him before discussing outside the company.24 * * * * * [Bob James] For obvious reasons we don’t want to write a memo and send it out because it would not be kept confidential.25 23 MCKAWP 0069714. 24 MCKAWP 0066465. 25 MCKAWP 0069591. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 79 of 181 - 57 - 001821-13 198880 V1 * * * * * [Bob James to McKesson field associate] I would be careful about ‘being ahead of the curve with Lilly. You be the judge on how your customer will interpret.26 * * * * * [McKesson field associate writing to John Bonner] My accounts are having issues with us ‘Normalizing brand pricing at 25%’ . . . . You also mentioned that we should not discuss [this] outside of McKesson, how would you suggest we answer our customers[’] questions?27 * * * * * [McKesson field associate] Obviously this is not out to the field.28 * * * * * [Bob James] Sorry for the extra confusion and questions that have come up from our customers. The (unintended consequences) results [of the normalization process] should have a very positive impact on our customers[’] profitability.29 * * * * * 119. First Data also knew the importance of keeping the Scheme a secret. In response to an e-mail inquiry whether electronic drug pricing publishers were increasing the AWP/WAC spread, Kay Morgan denies any involvement, adding, “I am most curious as to the source of this rumor. First Data has always used a wholesaler survey to determine AWP.”30 She forwarded on the exchange to Bob James at McKesson, stating, “I thought you might want to see my answer,” to which he responds: “I love it! You are the best.”31 120. When in 2003 one manufacturer indicated that it would “no longer report average wholesale prices (AWP) for its products”, First Data reported to McKesson that this 26 MCKAWP 0069594. 27 MCKAWP 0066464. 28 MCKAWP 0069732. 29 MCKAWP 0042663. 30 MCKAWP 0069588. 31 Id. Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 80 of 181 - 58 - 001821-13 198880 V1 manufacturer appeared “to be playing hard ball and [First Data] just won’t play.” First Data indicated that it would, then, “just assume the markup is 1.25.” In this situation, when the manufacturer wanted to be assured that any disclosure of an AWP associated with its product was a price that “has not been authorized” by it, First Data wrote back stating: “Wonderful. If we don’t report an AWP, the NDC will not be listed. It is the rules of the database. That database does not allow for statements such as your attorneys wrote below.” 121. Many insiders in the pharmaceutical industry recognized that the extraordinary, across-the-board increase in the number of drugs that were increased in the WAC/AWP spread from 20 to 25% was a “change… being driven at wholesaler lever” in order to accommodate the large drug retail chains. 122. First Data’s participation in the Scheme is also evidenced, in part, by its conduct with respect to AWPs reported to First Data from certain manufacturers. For example, in In re Pharmaceutical Indus. Average Wholesale Pricing Litig., MDL No. 1456 (D. Mass.), Novartis filed declarations stating that Novartis regularly communicated its AWP to the Publishers, including First Data and that for the period March 27, 2000 through August 21, 2002, the AWP published for its drugs was 20% higher than the WAC Novartis reported. Novartis then stated in its declaration that since January 18, 2002, First Data has consistently published an AWP that was 5% higher than the AWP reported by Novartis, or 25% over WAC. However, the Novartis declaration did not describe anything Novartis had done to remedy First Data’s fraudulent reporting of Novartis’ AWP. V. Some Branded Manufacturers’ Response to the McKesson/First Data Scheme 123. Some branded manufacturers noticed implementation of the Scheme and immediately appreciated its purpose – to provide additional profit to the wholesalers and retailers in the pharmacy class of trade. One branded company commented that “First Data, at the Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 81 of 181 - 59 - 001821-13 198880 V1 direction of the wholesale industry, has begun to change all branded pharmaceutical products to a 25 % markup… and that “the spread will be changed as product price changed….” The same company observed that the “largest negative factory is publicity” since the increase in AWP would increase end payors prices (even though it may not increase that revenues to manufacturers). 124. A different branded manufacturer also observed that the changed WAC/AWP markup for many branded drugs was “being driven at wholesaler level” and that they are “reporting 1.25 when companies take a price increase….” 125. Because branded and generic manufacturers have historically established AWPs for their NDCs either directly (by suggesting and AWP that was incorporated by First Data and wholesalers) or indirectly (by setting a WAC and setting or knowing of the markup factor to be applied to that WAC), manufacturers whose NDCs had been affected by the McKesson/First Data Scheme, asked First Data for answers as to why the markups had changed for selected branded products in 2002. In response, First Data generally pushed them off, giving different answers to different manufacturers. To make matters worse, First Data had counsel for its parent, the Hearst Corporation, write letters to various branded manufacturers’ representatives. In these letters, Hearst’s lawyers made claims which were false. 126. Ultimately, brand-name manufacturers did nothing in response to the Scheme. First Data and McKesson kept their scheme secret, and almost universally branded manufacturers acquiesced to the results of McKesson/First Data Scheme. Moreover, branded manufacturers took no action to disclose the existence of the inflated AWPs which had been effectuated by the Scheme to change the WAC/AWP markup. As a result, while First Data and McKesson as insiders to the Scheme were well aware of the changed markup factor (and Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 82 of 181 - 60 - 001821-13 198880 V1 corresponding increase in reimbursement payments being made throughout the country), and while some branded manufacturers were similarly aware that many of their branded products had experienced the WAC/AWP markup change without their explicit request, none of them disclosed this to the marketplace at large. Indeed, some manufacturers republished or utilized the new First Data AWPs in communications to customers or other publishers. In a market where billions of prescriptions are filled each year, where over 65,000 NDCs are actively in the marketplace, and where the WAC/AWP Scheme was sequentially implemented during the course of 2002 and later as price increases imposed by the manufacturers were effectuated, the Scheme went unnoticed to the marketplace at large. Indeed, even when players in the pharmaceutical marketplace noticed the increases in the WAC/AWP spread, they assumed by virtue of the manufacturers’ silence that those increases were the result of the actions of those manufacturers. W. Hiding the Scheme and Continuing the Enterprise 29.127. Both defendants cleverly hid their conduct behind FDB’s confidential survey process to avoid detection and to preserve for as long as possible the benefit they had conferred to the pharmacies. FDB continued to make false or misleading statements about the integrity of its data and the means by which it calculated its AWPs.32 FDB also kept McKesson’s participation in the process secret by refusing to disclose the alleged survey results on alleged grounds of confidentiality. Additionally, both defendants either denied or failed to disclose to the public their common plan of “normalizing” WAC/AWP markups at 25% and about their 32 For example, FDB-AWP 02005 (page from FDB’s website, dated November 4, 2002) (stating that FDB surveys each of the national wholesalers to determine markup), which Kay Morgan acknowledged was never a true statement of FDB’s survey practice. Morgan 6.28.07 dep at 100: 16 – 23. Formatted: Font color: Red, Strikethrough Deleted: 150 Deleted: 151 Deleted: . Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 83 of 181 - 61 - 001821-13 198880 V1 respective roles in achieving this goal.33 The communications between McKesson and FDB and internal McKesson communications about FDB over a three-year period indicate that the defendants functioned as a continuing unit for the purposes of implementing the 5% scheme and disseminating false prices. McKesson voluntarily provided FDB drug pricing information, including WACs, AWPs and WAC/AWP markup information.34 McKesson and FDB regularly communicated and shared drug pricing information, usually by telephone and e-mail, including discussions, in which they would agree to the markup factor for a manufacturer or brand drug line.35 30 128. The communications between McKesson and FDB and internal McKesson communications about FDB over a three-year period indicate that the defendants functioned as a continuing unit for the purposes of implementing the 5% scheme and disseminating false prices. McKesson voluntarily provided FDB drug pricing information, including WACs, AWPs and WAC/AWP markup information.36 McKesson and FDB regularly communicated and shared drug pricing information, usually by telephone and e-mail, including discussions, in which they would agree to the markup factor for a manufacturer or brand drug line.37129. Both defendants cleverly hid their conduct behind FDB’s confidential survey process to avoid detection and to preserve for as long as possible the benefit they had conferred to the pharmacies. 33 For example, Kay Morgan forwarded an e-mail to Bob James, in which she is directly questioned whether FDB is moving all manufacturers to a uniform 25% markup. Morgan categorically denies the scheme; James’ response is: “I love it. You are the best!” Ex. 39 (MCKAWP 0069588). 34 Both FDB employees charged with maintaining the integrity of the drug pricing data at FDB testified that McKesson regularly provided markup information. Morgan 6.28.07 dep at 89:17 – 90: 11; Nielson 5.18.07 dep at 97: 16 – 19. 35 For example, Ex. 19 (MCKAWP 0068621); Ex. 20 (MCKAWP 0069586); Ex. 21 (MCKAWP 0069857); Ex. 22 (MCKAWP 0001168); and Ex. 23 (MCKAWP 0001188). 36 Both FDB employees charged with maintaining the integrity of the drug pricing data at FDB testified that McKesson regularly provided markup information. Morgan 6.28.07 dep at 89:17 – 90: 11; Nielson 5.18.07 dep at 97: 16 – 19. 37 For example, Ex. 19 (MCKAWP 0068621); Ex. 20 (MCKAWP 0069586); Ex. 21 (MCKAWP 0069857); Ex. 22 (MCKAWP 0001168); and Ex. 23 (MCKAWP 0001188). Formatted: Font color: Red, Strikethrough Deleted: 151 Deleted: 152. Deleted: ¶ Deleted: 153. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 84 of 181 - 62 - 001821-13 198880 V1 FDB continued to make false or misleading statements about the integrity of its data and the means by which it calculated its AWPs.38 FDB also kept McKesson’s participation in the process secret by refusing to disclose the alleged survey results on alleged grounds of confidentiality. Additionally, both defendants either denied or failed to disclose to the public their common plan of “normalizing” WAC/AWP markups at 25% and about their respective roles in achieving this goal.39 X. First Data’s 2005 Capitulation 130. Then, in a March 15, 2005 letter, First Data announced that the unreliable surveys would be discontinued. Reviewing its past practices with respect to establishing AWP, First Data restated that it had conducted surveys to establish AWPs: March 15, 2005 Re: First DataBank’s Blue Book AWP Data Dear Customer: It is our pleasure to serve you as a customer of First DataBank. We are writing to make you aware of upcoming changes to First DataBank’s National Drug Data File Plus™ database, or NDDF Plus™, that may impact your use of our products. In order to publish various drug pricing data fields available through its NDDF Plus database and related products, First DataBank has historically relied on drug manufacturers and wholesalers to report or otherwise make available information concerning their list price for drugs. Unfortunately, First DataBank is no longer able to obtain information relating to list prices directly from wholesalers in a manner that is consistent with First DataBank’s editorial standards and policies. In fact, it is our understanding that some wholesalers often do not use catalog or list prices as a basis for determining actual transaction prices. As a result, First DataBank must implement certain changes to its publication of the “Blue Book AWP” pricing data field. Effective 38 For example, FDB-AWP 02005 (page from FDB’s website, dated November 4, 2002) (stating that FDB surveys each of the national wholesalers to determine markup), which Kay Morgan acknowledged was never a true statement of FDB’s survey practice. Morgan 6.28.07 dep at 100: 16 – 23. 39 For example, Kay Morgan forwarded an e-mail to Bob James, in which she is directly questioned whether FDB is moving all manufacturers to a uniform 25% markup. Morgan categorically denies the scheme; James’ response is: “I love it. You are the best!” Ex. 39 (MCKAWP 0069588). Formatted: Bullets and Numbering Formatted: Body Text Deleted: 152 Deleted: 154 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 85 of 181 - 63 - 001821-13 198880 V1 immediately, First DataBank will no longer survey drug wholesalers for information relating to their catalog or list prices. First DataBank historically relied upon wholesalers to provide information relating to their catalog or list prices for purposes of publishing the Blue Book AWP data field. First DataBank periodically surveyed full-line national wholesalers to determine the average markup applied to a manufacturer’s line of products. The average markup of the wholesalers responding to the survey was applied against the Wholesale Acquisition Cost (the manufacturer’s list price to wholesalers, also commonly referred to as WAC) or, if a Wholesale Acquisition Cost was not available, the Direct Price (the manufacturer’s list price to non-wholesalers), with the resulting value populating the Blue Book AWP field. In certain instances, wholesalers would accept a manufacturer’s suggested wholesale price, in which case the Blue Book AWP and Suggested Wholesale Price data fields would reflect the same value. [Emphasis added.] V. CLASS ACTION ALLEGATIONS FOR THE AWP PAYOR SCHEME 131. Plaintiffs bring this action pursuant to Rule 23(a) and (b)(2) and (b)(3) of the Federal Rules of Civil Procedure, on behalf of themselves and the Classes comprised of: Consumer purchasers: All individual persons who paid, or incurred a debt enforceable at the time of judgment in this case to pay, a percentage co-payment for the Subject Drugs during the Class Period pursuant to a plan, which in turn reimbursed the cost of brand-name pharmaceutical drugs based on AWP. The Marked Up Drugs are all drugs identified in Exhibit At the Third Amended Complaint and consist of certain brand-name drugs only.41 Third-party Payors: All third party payors whose pharmaceutical payments for the Subject Drugs were based on AWP during the Class Period. The Marked Up Drugs are all drugs identified in Exhibit A and consist of certain brand-name drugs only. Cash Payors: All uninsured or underinsured individual persons who paid, or incurred a debt enforceable at the time of judgment in this case, 41 Plaintiffs reserve the right to modify the Class Definition based on class related discovery and/or merits discovery. 45 MCKAWP 0065895. Formatted: Bullets and Numbering Deleted: V. Deleted: Subject Deleted: Deleted: .40 Deleted: Subject Deleted: 42 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 86 of 181 - 64 - 001821-13 198880 V1 cash for any of the drugs identified in Exhibit A to the Third Amended Complaint. Excluded from the above-listed Classes are: (a) each defendant and any entity in which any defendant has a controlling interest, and their legal representatives, officers, directors, assignees and successors; (b) any co-conspirators; and (c) any governmental entities who purchased such drugs during the Class Period. 132. The Class Period for Class 1 and 2 is August 1, 2001 to March 15, 2005, when First Data disclosed that it had stopped surveying wholesalers133. The class period for Class 3 is August 1, 2001 to the present. There is no evidence to suggest that Class 3 members should have known of the scheme or were able to mitigate the damages caused by the scheme. 134. The exact identity of the drugs covered by this lawsuit is capable of being discovered from the records of First Data and the PBMs identified above. Based on an investigation of First Data’s databases, the list of such drugs is attached as Exhibit A. 135. The Consumer Class, both Class 1 and Class 3 consists of hundreds of thousands of consumers throughout the United States, making individual joinder impractical, in satisfaction of Rule 23(a)(1). The disposition of the claims of the Class Members in a single class action will provide substantial benefits to all parties and to the Court. 136. The Third-party payor Class consists of in excess of ten thousand third-party payors throughout the United States, making individual joinder impractical, in satisfaction of Rule 23(a)(1). The disposition of the claims of the Class Members in a single class action will provide substantial benefits to all parties and to the Court. 137. The claims of the representative plaintiffs are typical of the claims of the Class, as required by Rule 23(a)(3), in that the representative plaintiffs include persons and entities who, like all Class Members, purchased drugs whose prices were inflated by the 5% price increase. Formatted: Bullets and Numbering Deleted: .43¶ Deleted: 44 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 87 of 181 - 65 - 001821-13 198880 V1 Such representative plaintiffs, like all Class Members, have been damaged by defendants’ misconduct because, among other things, they paid prices for these drugs that were higher than they would have been but for defendants’ improper actions. 138. The Class representatives for the Class are all of the plaintiffs. 139. The factual and legal bases of each defendant’s misconduct are common to the Class Members and represent a common thread of fraud and other misconduct resulting in injury to plaintiffs and members of the Class. 140. There are many questions of law and fact common to plaintiffs and the Class, and those questions predominate over any questions that may affect individual Class Members, within the meaning of and fulfilling Rules 23(a)(2) and 23(b)(2) and (3). Common questions of law and fact include, but are not limited to, the following: a. Whether AWPs published by First Data are used as a contractual benchmark for payments by third-party payors for drugs; b. Whether defendants engaged in a course of conduct that improperly inflated the WAC-to-AWP markup and the ultimate AWPs or cash price used by plaintiffs and Class Members as the basis for reimbursement; c. Whether defendants agreed to artificially inflate the published AWPs and the cash price for the drugs that are the subject of this complaint; d. Whether defendants engaged in a pattern and practice that caused plaintiffs and Class Members to make inflated payments for brand name drugs; e. Whether defendants engaged in a pattern of deceptive and/or fraudulent activity intended to defraud plaintiffs and the Class Members; Deleted: the AWPs Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 88 of 181 - 66 - 001821-13 198880 V1 f. Whether defendants formed enterprises for the purpose of carrying out the 5% Scheme; g. Whether defendants used the U.S. mails and interstate wire facilities to carry out the 5% Scheme; h. Whether defendants’ conduct violated RICO and various California statutes and common law; i. Whether defendants are liable to plaintiffs and the Class Members for damages for conduct actionable under the various state consumer protection statutes. 141. Plaintiffs will fairly and adequately represent and protect the interests of the Class, as required by Rule 23(a)(4). Plaintiffs have retained counsel with substantial experience in prosecuting nationwide consumer class actions. Plaintiffs and their counsel are committed to vigorously prosecuting this action on behalf of the Class, and have the financial resources to do so. Neither plaintiffs nor their counsel have any interest adverse to those of the Class. 142. Plaintiffs and members of the Class have all suffered, and will continue to suffer, harm and damages as a result of defendants’ unlawful and wrongful conduct. A class action is superior to other available methods for the fair and efficient adjudication of this controversy under Rule 23(b)(3). Absent a class action, most members of the Class likely would find the cost of litigating their claims to be prohibitive, and will have no effective remedy at law. The class treatment of common questions of law and fact is also superior to multiple individual actions or piecemeal litigation in that it conserves the resources of the Courts and the litigants, and promotes consistency and efficiency of adjudication. Additionally, defendants have acted and failed to act on grounds generally applicable to plaintiffs and the Class and require Court imposition of uniform relief to ensure compatible standards of conduct toward the Class, thereby Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 89 of 181 - 67 - 001821-13 198880 V1 making appropriate equitable relief to the Class as a whole within the meaning of Rules 23(b)(1) and (b)(2). 143. The (b)2 relief, sought by the Class, would include: (a) The submission to Class counsel of a complete electronic copy of the National Drug Database File (the so-called “NDDF”), along with an electronic report showing (i) all markup factor changes for the preceding one-half (1/2) year, and (ii) all changes in a difference greater than 0.5 basis points of the difference between any reported wholesale net price in the NDDF (the so-called field named “WHN,” more customarily referred to as the WAC or wholesale acquisition cost) and the stated Blue Book Average Wholesale Price (or so-called “BBAWP”); (b) Submission to Class counsel full and complete report of any and all editorial changes for the NDDF that effect, directly and/or indirectly, the publication material in any of the price fields of the NDDF; (c) A rollback in the NDDF of the markup factor for all drug code formulations (“NDCs”) set forth in Exhibit A from the current markup basis (typically 1.25) back to a markup factor of 1.20, and thereby make corresponding adjustments to the BBAWP field; (d) A cease and desist of all conduct that causes a non-economically justified increase in the spread, e.g., a markup done for the sole purpose of providing profits to McKesson’s retail clients. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 90 of 181 - 68 - 001821-13 198880 V1 COUNT I Violations of 18 U.S.C. § 1962(C) 144. Plaintiffs, on behalf of themselves and all others similarly situated, reallege and incorporate herein by reference each of the allegations contained in the preceding paragraphs of this Complaint. 145. This Count, which alleges violations of Section 1962(c) of RICO, 18 U.S.C. § 1962(c), is asserted against the defendants on behalf of the Class. 146. Plaintiffs, the members of Class, and the defendants are each “persons,” as that term is defined in 18 U.S.C. § 1961(3). 147. At all relevant times, in violation of 18 U.S.C. § 1962(c), the defendants conducted the affairs of certain association-in-fact enterprises identified herein, the affairs of which affected interstate commerce through a pattern of racketeering activity. The McKesson-First Data Enterprise 148. For purposes of this claim, certain RICO “enterprises” are associations-in-fact consisting of (a) First Data and (b) McKesson, including its directors, employees and agents. These associations-in-fact are sometimes collectively referred to herein as the “McKesson – First Data Enterprise.” The Enterprise is an ongoing and continuing business organization consisting of both corporations and individuals that are and have been associated for the common or shared purposes of (a) publishing or otherwise disseminating pharmaceutical price information, which all too often includes disseminating false and misleading AWPs; (b) implementing the 5% Spread Scheme; (c) deriving increased profits from the activities of the Enterprise; and (d) perpetuating use of AWPs as a benchmark for reimbursement in the pharmaceutical industry. First Data and McKesson each has a common purpose of perpetuating the use of AWPs as a Formatted: Bullets and Numbering Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 91 of 181 - 69 - 001821-13 198880 V1 benchmark for reimbursement in the pharmaceutical industry and a common purpose in inflating the AWPs by 5%. 149. The Enterprise has a systemic linkage because there are contractual relationships, financial ties, and continuing coordination of activities between McKesson and First Data. There is a common communication network by which McKesson and First Data shared and continued to share information on a regular basis throughout the class period. Typically this communication occurred by use of the wires and mails in which McKesson and First Data discuss and agree on the new WAC-AWP spread for a given drug. McKesson and First Data functioned as a continuing unit for the purposes of implementing the 5% Scheme, and when issues arose during the Scheme each agreed to take actions to hide the Scheme and to continue its existence. 150. At all relevant times, First Data was aware of McKesson’s conduct, was a knowing and willing participant in that conduct, and reaped profits from that conduct. First Data was aware that the published AWPs were inflated by the 5% Scheme. This awareness comes from the following sources: First, at some point prior to 1992, First Data in some instances obtained markups from wholesalers, which made First Data aware that the reported AWPs were not accurate even absent the 5% Scheme. Second, as various congressional bodies and government agencies reported on AWP inflation, First Data did not change or challenge manufacturers regarding the self-reported WAC and AWPs, or the markups that First Data used. Third, First Data stopped even the limited surveys other wholesalers and simply accepted the 5% Scheme, when it knew there was no basis for this bump and actually received letters from certain manufacturers stating that the 5% increase in AWP was not justified. McKesson and First Data initiated the 5% Scheme in 2001-2002 and continued the Scheme in force in 2003-2004 where Deleted: continue Deleted: and continues to occur, Deleted: will Deleted: an Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 92 of 181 - 70 - 001821-13 198880 V1 additional 5% increases were instituted. Fourth, McKesson and First Data regularly discussed the Scheme in wires, e-mails and in telephone conversations. 151. The Scheme went to the point where FDB would suggest to McKesson that it raise its WAC so that a given drug could go to a 25% markup. Thus, both McKesson and FDB conspiring to effectuate the actual WAC in order to implement the Scheme. MCKAWP 0069553. 152. The Scheme evolved to such an extent that McKesson would send to FDB, via e-mails, a “screen print” that would indicate the “WAC, markup and suggested sell price,” always showing a 25% markup. 153. The impacts of the Scheme are still in place, i.e., the increased spreads are still being maintained. As described earlier, for sales to non-cash paying customers, pharmacies are reimbursed by health plans and other pharmacy benefit providers based on AWP. Consequently, pharmacies make a profit on their spread between AWP and the actual acquisition cost for the drug. Under this system, a higher WAC-to-AWP spread results in increased profits to pharmacies. Thus, McKesson and First Data could help deliver greater profits to pharmacies by conspiring to increase AWPs. 154. This was acknowledged in McKesson’s internal mails, where McKesson’s executives discussed the positive impact of “normalizing” on McKesson’s customers: Here is an idea. Two years later, and having had some recent success in raising AWP’s, I think this could be presented to him positively in this way. Omnicare is looking for ......say $500,000 in benefit from year end deals, even though this was not part of their contract. We need to ask them to roll up or recalculate their reimbursements for last year based on the new AWP’s with a 20% spread. And......this is not just a one time benefit. They will receive this now and each year going forward until they renegotiate contracts with third parties (and hopefully do not give up this gift). Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 93 of 181 - 71 - 001821-13 198880 V1 Our successes recently and during this past year includes raising AWP spreads to 20% (markup of 25%) include Parke Davis (division of Pfizer). Searle (division of Pharmacia). GlaxoSmithKline (Glaxo was at 16 2/3%). AstraZeneca, TAP, Berlex, JOM including Alza and Centocor, parts of Merck and BMS where things were mixed between 16 2/3% and 20%, and more to come. Some of our friends in retail that I have spoken with are pretty overwhelmed that we would be “driving” this process on their behalf. Of course, we are not solely responsible for this “normalizing” of AWP’s but we have done our part as I have discusses with your previously. I have had conversations with Albertsons and Safeway and a few others. Remember, “McKesson is doing this to improve our efficiencies in our BIS group.” With mixed AWP spreads, our BIS group is required to make manual overrides (for every pricing activity) to input the First Data Bank AWP whenever there is a difference from our Suggested Sell or List Price. It could be stated as a benefit of the Sixth Sigma method of identifying defects. An “unintended consequence” is that the profitability of our customers will be impacted in a appositive way. They will basically get 3 1/3% more profit on Rx’s filled with this new AWP spread. (Just imagine what this would mean on drugs like Lipitor or Prilosec.... This strategy might be of interest to Jack Fragie, Larry Greco, and others in discussions with our large national accounts, prospective new customers, and buying groups like Servall and IPC (that are continually asking for lower costs, more added value, and discounts beyond their contract language......like Owens programs). We have an opportunity to “market” our efforts now. If we do not do this, its possible that some of these accounts will believe that this stuff just happens and the efforts will go unrecognized. In my discussions, one of the comments that was made was “this would certainly be a good reason to renew our agreement with McKesson when its time.” Talk about being good partners, wow! This is worth further discussion as we go forward. Maybe, a proactive strategy like this will soften some of the activity around asking for lower costs and more benefit. (Emphasis added.) 155. Nonetheless McKesson also realized that it could “‘market’ [its] efforts” by informing its customers that it was “doing everything possible to ‘raise’ AWP’s when appropriate.”45 McKesson appreciated that if it failed to inform its customers that it was behind all these changes “it’s possible that some of these accounts will believe that this stuff just Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 94 of 181 - 72 - 001821-13 198880 V1 happens and our efforts will go unrecognized.”46 As one McKesson executive put it: “This sounds like something we should at least [be] quietly communicating to our customers in order to get some mileage from it[.]”47 And so it began: [To Dan Connolly of Bartell Drugs]: Celexa and Lexapro will have an AWP markup of 25% or a spread of 20% as soon as FDB information is updated. Look for the change to happen next week. Keep smilin[g] . . . and who said we never listen to our customers (and old friends).”48 * * * * * [To Dan Connolly]: Just wanted you to know that Clarinex AWP spreads went to 20% this week. A few weeks ago Celxa went to 20% as well. Fat cat status is just around the corner.”)49 * * * * * [To David Vucurevich of Rite Aid]: P.S. latest AWP changes . . . Celexa and Clarinex, working on Lilly and Novo.50 156. A field agent reports: “Some of the more savvy stores like Med-X have taken notice.”51 Bob James realized that the goodwill McKesson established with the pharmacies as a result of inflating AWPs would give it a substantial edge over its competition: In my discussions [with select customers about McKesson’s efforts to “normalize” the AWP markup at 25%], one of the comments that was made was “this would certainly be a good reason to renew our agreement with McKesson when its time.” Talk about being good partners, wow! This is worth further discussion as we go forward. Maybe a proactive strategy like this will soften some of the activity around asking for lower costs and more benefit.52 46 MCKAWP 0065895. 47 MCKAWP 0069732. 48 MCKAWP 0069817. 49 MCKAWP 0069901. 50 MCKAWP 0069911. 51 MCKAWP 0069732. 52 MCKAWP 0065895. Formatted: Bullets and Numbering Deleted: savy Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 95 of 181 - 73 - 001821-13 198880 V1 157. Bob James proposed disclosing McKesson’s efforts to customer Omnicare who purportedly was looking for an extra-contractual year-end bonus in the neighborhood of $500,000: Omnicare is looking for . . . . . . say $500,000 in benefit from year end deals, even though this was not part of their contract. We need to ask them to roll up or recalculate their reimbursements for last year based on the new AWP’s with a 20% spread. And . . . . . . this is not just a one time benefit. They will receive this now and for each year going forward until they renegotiate their contracts with third parties (and hopefully do not give up this gift).53 Bob James also noted with pleasure that Kay Morgan spoke “with Eric Sorkin at RiteAid to let him know how much effort we are putting into this AWP thing to get it right.”54 Other customers were also appreciative, for example an unnamed customer from Ohio, who called McKesson “to say that he was looking at some of these items again and found that the spread appears to have increased significantly on most of these items to the area of 20-21%. He wondered if we had any part in doing this and, if so, he wanted to let us know that he really appreciated our efforts.”55 Med-X Corp.’s Director of Operations, Jerry Howard reviewed the numbers, put two and two together56 and “was very ex[c]ited about” McKesson “working on AWP expansion.”57 158. The foregoing evidences that First Data and McKesson each was a willing participant in the enterprise; had a common purpose and interest in the establishment and operations of the Scheme; and their agreement to a structure wherein First Data and McKesson agreed on how the operation of the Enterprise would be conducted, i.e., through McKesson’s transmission of increased markups and First Data’s publication of those markups. This structure was the basis in which the enterprise operated. 53 MCKAWP 0065895 (emphasis, ellipses in original). 54 MCKAWP 0069669. 55 MCKAWP 0069513. 56 MCKAWP 0069732. 57 MCKAWP 0069726. Formatted: Bullets and Numbering Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 96 of 181 - 74 - 001821-13 198880 V1 The Defendants’ Use of the U.S. Mails and Interstate Wire Facilities 159. The Enterprise engaged in and affected interstate commerce because it engaged in the following activities across state boundaries: The transmission and publication of false and misleading information concerning AWPs. 160. During the Class Period, the defendants’ illegal conduct and wrongful practices were carried out by an array of employees, working across state boundaries, who necessarily relied upon frequent transfers of documents and information, products and funds by the U.S. mails and interstate wire facilities. 161. The nature and pervasiveness of the Scheme, which was orchestrated out of the corporate headquarters of each defendant, necessarily required those headquarters to communicate directly and frequently by the U.S. mails and by interstate wire facilities. 162. Many of the precise dates of defendants’ uses of the U.S. mails and interstate wire facilities (and corresponding RICO predicate acts of mail and wire fraud) have been hidden and cannot be alleged without access to these defendants’ books and records. Indeed, an essential part of the successful operation of the Scheme alleged herein depended upon secrecy. However, plaintiffs can generally describe the occasions on which the RICO predicate acts of mail fraud and wire fraud occurred, and how those acts were in furtherance of the Scheme; plaintiffs describe this below. 163. The defendants’ use of the U.S. mails and interstate wire facilities to perpetrate the 5% Scheme involved thousands of communications throughout the Class Period including, inter alia: (a) Marketing materials about First Data’s services, which First Data, sent to health care providers located across the country; Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 97 of 181 - 75 - 001821-13 198880 V1 (b) Written representations and telephone calls between McKesson and First Data regarding markups and AWPs, which occurred on a regular basis each year; (c) Hundreds of e-mails between McKesson and First Data agreeing to or effectuating the implementation of the Scheme said e-mails, included but are not limited to, those identified earlier in this Complaint; (d) Written and oral communications directed to U.S. Government agencies and private insurers that fraudulently misrepresented what the AWPs were, or that were intended to deter investigations into the true nature of the AWPs or to forestall changes to reimbursement based on something other than AWPs; (e) Receipts of increased profits sent through the U.S. mails and interstate wire facilities – the wrongful proceeds of the Scheme; and (f) In addition to the above-referenced RICO predicate acts, it was foreseeable to each defendant that First Data would distribute publications containing false AWPs through the U.S. mails and by interstate wire facilities. Further, each defendant has, in furtherance of the Scheme, communicated through use of the U.S. mails and by interstate wire facilities with their various local headquarters or divisions. These uses of the U.S. mails include some of the documents referenced in this Complaint. Conduct of the RICO Enterprises’ Affairs 164. During the Class Period, the defendants have exerted control over the Enterprise and, in violation of Section 1962(c) of RICO, the defendants have conducted or participated in the conduct of the affairs of those RICO enterprises, directly or indirectly, in the following ways: (a) Each of the defendants had a degree of control concerning the WAC-to- AWP spread and each had AWPs that First Data reported; Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 98 of 181 - 76 - 001821-13 198880 V1 (b) First Data has directly controlled the creation and distribution of marketing, sales, and other materials used to inform members of the Class as to the value of its services; (c) McKesson intended that First Data would (and did) distribute their publications containing false AWPs through the U.S. mails and by interstate wire facilities; and (d) First Data has allowed McKesson to exert control over its organization knowing that the AWPs were inflated as a result of the 5% Scheme and were not real numbers. McKesson controlled First Data by virtue of its ability to cause an increase in the WAC-AWP markup. First Data did so because the reporting of AWPs was, and is, a major part of its business, and McKesson was integral to First Data’s AWP reporting and to increasing First Data’s profits for the reasons set forth herein. 165. The Enterprise had a hierarchical decision-making structure headed by McKesson. McKesson issued instructions on how the WAC-to-AWP spread was to be reported and each Publisher accepted those instructions despite knowing of their falsity. 166. In violation of Section 1962(c) of RICO, each defendant conducted the affairs of the Enterprise with which it associated by establishing a phony extra 5% WAC-to-AWP spread that First Data then published and disseminated nationwide. The Defendants’ Pattern of Racketeering Activity 167. Each of the defendants conducted and participated in the affairs of the above- referenced Enterprises through a pattern of racketeering activity, including acts that are indictable under 18 U.S.C. § 1341, relating to mail fraud, and 18 U.S.C. § 1343, relating to wire fraud. The defendants’ pattern of racketeering likely involved thousands of separate instances of use of the U.S. mails or interstate wire facilities in furtherance of their Scheme. Each of these Formatted: Bullets and Numbering Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 99 of 181 - 77 - 001821-13 198880 V1 fraudulent mailings and interstate wire transmissions constitutes a “racketeering activity” within the meaning of 18 U.S.C. § 1961(1)(B). Collectively, these violations constitute a “pattern of racketeering activity,” within the meaning of 18 U.S.C. § 1961(5), in which the defendants intended to defraud plaintiffs, members of the Class and other intended victims. 168. McKesson and First Data calculated and intentionally crafted the Scheme to ensure that plaintiffs and members of the Class would be over-billed for the drugs. In designing and implementing the 5% Scheme, at all times the defendants were cognizant of the fact that those in the distribution chain who are not part of the industry rely on the integrity of the pharmaceutical companies, wholesalers and Publishers in setting the AWPs, as reported by the Publishers. 169. By intentionally and artificially inflating the AWPs by virtue of the increase in the WAC-to-AWP spread, and by subsequently failing to disclose such practices to the individual patients, health plans and their insurers, the defendants engaged in a fraudulent and unlawful course of conduct constituting a pattern of racketeering activity. 170. The defendants’ racketeering activities amounted to a common course of conduct, with similar pattern and purpose, intended to deceive plaintiffs and members of the Class. Each separate use of the U.S. mails and/or interstate wire facilities employed by the defendants was related, had similar intended purposes, involved similar participants and methods of execution, and had the same results affecting the same victims, including plaintiffs and members of the Class. Each of the defendants has engaged in the pattern of racketeering activity for the purpose of conducting the ongoing business affairs of its particular Manufacturer-Publisher Enterprise. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 100 of 181 - 78 - 001821-13 198880 V1 Damages Caused by the Defendants’ Five Percent Spread Scheme 171. The defendants’ violations of federal law and their pattern of racketeering activity have directly and proximately caused plaintiffs and members of the Class to be injured in their business or property because plaintiffs and members of the Class have paid many hundreds of millions of dollars in inflated reimbursements or other payments for drugs whose AWP was artificially raised as described herein. 172. The defendants sent AWP information through the U.S. mails or by interstate wire facilities and reported AWPs and other information by the same methods in furtherance of their 5% Scheme. Plaintiffs and members of the Class have made inflated payments for drugs based on and/or in reliance on reported and false AWPs. 173. Under the provisions of Section 1964(c) of RICO, the defendants are jointly and severally liable to plaintiffs and members of the Class for three times the damages that plaintiffs and the Class Members have sustained, plus the costs of bringing this suit, including reasonable attorneys’ fees. COUNT II CLAIM FOR VIOLATION OF SHERMAN ACT, 15 U.S.C. § 1 174. The preceding paragraphs of this Complaint are realleged and incorporated by reference and asserted by plaintiffs on behalf of themselves and members of the Classes. 175. The combination or conspiracy alleged in this complaint consisted of a continuing agreement, understanding or concert of action by McKesson, along with its co-conspirator, First DataBank, the substantial terms of which were to raise, fix and maintain the AWPs of the Marked Up Drugs at 25% over WAC. 176. The price fixing conspiracy was intended to affect directly the end payors of the Marked Up Drugs, i.e., members of Classes 1, 2 and 3. The intent, purpose and effect of the Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 101 of 181 - 79 - 001821-13 198880 V1 conspiracy was to cause over-reimbursement for these drugs, and thereby increase retail pharmacy profit margins on the sales of the Marked Up Drugs to the detriment of the Classes. 177. Through the price fixing conspiracy, Defendants have in fact caused an increase in end payor reimbursement or payments for the Marked Up Drugs and at the same time the conspiracy had the intent, purpose and effect of not increasing (either directly or indirectly) transaction costs and/or prices to all other participants in the distribution chain (i.e., pharmacies and/or PBMs in their retail capacity). 178. As the result of Defendants’ wrongful conduct, Plaintiffs in Classes 1, 2 and 3 paid higher prices for the Marked Up Drugs than they would have paid but for Defendants’ anticompetitive conduct, have been injured in their business or property, and have suffered damages in an amount to be determined at trial. 179. Plaintiffs in all Classes are directly harmed by Defendants’ agreement to raise and fix AWP/WAC markups in that they are the first and only ones in the distribution chain that actually pay the overcharge. The harm that they incur is not the result of a pass-on or otherwise derivative of any harm suffered by an upstream seller. On the contrary, retail pharmacies (including PBMs’ mail order pharmacy businesses), from whom plaintiffs purchased the drugs directly benefited from the increased markups in the form of higher profit margins on the sales of Marked Up Drugs. 180. Plaintiffs in all Classes are entitled to recover all damages and treble damages allowed under § 1 of the Sherman Act against Defendants, jointly and severally, together with their costs of suit, including reasonable attorneys’ fees. APPLICABLE LAW FOR COUNTS II-VII 181. Counts III – IX set forth below are asserted under the law of California. Formatted: Body Text Formatted: Bullets and Numbering Deleted: 1 and 2 Deleted: 1 and 2 Deleted: ¶ Deleted: VII Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 102 of 181 - 80 - 001821-13 198880 V1 182. California’s consumer protection laws are among the strongest in the country.” Wershba v. Apple Computer, 91 Cal. App. 4th 224, 242 (6th Dist. 2001). To the extent that other states offer the same protection to consumers as the state of California, there is no real conflict and California law should apply. To the extent that other states provide less protections, the Court should also take into consideration California’s avowed interest in policing the conduct of its own residents for injuries they cause to residents and non-residents alike “to ensure that the flow of out-of-state capital necessary to the growth of California business will continue.” Diamond Multimedia Sys. v. Superior Court, 19 Cal. 4th 1036, 1063-64 (1999). In similar circumstances California courts have found it appropriate to certify a national class based on California state law claims where the misconduct occurred in the State of California. Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214, 224-25 (4th Dist. 1999) (“[S]tate statutory remedies may be invoked by out-of-state parties when they are harmed by wrongful conduct occurring in California.”); Clothesrigger, Inc. v. GTE Corp., 191 Cal. App. 3d 605, 618 (4th Dist. 1987) (reversing a trial court’s denial of a motion to apply California consumer protection to a national class, reasoning that “[u]nder certain facts California may have an important interest in applying its law [to non-residents] to punish and deter the alleged wrongful conduct.”). COUNT III Untrue and Misleading Advertising (Business and Professions Code § 17500, et seq.) 183. The preceding paragraphs of this Complaint are realleged and incorporated by reference. Plaintiffs assert this claim on behalf of themselves and the members of the Class. 184. Bus. & Prof. Code § 17500 provides that “[i]t is unlawful for any … corporation … with intent … to dispose of … personal property … to induce the public to enter into any Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 103 of 181 - 81 - 001821-13 198880 V1 obligation relating thereto, to make or disseminate or cause to be made or disseminated before the public in this state, … any statement … which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading ….” 185. First Data made a series of representations as to the meaning of AWP and how it was derived, all of which were false. McKesson was aware of those representations. Both First Data and McKesson proceeded to implement a false advertising scheme designed to induce payors to pay based on the inflated amount. 186. PURSUANT TO BUS. & PROF. CODE § 17535, PLAINTIFFS AND MEMBERS OF THE CLASS ARE ENTITLED TO THE REMEDIES SET FORTH BELOW.COUNT IV Violations of Unfair Competition Law (Business and Professions Code § 17200, et seq.) 187. Plaintiffs, on behalf of themselves and all others similarly situated, reallege and incorporate herein by reference each of the allegations contained in the preceding paragraphs of this Complaint. 188. Defendants are incorporated, or maintain their principal places of business, in California. California courts have ruled that California statutes apply on a nationwide basis to the conduct of California corporations. 189. Defendants’ actions, as complained of herein, constitute unfair and deceptive unlawful practices committed in violation of the Unfair Competition Law, Bus. & Prof. Code §§ 17200 et seq. 190. Defendants violated the “fraudulent” prong of § 17200, the “unfair” prong of § 17200, and the “unlawful” prong of § 17200 by engaging in the following conduct: a. Defendants’ conduct was unfair, unlawful and deceptive in that knowing of the use of AWP by payors, and despite knowledge as to representations that AWPs were Formatted: Bullets and Numbering Deleted: ¶ Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 104 of 181 - 82 - 001821-13 198880 V1 established in part by use of surveys, and were “reliable” and “accurate,” defendants artificially raised AWPs by increasing as described herein the WAC-to-AWP spread by 5% thereby allowing publication of AWPs that were even more inaccurate and unreliable; b. Defendants’ conduct was unfair, unlawful and deceptive in that each defendant knew that members of the Class used AWP as a pricing mechanism and that the 5% WAC-to-AWP increase was a phony increase, i.e., it did not represent any true increase in cost prices, and as such would artificially increase pharmaceutical payments by class members. c. Defendants’ conduct was unfair, unlawful and deceptive in that defendants knew that the 5% WAC-to-AWP increase was not based on any actual change in the average wholesale price, and defendants knew that the increase did not have any other legitimate cost or pricing basis and was implemented solely for defendants’ own economic and business purposes; d. Defendants’ conduct was unfair, unlawful and deceptive in that they suppressed, manipulated and concealed information that would reveal the lack of any legitimate economic basis in the 5% increase in the WAC-to-AWP spread; and e. Defendants omitted material information known to them in order to induce payors to use an inflated AWP and pay an inflated price for drugs. 191. All of the conduct alleged herein occurred in defendants’ business. Defendants’ wrongful conduct is part of a pattern or generalized course of conduct repeated on thousands of occasions daily. 192. Plaintiffs request that this Court enter such orders or judgments as may be necessary to restore to any person in interest any money which may have been acquired by means of such unfair practices, as provided in Bus. & Prof. Code § 17203 and Civil Code § 3345, and for such other relief as set forth below. Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 105 of 181 - 83 - 001821-13 198880 V1 COUNT V Violations of the Consumers Legal Remedies Act (Cal. Civ. Code § 1750, et seq.) 193. The preceding paragraphs of this Complaint are realleged and incorporated by reference. Plaintiffs assert this claim on behalf of themselves and the members of the Class against First Data. 194. Plaintiffs and the members of the Class are payors who are paying for consumers’ purchase of goods for personal, family, or household purposes. 195. Representing that published AWPs have characteristics, uses, benefits, or qualities that they do not have, and advertising goods with intent not to sell them as advertised constitutes unfair or deceptive trade practices under the provisions of the CLRA, Civil Code § 1770 (a)(5), (7), (8), and (9). 196. Plaintiffs and the members of the Class have all been directly and proximately injured by First Data’s conduct, and such injury includes payment for drugs inflated by the Scheme, which drugs plaintiffs and the members of the Class, would not have purchased at the inflated prices were they truthfully and fully informed of material facts concerning the product. 197. In accordance with Civil Code § 1780 (a), plaintiffs and members of the Class seek injunctive and equitable relief as to defendants’ violations of the CLRA. Plaintiffs request that this Court enter such orders or judgments as may be necessary to restore to any person in interest any money which may have been acquired by means of such unfair business practices, and for such other relief as provided in Civil Code § 1780 and the Prayer for Relief. Formatted: Bullets and Numbering Deleted: I Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 106 of 181 - 84 - 001821-13 198880 V1 COUNT VI Negligent Misrepresentation 198. The preceding paragraphs of this Complaint are realleged and incorporated by reference and asserted by plaintiffs on behalf of themselves and members of the Class. 199. During the Class Period, First Data made representations concerning its services, which were false and omitted disclosure of material facts as set forth above. 200. Each Class Member’s use of the AWPs published by First Data established the Class’ reliance on First Data. 201. First Data, having issued representations as to its services had a duty to be accurate and breached that duty thereby causing plaintiffs and Class Members to suffer damage. COUNT VII Civil Conspiracy 202. The preceding paragraphs of this Complaint are realleged and incorporated by reference and asserted by plaintiffs on behalf of themselves and members of the Class. 203. The defendants joined in a conspiracy to raise the spread between reported AWPs and WAC. Each defendant also agreed to publish or caused to be published AWPs that were inflated as a result. Each defendant also knew that by agreeing to raise and fix AWPs in this fashion, they were perpetuating the use of inflated AWPs on a nationwide basis. 204. The defendants consciously conspired and deliberately pursued a common plan or design to commit tortuous acts, subjecting each to joint liability. 205. Defendants each committed unlawful act or acts in furtherance of this conspiracy, including acts violating RICO, state consumer protection laws, the common law and committed acts of mail and wire fraud. All of these acts were in furtherance of the conspiracy. Formatted: Bullets and Numbering Formatted: Bullets and Numbering Deleted: tortious Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 107 of 181 - 85 - 001821-13 198880 V1 206. Plaintiffs are entitled to a presumption of reliance on the false representations, concealments and nondisclosures by the defendants. Class Members were ignorant of defendants’ conduct and were ignorant of the full and true facts suppressed by them, and such reliance was justified. 207. As a direct, proximate result of this conspiracy, plaintiffs and Class Members have been injured, as they have suffered and continue to suffer economic losses and general and specific damages, all in an amount to be determined according to proof. COUNT VIII ENTITLEMENT TO ENHANCED RELIEF PURSUANT TO CALIFORNIA CIVIL CODE § 3345 208. The preceding paragraphs of this Complaint are realleged and incorporated by reference. Civil Code §3345 awards treble damages for unfair and deceptive practices perpetrated against seniors. This claim is asserted on behalf of a Subclass of Consumer Class members who were over 65 at the time they purchased the Subject Drugs. June Swan was over 65 years of age at the time she purchased the Subject Drugs. This Class is referred to as the “Senior Subclass.” 209. Defendants McKesson and First Data knew or should have known that their conduct was directed to the Senior Subclass in that a large percentage of members of the Consumer Class for certain brand-name drugs are over 65 and that any wrongful conduct with respect to the sale of the Subject Drugs was likely to aversely impact such seniors. 210. As a result of Defendants’ Scheme, Plaintiffs and members of the Senior Subclass have suffered economic injury and the loss of assets essential to their health and welfare. Formatted: Bullets and Numbering Deleted: Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 108 of 181 - 86 - 001821-13 198880 V1 COUNT IX Violation of State Antitrust Law 211. The preceding paragraphs of this complaint are realleged and incorporated by reference and asserted by plaintiffs and members of the Class, who have standing to bring a damages action under federal antitrust law in that they are the first and only ones in the distribution chain that actually pay the overcharge caused by the agreement to fix AWP/WAC markups. Everyone else in the distribution chain benefits from the markup, i.e., retail pharmacies and/or PBM mail order pharmacies, for whom the increase in markups translates into an increase in profit margins on the sales of Marked Up Drugs. However, in the event that the Court finds that the plaintiffs in all Classes lack standing under Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977), this Count is asserted alternatively. 212. The McKesson-FDB agreement, undertaken by entities that had the power to effect price, to raise the WAC-AWP spread was an agreement to artificially raise, fix and stabilize prices in the market for brand name prescription drugs in violation of California Bus. & Prof. Code §§ 16700 et seq. 213. As a direct result of this agreement, plaintiffs and members of the class sustained injury in the form of an increase in the price they paid for prescription drugs. 214. To the extent the Court rules that California’s antitrust law does not apply nationwide, plaintiffs allege violation of: (a) Plaintiffs allege this claim in the alternative on behalf of the Subclass in the event the Court does not apply California law on a nationwide basis. (b) Defendants have violated Arizona Revised Stat. Code §§ 44-1401 et seq. (c) Defendants have violated District of Columbia Code Ann. §§ 28-4503 et seq. Formatted: Bullets and Numbering Formatted: Font: Italic Formatted: Font: Bold Formatted: Font: Not Italic Deleted: VIII Deleted: in Class 3 Deleted: 1 and 2 Deleted: (c) Defendants have violated California Bus. & Prof. Code §§ 16700 et seq. Deleted: [STEVE: I think this needs to stay for consistency’s sake. We included Cal. Law in our list of alternate consumer protection statutes re subclass of Cal. class members.] Deleted: ¶ Deleted: d Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 109 of 181 - 87 - 001821-13 198880 V1 (d) In this complaint, Plaintiffs are not alleging a violation of Hawaii Rev. Stat. 480-1 et seq., but Plaintiffs are taking steps to comply with the procedural prerequisites, as set forth in Haw. Rev. Stat. 480-13.3, to filing and maintaining a private indirect-purchaser class action under that statute. (e) Defendants have violated Iowa Code §§ 553.1 et seq. (f) Defendants have violated Kansas Stat. Ann. §§ 50-101 et seq. (g) Defendants have violated 10 Maine Rev. Stat. §§ 1101 et seq. (h) Defendants have violated Michigan Comp. Laws. Ann. §§ 445.773 et seq. (i) Defendants have violated Minnesota Stat. §§ 325D.52 et seq. (j) Defendants have violated Mississippi Code Ann. § 75-21-1 et seq. (k) Defendants have violated Nebraska Rev. Stat. §§ 59-801 et seq. (l) Defendants have violated Nevada Rev. Stat. Ann. §§ 598A et seq. (m) Defendants have violated New Mexico Stat. Ann. §§ 57-1-1 et seq. (n) Defendants have violated New York Gen. Bus. Law § 340 et seq. (o) Defendants have violated North Carolina Gen. Stat. §§ 75-1 et seq. (p) Defendants have violated North Dakota Cent. Code §§ 51-08.1-01 et seq. (q) Defendants have violated South Dakota Codified Laws Ann. §§ 37-1 et seq. (r) Defendants have violated Tennessee Code Ann. §§ 47-25-101 et seq. (s) Defendants have violated Vermont Stat. Ann. 9 §§ 2453 et seq. (t) Defendants have violated West Virginia Code §§ 47-18-1 et seq. (u) Defendants have violated Wisconsin Stat. §§ 133.01 et seq. Deleted: e Deleted: f Deleted: g Deleted: h Deleted: i Deleted: j Deleted: k Deleted: l Deleted: m Deleted: n Deleted: o Deleted: p Deleted: q Deleted: r Deleted: s Deleted: t Deleted: u Deleted: v Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 110 of 181 - 88 - 001821-13 198880 V1 (v) As a direct and proximate result of McKesson and FDB’s unlawful conduct, class members in each of these States have been injured in their businesses and property in that they paid more for the brand name drugs at issue than they would have paid absent the unlawful conduct. ALTERNATE COUNT X Consumer Protection Laws of Various States 215. The preceding paragraphs of this Complaint are realleged and incorporated by reference and asserted by plaintiffs on behalf of themselves and members of the Class. 216. In the event California law is not applied on a class-wide basis, defendants’ actions, as complained of herein, constitute unfair competition or unfair, unconscionable, deceptive or fraudulent acts or practices in violation of various state consumer protection statutes. Specifically, the Consumer Class seeks redress under the following statutes, i.e. Plaintiffs allege: (a) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Ariz. Rev. Stat. § 44-1522, et seq.; (b) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Ark. Code § 4-88-101, et seq.; (c) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Cal. Bus. & Prof. Code §§ 17200, et seq.; (d) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Colo. Rev. Stat. § 6-1-105, et seq.; (e) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Conn. Gen. Stat. § 42-110b, et seq.; Formatted: Bullets and Numbering Deleted: w Deleted: VIII Deleted: VI Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 111 of 181 - 89 - 001821-13 198880 V1 (f) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of 6 Del. Code § 2511, et seq.; (g) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of D.C. Code § 28-3901, et seq.; (h) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Fla. Stat. § 501.201, et seq.; (i) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Haw. Rev. Stat. § 480, et seq.; (j) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Idaho Code § 48-601, et seq.; (k) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of 815 ILCS § 505/1, et seq.; (l) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Ind. Code Ann. § 24-5-0-5-1, et seq.; (m) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Kan. Stat. § 50-623, et seq.; (n) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Md. Com. Law Code § 13-101, et seq.; (o) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Mass. Gen. L. Ch. 93A, et seq.; (p) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Mich. Stat. § 445-901, et seq.; Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 112 of 181 - 90 - 001821-13 198880 V1 (q) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Minn. Stat. § 325F.67, et seq.; (r) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Mo. Rev. Stat. § 407.010, et seq.; (s) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Neb. Rev. Stat. § 59-1601, et seq.; (t) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Nev. Rev. Stat. § 598.0903, et seq.; (u) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.H. Rev. Stat. § 358-A:1, et seq., (v) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.J. Stat. Ann. § 56:8-1, et seq., (w) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.M. Stat. Ann. § 57-12-1, et seq.; (x) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.Y. Gen. Bus. Law § 349, et seq.; (y) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.C. Gen. Stat. § 75-1.1, et seq.; (z) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.D. Cent. Code § 51-15-01, et seq.; (aa) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Ohio Rev. Stat. § 1345.01, et seq.; Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 113 of 181 - 91 - 001821-13 198880 V1 (bb) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Okla. Stat. tit. 15 § 751, et seq.; (cc) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Or. Rev. Stat. § 646.605, et seq.; (dd) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of 73 Pa. Stat. § 201-1, et seq.; (ee) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of R.I. Gen. Laws. § 6-13.1-1, et seq.; (ff) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of S.C. Code Laws § 39-5-10, et seq.; (gg) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of S.D. Code Laws § 37-24-1, et seq.; (hh) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Tenn. Code § 47-18-101, et seq.; (ii) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Tex. Bus. & Com. Code § 17.41, et seq.; (jj) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Utah Code Ann. § 13-1 1-1, et seq.; (kk) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Vt. Stat. Ann. Tit. 9, § 245 1, et seq.; (ll) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Wash. Rev. Code § 19.86.010, et seq.; Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 114 of 181 - 92 - 001821-13 198880 V1 (mm) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of W. Va. Code § 46A-6-101, et seq.; (nn) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Wis. Stat. § 100.18, et seq.; and (oo) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Wyo. Stat. § 40-12-100, et seq. 217. Additionally, the third-party payor Class seeks redress under the following statutes, which allow corporations to bring consumer protection claims, i.e. Plaintiffs allege: (a) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Ariz. Rev. Stat. § 44-1522, et seq.; (b) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Ark. Code § 4-88-101, et seq., including 4-88-113(f), and 4-88-102(5); (c) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Cal. Bus. & Prof. Code §§ 17200, et seq.; (d) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Colo. Rev. Stat. § 6-1-105, et seq., including § 6-1-113(1)(c) and § 6-1-102(b); (e) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Conn. Gen. Stat. § 42-110b, et seq., including § 42-110(a)(3); (f) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of 6 Del. Code § 2511, et seq., including 6 Del. Code § 2512; Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 115 of 181 - 93 - 001821-13 198880 V1 (g) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of D.C. Code § 28-3901, et seq., including § 28-390(1); (h) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Fla. Stat. § 501.201, et seq.; (i) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Idaho Code § 48-601, et seq., including § 48-602; (j) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of 815 ILCS § 505/1, et seq.; (k) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Md. Com. Law Code § 13-101, et seq., including § 13-101(h); (l) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Mass. Gen. L. Ch. 93A, § 11; (m) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Mich. Stat. § 445.901, et seq., including § 445-902(c); (n) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Minn. Stat. § 325F.67, et seq., including § 407.010(5); (o) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Vernon’s Mo. Rev. Stat. § 407.010, et seq.; (p) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Neb. Rev. Stat. § 59-1601, et seq., including § 59-160(1); (q) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Nev. Rev. Stat. § 598.0903, et seq.; Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 116 of 181 - 94 - 001821-13 198880 V1 (r) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.H. Rev. Stat. § 358-A:1, et seq., including § 358A:1(1); (s) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.J. Stat. Ann. § 56:8-1, et seq., § 56:8-1(d); (t) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.M. Stat. Ann. § 57-12-1, et seq.; (u) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.Y. Gen. Bus. Law § 349, et seq.; (v) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.C. Gen. Stat. § 75-1.1, et seq.; (w) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.D. Cent. Code § 51-15-01, et seq., including § 51-15-01(4); (x) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Ohio Rev. Stat. § 1345.01, et seq., including § 1345.01(B); (y) Defendants have engaged in unfair competition or unfair or deceptive acts or practices or made representations in violation of Okla. Stat. tit. 15 § 751, et seq.; (z) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Or. Rev. Stat. § 646.605, et seq., including § 646.605(4); (aa) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of 73 Pa. Stat. § 201-1, et seq., including § 201-2(2); (bb) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of S.C. Code Laws § 39-5-10, et seq., including § 39-5-10(9); Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 117 of 181 - 95 - 001821-13 198880 V1 (cc) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of S.D. Code Laws § 37-24-1, et seq., including § 37-24-1(8); (dd) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Tenn. Code § 47-18-101, et seq., including § 47-18-103(9); (ee) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Tex. Bus. & Com. Code § 17.41, et seq., including § 17.45(4); (ff) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Utah Code Ann. § 13-1 1-1, et seq.; (gg) Defendants have engaged in unfair competition or unfair, deceptive acts or fraudulent acts or practices in violation of Wash. Rev. Code § 19.86.010, et seq., including § 19.86.010(1); (hh) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Wis. Stat. § 100.18, et seq.; and (ii) Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Wyo. Stat. § 40-12-100, et seq., including § 40-12-102(a)(i). 218. Plaintiffs provided notice of this litigation as required by law. ALTERNATE COUNT IX Civil Conspiracy 219. The preceding paragraphs are realleged and incorporated by reference as if fully set forth herein. 220. This Count is asserted based upon the common law of civil conspiracy in the fifty states. Formatted: Bullets and Numbering Formatted: Bullets and Numbering Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 118 of 181 - 96 - 001821-13 198880 V1 VI. DEMAND FOR JUDGMENT WHEREFORE, plaintiffs demand judgment as follows: A. The Court determines that this action may be maintained as a class action pursuant to Rule 23(b)(2) of the Federal Rules of Civil Procedure with respect to plaintiffs’ claims for declaratory, equitable and injunctive relief, and Rule 23(b)(3) of the Federal Rules of Civil Procedure with respect to the claims for damages, and declaring Plaintiffs as representatives of the Classes and their counsel as counsel for the Classes; B. The conduct alleged herein be declared, adjudged and decreed to be unlawful; C. Plaintiffs and the Class be granted an award of damages in such amount to be determined at trial, with trebling under Count I and Counts VIII and VIX where allowed by law; D. Plaintiffs and the Class be granted an award of punitive damages in such amount to be determined at trial; E. Defendants be enjoined from continuing the illegal activities alleged herein; F. Plaintiffs and the Class recover their costs of suit, including reasonable attorneys’ fees and expenses as provided by law; and G. Plaintiffs and the Class be granted such other, further, and different relief as the nature of the case may require or as may be determined to be just, equitable, and proper by this Court. Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 119 of 181 - 97 - 001821-13 198880 V1 DATED: October ___, 2007 By /s/ Steve W. Berman Steve W. Berman Sean R. Matt Nick Styant-Browne Barbara A. Mahoney Hagens Berman Sobol Shapiro LLP 1301 Fifth Avenue, Suite 2900 Seattle, WA 98101 Telephone: (206) 623-7292 Facsimile: (206) 623-0594 Thomas M. Sobol (BBO #471770) Edward Notargiacomo (BBO #567636) Hagens Berman Sobol Shapiro LLP One Main Street, 4th Floor Cambridge, MA 02142 Telephone: (617) 482-3700 Facsimile: (617) 482-3003 Jeffrey Kodroff John Macoretta Spector, Roseman & Kodroff, P.C. 1818 Market Street, Suite 2500 Philadelphia, PA 19103 Telephone: (215) 496-0300 Facsimile: (215) 496-6611 Marc H. Edelson Allan Hoffman Hoffman & Edelson 45 West Court Street Doylestown, PA 18901 Telephone: (215) 230-8043 Facsimile: (215) 230-8735 Kenneth A. Wexler Jennifer Fountain Connolly Wexler Toriseva Wallace LLP 55 W. Monroe Street, Suite 3300 Chicago, IL 60603 Telephone: (312) 346-2222 Facsimile: (312) 346-0022 Deleted: 31, 2006 Deleted: One North LaSalle Street, Suite 2000 Deleted: 60602 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 120 of 181 - 98 - 001821-13 198880 V1 George E. Barrett Edmund L. Carey, Jr. Barret, Johnston & Parsley 217 Second Avenue, North Nashville, TN 37201 Telephone: (615) 244-2202 Facsimile: (615) 252-3798 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 121 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION MEDICIS DERMATOLOGICS INC 99207001960 A/T/S 2% TOPICAL SOLUTION ASTRAZENECA LP 00310040160 ACCOLATE 10 MG TABLET ASTRAZENECA LP 00310040239 ACCOLATE 20 MG TABLET ASTRAZENECA LP 00310040260 ACCOLATE 20 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071053023 ACCUPRIL 10 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071053040 ACCUPRIL 10 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071053223 ACCUPRIL 20 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071053240 ACCUPRIL 20 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071053523 ACCUPRIL 40 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071052723 ACCUPRIL 5 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071052740 ACCUPRIL 5 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071022206 ACCURETIC 10-12.5 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071022006 ACCURETIC 20-12.5 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071022306 ACCURETIC 20-25 MG TABLET JOHNSON & JOHNSON GROUP 62856024330 ACIPHEX 20 MG TABLET EC JOHNSON & JOHNSON GROUP 62856024341 ACIPHEX 20 MG TABLET EC JOHNSON & JOHNSON GROUP 62856024390 ACIPHEX 20 MG TABLET EC WATSON LABORATORIES INC 52544093001 ACTIGALL 300 MG CAPSULE PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149047001 ACTONEL 30 MG TABLET PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149047101 ACTONEL 5 MG TABLET PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149047103 ACTONEL 5 MG TABLET TAKEDA PHARMACEUTICALS NORTH AMERICA INC 64764015104 ACTOS 15 MG TABLET TAKEDA PHARMACEUTICALS NORTH AMERICA INC 64764015105 ACTOS 15 MG TABLET TAKEDA PHARMACEUTICALS NORTH AMERICA INC 64764015106 ACTOS 15 MG TABLET TAKEDA PHARMACEUTICALS NORTH AMERICA INC 64764030114 ACTOS 30 MG TABLET TAKEDA PHARMACEUTICALS NORTH AMERICA INC 64764030115 ACTOS 30 MG TABLET TAKEDA PHARMACEUTICALS NORTH AMERICA INC 64764030116 ACTOS 30 MG TABLET TAKEDA PHARMACEUTICALS NORTH AMERICA INC 64764045124 ACTOS 45 MG TABLET TAKEDA PHARMACEUTICALS NORTH AMERICA INC 64764045125 ACTOS 45 MG TABLET TAKEDA PHARMACEUTICALS NORTH AMERICA INC 64764045126 ACTOS 45 MG TABLET SHIRE US INC 54092038301 ADDERALL XR 10 MG CAPSULE SA SHIRE US INC 54092038701 ADDERALL XR 20 MG CAPSULE SA SHIRE US INC 54092039101 ADDERALL XR 30 MG CAPSULE SA GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173069500 ADVAIR 100/50 DISKUS GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173069502 ADVAIR 100/50 DISKUS GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173069600 ADVAIR 250/50 DISKUS GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173069602 ADVAIR 250/50 DISKUS GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173069700 ADVAIR 500/50 DISKUS GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173069702 ADVAIR 500/50 DISKUS KOS PHARMACEUTICALS INC 60598000890 ADVICOR 1,000 MG/20 MG TABLET KOS PHARMACEUTICALS INC 60598000690 ADVICOR 500 MG/20 MG TABLET FOREST PHARMACEUTICALS INC 00456067299 AEROBID AEROSOL W/ADAPTER FOREST PHARMACEUTICALS INC 00456067099 AEROBID-M AEROSOL W/ADAPTER GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173068700 AGENERASE 15 MG/ML ORAL SOLN GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173067200 AGENERASE 150 MG CAPSULE GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173067900 AGENERASE 50 MG CAPSULE BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597000160 AGGRENOX CAPSULE SA PFIZER LABORATORIES DIV PFIZER INC 00025101131 ALDACTAZIDE 25/25 TABLET PFIZER LABORATORIES DIV PFIZER INC 00025101155 ALDACTAZIDE 25/25 TABLET PFIZER LABORATORIES DIV PFIZER INC 00025102131 ALDACTAZIDE 50/50 TABLET PFIZER LABORATORIES DIV PFIZER INC 00025103131 ALDACTONE 100 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025103134 ALDACTONE 100 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025100131 ALDACTONE 25 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025100151 ALDACTONE 25 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025100155 ALDACTONE 25 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025104131 ALDACTONE 50 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025104134 ALDACTONE 50 MG TABLET 3M PHARMACEUTICALS 00089061012 ALDARA 5% CREAM ZYBER PHARMACEUTICAL INC 65224065001 ALDEX TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 59572030250 ALKERAN 2 MG TABLET MERRELL PHARMACEUTICALS INC 00088110947 ALLEGRA 180 MG TABLET MERRELL PHARMACEUTICALS INC 00088110647 ALLEGRA 30 MG TABLET MERRELL PHARMACEUTICALS INC 00088110747 ALLEGRA 60 MG TABLET MERRELL PHARMACEUTICALS INC 00088109047 ALLEGRA-D TABLET SA MERRELL PHARMACEUTICALS INC 00088109049 ALLEGRA-D TABLET SA MERRELL PHARMACEUTICALS INC 00088109055 ALLEGRA-D TABLET SA MCR AMERICAN PHARMACEUTICALS INC 58605051301 ALLFEN 1,000 MG TABLET SA MCR AMERICAN PHARMACEUTICALS INC 58605052101 ALLFEN-DM TABLET SA BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597007017 ALUPENT 650 MCG INHALER COMP MERRELL PHARMACEUTICALS INC 00039022110 AMARYL 1 MG TABLET MERRELL PHARMACEUTICALS INC 00039022210 AMARYL 2 MG TABLET MERRELL PHARMACEUTICALS INC 00039022211 AMARYL 2 MG TABLET MERRELL PHARMACEUTICALS INC 00039022310 AMARYL 4 MG TABLET MERRELL PHARMACEUTICALS INC 00039022311 AMARYL 4 MG TABLET SANOFI SYNTHELABO INC 00024542131 AMBIEN 10 MG TABLET SANOFI SYNTHELABO INC 00024542134 AMBIEN 10 MG TABLET SANOFI SYNTHELABO INC 00024540131 AMBIEN 5 MG TABLET SANOFI SYNTHELABO INC 00024540134 AMBIEN 5 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173056100 AMERGE 1 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173056200 AMERGE 2.5 MG TABLET FERNDALE LABORATORIES INC 00496077804 ANALPRAM-HC 1% CREAM FERNDALE LABORATORIES INC 00496080004 ANALPRAM-HC 2.5% CREAM FERNDALE LABORATORIES INC 00496082904 ANALPRAM-HC 2.5% LOTION HOFFMANN LA ROCHE INC 00004620201 ANAPROX 275 MG TABLET SANOFI SYNTHELABO INC 00024008401 ARALEN PHOSPHATE 500 MG TAB MERRELL PHARMACEUTICALS INC 00088216030 ARAVA 10 MG TABLET Privileged and Confidential Information Page 1 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 122 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION MERRELL PHARMACEUTICALS INC 00088216130 ARAVA 20 MG TABLET ASTRAZENECA LP 00310020130 ARIMIDEX 1 MG TABLET FOREST PHARMACEUTICALS INC 00456046100 ARMOUR THYROID 120 MG TABLET FOREST PHARMACEUTICALS INC 00456046101 ARMOUR THYROID 120 MG TABLET FOREST PHARMACEUTICALS INC 00456046163 ARMOUR THYROID 120 MG TABLET FOREST PHARMACEUTICALS INC 00456045701 ARMOUR THYROID 15 MG TABLET FOREST PHARMACEUTICALS INC 00456046200 ARMOUR THYROID 180 MG TABLET FOREST PHARMACEUTICALS INC 00456046201 ARMOUR THYROID 180 MG TABLET FOREST PHARMACEUTICALS INC 00456046301 ARMOUR THYROID 240 MG TABLET FOREST PHARMACEUTICALS INC 00456045800 ARMOUR THYROID 30 MG TABLET FOREST PHARMACEUTICALS INC 00456045801 ARMOUR THYROID 30 MG TABLET FOREST PHARMACEUTICALS INC 00456045863 ARMOUR THYROID 30 MG TABLET FOREST PHARMACEUTICALS INC 00456046401 ARMOUR THYROID 300 MG TABLET FOREST PHARMACEUTICALS INC 00456045900 ARMOUR THYROID 60 MG TABLET FOREST PHARMACEUTICALS INC 00456045901 ARMOUR THYROID 60 MG TABLET FOREST PHARMACEUTICALS INC 00456045951 ARMOUR THYROID 60 MG TABLET FOREST PHARMACEUTICALS INC 00456045963 ARMOUR THYROID 60 MG TABLET FOREST PHARMACEUTICALS INC 00456046001 ARMOUR THYROID 90 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025141134 ARTHROTEC 50 TABLET EC PFIZER LABORATORIES DIV PFIZER INC 00025141160 ARTHROTEC 50 TABLET EC PFIZER LABORATORIES DIV PFIZER INC 00025141190 ARTHROTEC 50 TABLET EC PFIZER LABORATORIES DIV PFIZER INC 00025142134 ARTHROTEC 75 TABLET EC PFIZER LABORATORIES DIV PFIZER INC 00025142160 ARTHROTEC 75 TABLET EC PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149075202 ASACOL 400 MG TABLET EC ASTRAZENECA LP 00186001628 ATACAND 16 MG TABLET ASTRAZENECA LP 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MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025185152 CALAN 80 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025190131 CALAN SR 120 MG CAPLET SA PFIZER LABORATORIES DIV PFIZER INC 00025190134 CALAN SR 120 MG CAPLET SA PFIZER LABORATORIES DIV PFIZER INC 00025191131 CALAN SR 180 MG CAPLET SA PFIZER LABORATORIES DIV PFIZER INC 00025191134 CALAN SR 180 MG CAPLET SA PFIZER LABORATORIES DIV PFIZER INC 00025189131 CALAN SR 240 MG CAPLET SA PFIZER LABORATORIES DIV PFIZER INC 00025189134 CALAN SR 240 MG CAPLET SA PFIZER LABORATORIES DIV PFIZER INC 00025189151 CALAN SR 240 MG CAPLET SA MERRELL PHARMACEUTICALS INC 00068003701 CANTIL 25 MG TABLET AXCAN SCANDIPHARM INC 58914017110 CARAFATE 1 GM TABLET AXCAN SCANDIPHARM INC 58914017121 CARAFATE 1 GM TABLET AXCAN SCANDIPHARM INC 58914017130 CARAFATE 1 GM TABLET AXCAN SCANDIPHARM INC 58914017150 CARAFATE 1 GM TABLET HOFFMANN LA ROCHE INC 00004018301 CARDENE 20 MG CAPSULE HOFFMANN LA ROCHE INC 00004018401 CARDENE 30 MG CAPSULE HOFFMANN LA ROCHE INC 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CELEBREX 100 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00025152531 CELEBREX 200 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00025152534 CELEBREX 200 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00025152551 CELEBREX 200 MG CAPSULE SCHERING CORP 00085094205 CELESTONE 0.6 MG/5 ML SYRUP FOREST PHARMACEUTICALS INC 00456401001 CELEXA 10 MG TABLET FOREST PHARMACEUTICALS INC 00456413008 CELEXA 10 MG/5 ML SOLUTION FOREST PHARMACEUTICALS INC 00456402001 CELEXA 20 MG TABLET Privileged and Confidential Information Page 3 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 124 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION FOREST PHARMACEUTICALS INC 00456402063 CELEXA 20 MG TABLET FOREST PHARMACEUTICALS INC 00456404001 CELEXA 40 MG TABLET FOREST PHARMACEUTICALS INC 00456404063 CELEXA 40 MG TABLET HOFFMANN LA ROCHE INC 00004026129 CELLCEPT 200 MG/ML ORAL SUSP HOFFMANN LA ROCHE INC 00004025901 CELLCEPT 250 MG CAPSULE HOFFMANN LA ROCHE INC 00004025905 CELLCEPT 250 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CORGARD 40 MG TABLET MONARCH PHARMACEUTICALS INC 61570020201 CORGARD 80 MG TABLET MONARCH PHARMACEUTICALS INC 61570020210 CORGARD 80 MG TABLET MONARCH PHARMACEUTICALS INC 61570017501 CORZIDE 40/5 TABLET MONARCH PHARMACEUTICALS INC 61570017601 CORZIDE 80/5 TABLET BRISTOL MYERS SQUIBB CO 00056016970 COUMADIN 1 MG TABLET BRISTOL MYERS SQUIBB CO 00056016975 COUMADIN 1 MG TABLET BRISTOL MYERS SQUIBB CO 00056016990 COUMADIN 1 MG TABLET BRISTOL MYERS SQUIBB CO 00056017470 COUMADIN 10 MG TABLET BRISTOL MYERS SQUIBB CO 00056017475 COUMADIN 10 MG TABLET BRISTOL MYERS SQUIBB CO 00056017070 COUMADIN 2 MG TABLET BRISTOL MYERS SQUIBB CO 00056017075 COUMADIN 2 MG TABLET BRISTOL MYERS SQUIBB CO 00056017090 COUMADIN 2 MG TABLET BRISTOL MYERS SQUIBB CO 00056017670 COUMADIN 2.5 MG TABLET BRISTOL MYERS SQUIBB CO 00056017675 COUMADIN 2.5 MG TABLET Privileged and Confidential Information Page 4 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 125 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION BRISTOL MYERS SQUIBB CO 00056017690 COUMADIN 2.5 MG TABLET BRISTOL MYERS SQUIBB CO 00056018870 COUMADIN 3 MG TABLET BRISTOL MYERS SQUIBB CO 00056018875 COUMADIN 3 MG TABLET BRISTOL MYERS SQUIBB CO 00056018890 COUMADIN 3 MG TABLET BRISTOL MYERS SQUIBB CO 00056016870 COUMADIN 4 MG TABLET BRISTOL MYERS SQUIBB CO 00056016875 COUMADIN 4 MG TABLET BRISTOL MYERS SQUIBB CO 00056016890 COUMADIN 4 MG TABLET BRISTOL MYERS SQUIBB CO 00056017270 COUMADIN 5 MG TABLET BRISTOL MYERS SQUIBB CO 00056017275 COUMADIN 5 MG TABLET BRISTOL MYERS SQUIBB CO 00056017290 COUMADIN 5 MG TABLET BRISTOL MYERS SQUIBB CO 00056018970 COUMADIN 6 MG TABLET BRISTOL MYERS SQUIBB CO 00056018975 COUMADIN 6 MG TABLET BRISTOL MYERS SQUIBB CO 00056018990 COUMADIN 6 MG TABLET BRISTOL MYERS SQUIBB CO 00056017370 COUMADIN 7.5 MG TABLET BRISTOL MYERS SQUIBB CO 00056017375 COUMADIN 7.5 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025201131 COVERA-HS 180 MG TABLET SA PFIZER LABORATORIES DIV PFIZER INC 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2.5 MG TABLET MERRELL PHARMACEUTICALS INC 00039005150 DIABETA 2.5 MG TABLET MERRELL PHARMACEUTICALS INC 00039005210 DIABETA 5 MG TABLET MERRELL PHARMACEUTICALS INC 00039005211 DIABETA 5 MG TABLET MERRELL PHARMACEUTICALS INC 00039005250 DIABETA 5 MG TABLET MERRELL PHARMACEUTICALS INC 00039005270 DIABETA 5 MG TABLET Privileged and Confidential Information Page 5 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 126 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149040560 DIDRONEL 200 MG TABLET PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149040660 DIDRONEL 400 MG TABLET WATSON LABORATORIES INC 52544048201 DILACOR XR 120 MG CAPSULE SA WATSON LABORATORIES INC 00075025000 DILACOR XR 120MG CAPSULE SA WATSON LABORATORIES INC 52544073201 DILACOR XR 120MG CAPSULE SA WATSON LABORATORIES INC 52544048301 DILACOR XR 180 MG CAPSULE SA WATSON LABORATORIES INC 52544048305 DILACOR XR 180 MG CAPSULE SA WATSON LABORATORIES INC 00075025100 DILACOR XR 180MG CAPSULE SA WATSON LABORATORIES INC 52544073301 DILACOR XR 180MG CAPSULE SA WATSON LABORATORIES INC 52544048401 DILACOR XR 240 MG CAPSULE SA WATSON LABORATORIES INC 52544048405 DILACOR XR 240 MG CAPSULE SA WATSON LABORATORIES INC 00075025200 DILACOR XR 240MG CAPSULE SA WATSON LABORATORIES INC 52544073401 DILACOR XR 240MG CAPSULE SA PFIZER LABORATORIES DIV PFIZER INC 00071036224 DILANTIN 100 MG KAPSEAL PFIZER LABORATORIES DIV PFIZER INC 00071036232 DILANTIN 100 MG KAPSEAL PFIZER LABORATORIES DIV PFIZER INC 00071036240 DILANTIN 100 MG KAPSEAL PFIZER LABORATORIES DIV PFIZER INC 00071221420 DILANTIN 125 MG/5 ML SUSP PFIZER LABORATORIES DIV PFIZER INC 00071036524 DILANTIN 30 MG KAPSEAL PFIZER LABORATORIES DIV PFIZER INC 00071000724 DILANTIN 50 MG INFATAB PFIZER LABORATORIES DIV PFIZER INC 00071000740 DILANTIN 50 MG INFATAB SCHERING CORP 00085063401 DIPROLENE 0.05% GEL SCHERING CORP 00085063403 DIPROLENE 0.05% GEL SCHERING CORP 00085096201 DIPROLENE 0.05% LOTION SCHERING CORP 00085096202 DIPROLENE 0.05% LOTION SCHERING CORP 00085057502 DIPROLENE 0.05% OINTMENT SCHERING CORP 00085057505 DIPROLENE 0.05% OINTMENT SCHERING CORP 00085051701 DIPROLENE AF 0.05% CREAM SCHERING CORP 00085051704 DIPROLENE AF 0.05% CREAM JOHNSON & JOHNSON GROUP 17314920001 DITROPAN 5 MG TABLET JOHNSON & JOHNSON GROUP 17314920002 DITROPAN 5 MG TABLET JOHNSON & JOHNSON GROUP 17314920003 DITROPAN 5 MG TABLET JOHNSON & JOHNSON GROUP 17314920104 DITROPAN 5 MG/5 ML SYRUP WARNER CHILCOTT INC 00430083819 DORYX 100 MG CAPSULE EC WARNER CHILCOTT INC 00430083620 DORYX 75 MG CAPSULE EC WESTWOOD SQUIBB PHARMACEUTICALS INC 00072026006 DOVONEX 0.005% CREAM WESTWOOD SQUIBB PHARMACEUTICALS INC 00072026012 DOVONEX 0.005% CREAM WESTWOOD SQUIBB PHARMACEUTICALS INC 00072254006 DOVONEX 0.005% OINTMENT WESTWOOD SQUIBB PHARMACEUTICALS INC 00072254012 DOVONEX 0.005% OINTMENT WESTWOOD SQUIBB PHARMACEUTICALS INC 00072116006 DOVONEX 0.005% SOLUTION SANOFI 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SCHERING CORP 00085056701 ELOCON 0.1% CREAM SCHERING CORP 00085056702 ELOCON 0.1% CREAM SCHERING CORP 00085085401 ELOCON 0.1% LOTION SCHERING CORP 00085085402 ELOCON 0.1% LOTION SCHERING CORP 00085037001 ELOCON 0.1% OINTMENT SCHERING CORP 00085037002 ELOCON 0.1% OINTMENT ASTRAZENECA LP 00186151601 EMLA CREAM ASTRAZENECA LP 00186151501 EMLA CREAM W/TEGADERM ASTRAZENECA LP 00186151503 EMLA CREAM W/TEGADERM IMMUNEX CORP 58406042534 ENBREL 25 MG KIT IMMUNEX CORP 58406042541 ENBREL 25 MG KIT ASTRAZENECA LP 00186070210 ENTOCORT EC 3 MG CAPSULE GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173047100 EPIVIR 10 MG/ML ORAL SOLN Privileged and Confidential Information Page 6 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 127 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173047001 EPIVIR 150 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173066200 EPIVIR HBV 100 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173066300 EPIVIR HBV 25 MG/5 ML SOLN JOHNSON & JOHNSON GROUP 50458027036 ERGAMISOL 50MG TABLET WARNER CHILCOTT INC 00430069624 ERYC 250 MG CAPSULE EC JOHNSON & JOHNSON GROUP 00062118501 ERYCETTE 2% PLEDGETS FOREST PHARMACEUTICALS INC 00456063001 ESGIC TABLET FOREST PHARMACEUTICALS INC 00535001101 ESGIC TABLET FOREST PHARMACEUTICALS INC 00456067801 ESGIC-PLUS TABLET WARNER CHILCOTT INC 00430375411 ESTRACE 0.01% CREAM WARNER CHILCOTT INC 00430375414 ESTRACE 0.01% CREAM WARNER CHILCOTT INC 00430002324 ESTRACE 1 MG TABLET WARNER CHILCOTT INC 00430002330 ESTRACE 1 MG TABLET WARNER CHILCOTT INC 00430002424 ESTRACE 2 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083231008 ESTRADERM 0.05 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00083231062 ESTRADERM 0.05 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00083232008 ESTRADERM 0.1 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00083232062 ESTRADERM 0.1 MG PATCH PFIZER LABORATORIES DIV PFIZER INC 00071092815 ESTROSTEP FE-28 TABLET PFIZER LABORATORIES DIV PFIZER INC 00071092847 ESTROSTEP FE-28 TABLET BAXTER HEALTHCARE CORP 10019035060 ETHRANE INHALATION SCHERING CORP 00085052503 EULEXIN 125 MG CAPSULE SCHERING CORP 00085052505 EULEXIN 125 MG CAPSULE SCHERING CORP 00085052506 EULEXIN 125 MG CAPSULE ELI LILLY AND CO 00002416502 EVISTA 60 MG TABLET ELI LILLY AND CO 00002416507 EVISTA 60 MG TABLET ELI LILLY AND CO 00002416530 EVISTA 60 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00078032306 EXELON 1.5 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078032344 EXELON 1.5 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078033931 EXELON 2 MG/ML ORAL SOLUTION NOVARTIS PHARMACEUTICALS CORP 00078032406 EXELON 3 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078032444 EXELON 3 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078032506 EXELON 4.5 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078032544 EXELON 4.5 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078032606 EXELON 6 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078032644 EXELON 6 MG CAPSULE HOFFMANN LA ROCHE INC 00004016103 FANSIDAR 500/25 TABLET NOVARTIS PHARMACEUTICALS CORP 00078024915 FEMARA 2.5 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00430054414 FEMHRT 1/5 TABLET PFIZER LABORATORIES DIV PFIZER INC 00430054423 FEMHRT 1/5 TABLET WARNER CHILCOTT INC 00430620140 FEMRING 0.05 MG VAGINAL RING WARNER CHILCOTT INC 00430620240 FEMRING 0.10 MG VAGINAL RING ABBOTT LABORATORIES 00074707930 FERO-FOLIC-500 FILMTAB NOVARTIS PHARMACEUTICALS CORP 00078010305 FIORINAL CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078010308 FIORINAL CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078010705 FIORINAL/CODEINE #3 CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00025183131 FLAGYL 250 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025183150 FLAGYL 250 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025183155 FLAGYL 250 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025194234 FLAGYL 375 CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00025194250 FLAGYL 375 CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00025182131 FLAGYL 500 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025182150 FLAGYL 500 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025182151 FLAGYL 500 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00025196130 FLAGYL ER 750 MG TABLET SA GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173045301 FLONASE 0.05% NASAL SPRAY GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173050900 FLOVENT 100 MCG ROTADISK GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173049400 FLOVENT 110 MCG INHALER GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173049800 FLOVENT 110 MCG INHALER GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173049500 FLOVENT 220 MCG INHALER GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173049900 FLOVENT 220 MCG INHALER GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173050400 FLOVENT 250 MCG ROTADISK GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173049100 FLOVENT 44 MCG INHALER GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173049700 FLOVENT 44 MCG INHALER GLAXO WELLCOME DIVISION 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00087607005 GLUCOPHAGE 850 MG TABLET BRISTOL MYERS SQUIBB CO 00087607211 GLUCOVANCE 1.25/250 MG TAB BRISTOL MYERS SQUIBB CO 00087607311 GLUCOVANCE 2.5/500 MG TAB BRISTOL MYERS SQUIBB CO 00087607411 GLUCOVANCE 5/500 MG TAB JOHNSON & JOHNSON GROUP 00062020604 GRIFULVIN V 125 MG/5 ML SUSP PROMETHEUS LABORATORIES INC 65483049514 HELIDAC THERAPY Privileged and Confidential Information Page 7 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 128 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION US PHARMACEUTICAL CORP 52747080060 HEMOCYTE PLUS CAPSULE US PHARMACEUTICAL CORP 52747030830 HEMOCYTE PLUS TABULE US PHARMACEUTICAL CORP 52747030870 HEMOCYTE PLUS TABULE US PHARMACEUTICAL CORP 52747030630 HEMOCYTE-F TABLET US PHARMACEUTICAL CORP 52747030670 HEMOCYTE-F TABLET GILEAD SCIENCES INC 61958050101 HEPSERA 10 MG TABLET MERRELL PHARMACEUTICALS INC 00068027761 HIPREX 1 GM TABLET HOFFMANN LA ROCHE INC 00004022001 HIVID 0.375 MG TABLET HOFFMANN LA ROCHE INC 00004022101 HIVID 0.750 MG TABLET SANOFI SYNTHELABO INC 00024079202 HYTAKEROL 0.125 MG CAPSULE ABBOTT LABORATORIES 00074712530 IBERET-FOLIC 500 FILMTAB HAWTHORN PHARMACEUTICALS 63717015003 ICAR PRENATAL COMBO PACK HAWTHORN PHARMACEUTICALS 63717011201 ICAR-C PLUS SR CAPSULE SCHERING CORP 00085115303 IMDUR 120 MG TABLET SA SCHERING CORP 00085115304 IMDUR 120 MG TABLET SA SCHERING CORP 00085330601 IMDUR 30 MG TABLET SA SCHERING CORP 00085330603 IMDUR 30 MG TABLET SA SCHERING CORP 00085411001 IMDUR 60 MG TABLET SA SCHERING CORP 00085411003 IMDUR 60 MG TABLET SA GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173045003 IMITREX 100 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173052300 IMITREX 20 MG NASAL SPRAY GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173046002 IMITREX 25 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173052400 IMITREX 5 MG NASAL SPRAY GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173045900 IMITREX 50 MG TABLET PROMETHEUS LABORATORIES INC 65483059010 IMURAN 50 MG TABLET MERRELL PHARMACEUTICALS INC 60793001114 INTAL INHALER MERRELL PHARMACEUTICALS INC 00585067302 INTAL NEBULIZER SOLUTION MERRELL PHARMACEUTICALS INC 00585067303 INTAL NEBULIZER SOLUTION HOFFMANN LA ROCHE INC 00004024515 INVIRASE 200 MG CAPSULE SCHERING CORP 00085026301 K-DUR 10 MEQ TABLET SA SCHERING CORP 00085026381 K-DUR 10 MEQ TABLET SA SCHERING CORP 00085078701 K-DUR 20 MEQ TABLET SA SCHERING CORP 00085078706 K-DUR 20 MEQ TABLET SA SCHERING CORP 00085078710 K-DUR 20 MEQ TABLET SA SCHERING CORP 00085078781 K-DUR 20 MEQ TABLET SA PFIZER LABORATORIES DIV PFIZER INC 00024230110 KERLONE 10 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00024230020 KERLONE 20 MG TABLET HOFFMANN LA ROCHE INC 00004006801 KLONOPIN 0.5 MG TABLET HOFFMANN LA ROCHE INC 00004005801 KLONOPIN 1 MG TABLET HOFFMANN LA ROCHE INC 00004009801 KLONOPIN 2 MG TABLET WESTWOOD SQUIBB PHARMACEUTICALS INC 00072573028 LAC-HYDRIN 12% CREAM WESTWOOD SQUIBB PHARMACEUTICALS INC 00072573038 LAC-HYDRIN 12% CREAM WESTWOOD SQUIBB PHARMACEUTICALS INC 00072570801 LAC-HYDRIN 12% LOTION WESTWOOD SQUIBB PHARMACEUTICALS INC 00072571208 LAC-HYDRIN 12% LOTION WESTWOOD SQUIBB PHARMACEUTICALS INC 00072571214 LAC-HYDRIN 12% LOTION WESTWOOD SQUIBB PHARMACEUTICALS INC 00072571401 LAC-HYDRIN 12% LOTION GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173064255 LAMICTAL 100 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173064360 LAMICTAL 150 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173064460 LAMICTAL 200 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173052700 LAMICTAL 25 MG DISPER TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173063302 LAMICTAL 25 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173052600 LAMICTAL 5 MG DISPER TABLET NOVARTIS PHARMACEUTICALS CORP 00078032882 LAMISIL 1% SOLUTION NOVARTIS PHARMACEUTICALS CORP 00078017905 LAMISIL 250 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00078017915 LAMISIL 250 MG TABLET NOVARTIS 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40 MG TABLET MERRELL PHARMACEUTICALS INC 00039006013 LASIX 40 MG TABLET MERRELL PHARMACEUTICALS INC 00039006050 LASIX 40 MG TABLET MERRELL PHARMACEUTICALS INC 00039006070 LASIX 40 MG TABLET MERRELL PHARMACEUTICALS INC 00039006605 LASIX 80 MG TABLET MERRELL PHARMACEUTICALS INC 00039006650 LASIX 80 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00078017605 LESCOL 20 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078017615 LESCOL 20 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078023405 LESCOL 40 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078023415 LESCOL 40 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078035405 LESCOL XL 80 MG TABLET SA NOVARTIS PHARMACEUTICALS CORP 00078035415 LESCOL XL 80 MG TABLET SA GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173063535 LEUKERAN 2 MG TABLET JOHNSON & JOHNSON GROUP 00045152010 LEVAQUIN 250 MG TABLET JOHNSON & JOHNSON GROUP 00045152050 LEVAQUIN 250 MG TABLET JOHNSON & JOHNSON GROUP 00045152510 LEVAQUIN 500 MG TABLET JOHNSON & JOHNSON GROUP 00045152550 LEVAQUIN 500 MG TABLET JOHNSON & JOHNSON GROUP 00045153010 LEVAQUIN 750 MG TABLET Privileged and Confidential Information Page 8 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 129 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION JOHNSON & JOHNSON GROUP 00045153050 LEVAQUIN 750 MG TABLET ASTRAZENECA LP 00186000231 LEXXEL 5-2.5 MG TABLET SA ASTRAZENECA LP 00186000131 LEXXEL 5-5 MG TABLET SA ASTRAZENECA LP 00186000168 LEXXEL 5-5 MG TABLET SA PFIZER LABORATORIES DIV PFIZER INC 00071015523 LIPITOR 10 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071015534 LIPITOR 10 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071015540 LIPITOR 10 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071015623 LIPITOR 20 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071015640 LIPITOR 20 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071015723 LIPITOR 40 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071015823 LIPITOR 80 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071091648 LOESTRIN 21 1.5/30 TABLET PFIZER LABORATORIES DIV PFIZER INC 00071091548 LOESTRIN 21 1/20 TABLET PFIZER LABORATORIES DIV PFIZER INC 00071091745 LOESTRIN FE 1.5/30 TABLET PFIZER LABORATORIES DIV PFIZER INC 00071091748 LOESTRIN FE 1.5/30 TABLET PFIZER LABORATORIES DIV PFIZER INC 00071091345 LOESTRIN FE 1/20 TABLET PFIZER LABORATORIES DIV PFIZER INC 00071091348 LOESTRIN FE 1/20 TABLET PFIZER LABORATORIES DIV PFIZER INC 00025006602 LOMOTIL LIQUID PFIZER LABORATORIES DIV PFIZER INC 00025006131 LOMOTIL TABLET PFIZER LABORATORIES DIV PFIZER INC 00025006134 LOMOTIL TABLET PFIZER LABORATORIES DIV PFIZER INC 00025006151 LOMOTIL TABLET PFIZER LABORATORIES DIV PFIZER INC 00025006152 LOMOTIL TABLET PFIZER LABORATORIES DIV PFIZER INC 00025006155 LOMOTIL TABLET PFIZER LABORATORIES DIV PFIZER INC 00071073720 LOPID 600 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071073730 LOPID 600 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00028420133 LOPRESSOR 1 MG/ML AMPUL NOVARTIS PHARMACEUTICALS CORP 00028007101 LOPRESSOR 100 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00028007110 LOPRESSOR 100 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00028007161 LOPRESSOR 100 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00028005101 LOPRESSOR 50 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00028005110 LOPRESSOR 50 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00028005301 LOPRESSOR HCT 100/25 TABLET NOVARTIS PHARMACEUTICALS CORP 00028007301 LOPRESSOR HCT 100/50 TABLET NOVARTIS PHARMACEUTICALS CORP 00028003501 LOPRESSOR HCT 50/25 TABLET FOREST PHARMACEUTICALS INC 00785635001 LORCET 10/650 TABLET FOREST PHARMACEUTICALS INC 00785635050 LORCET 10/650 TABLET FOREST PHARMACEUTICALS INC 00785635063 LORCET 10/650 TABLET FOREST PHARMACEUTICALS INC 00785112201 LORCET PLUS TABLET FOREST PHARMACEUTICALS INC 00785112250 LORCET PLUS TABLET FOREST PHARMACEUTICALS INC 00785112263 LORCET PLUS TABLET FOREST PHARMACEUTICALS INC 00785112001 LORCET-HD CAPSULE NOVARTIS PHARMACEUTICALS CORP 00083006330 LOTENSIN 10 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083006332 LOTENSIN 10 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083006390 LOTENSIN 10 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083007930 LOTENSIN 20 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083007932 LOTENSIN 20 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083007990 LOTENSIN 20 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083009430 LOTENSIN 40 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083009432 LOTENSIN 40 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083009490 LOTENSIN 40 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083005930 LOTENSIN 5 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083005932 LOTENSIN 5 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083005990 LOTENSIN 5 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083007230 LOTENSIN HCT 10/12.5 TABLET NOVARTIS PHARMACEUTICALS CORP 00083007430 LOTENSIN HCT 20/12.5 TABLET NOVARTIS PHARMACEUTICALS CORP 00083007530 LOTENSIN HCT 20/25 TABLET NOVARTIS PHARMACEUTICALS CORP 00083005730 LOTENSIN HCT 5/6.25 TABLET NOVARTIS PHARMACEUTICALS CORP 00083225530 LOTREL 2.5/10 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00083226030 LOTREL 5/10 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00083226530 LOTREL 5/20 MG CAPSULE SCHERING CORP 00085092401 LOTRISONE CREAM SCHERING CORP 00085092402 LOTRISONE CREAM SCHERING CORP 00085080901 LOTRISONE LOTION BRISTOL MYERS SQUIBB CO 00015308060 LYSODREN 500 MG TABLET PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149071001 MACROBID 100 MG CAPSULE PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149000905 MACRODANTIN 100 MG CAPSULE PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149000967 MACRODANTIN 100 MG CAPSULE PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149000705 MACRODANTIN 25 MG CAPSULE PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149000805 MACRODANTIN 50 MG CAPSULE PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149000866 MACRODANTIN 50 MG CAPSULE PROCTER AND GAMBLE PHARMACEUTICALS INC SUB PROCTER AND GAMBLE CO 00149000867 MACRODANTIN 50 MG CAPSULE GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173067501 MALARONE 250-100 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173067601 MALARONE 62.5-25 MG PED TAB WARNER CHILCOTT INC 00430016624 MANDELAMINE 500 MG TABLET 3M PHARMACEUTICALS 00089081521 MAXAIR AUTOHALER 0.2 MG AERO MCR AMERICAN PHARMACEUTICALS INC 58605052001 MAXIFED 700/80 TABLET SA MCR AMERICAN PHARMACEUTICALS INC 58605052601 MAXIFED DM TABLET SA MCR AMERICAN PHARMACEUTICALS INC 58605051401 MAXIFED-G TABLET SA OVATION PHARMACEUTICALS INC 67386080302 MEBARAL 100 MG TABLET OVATION PHARMACEUTICALS INC 67386080102 MEBARAL 32 MG TABLET OVATION PHARMACEUTICALS INC 67386080202 MEBARAL 50 MG TABLET BERTEK PHARMACEUTICALS INC 62794015102 MENTAX 1% CREAM BERTEK PHARMACEUTICALS INC 62794015103 MENTAX 1% CREAM GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173066518 MEPRON 750 MG/5 ML SUSPENSION NOVARTIS PHARMACEUTICALS CORP 00078005405 METHERGINE 0.2 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00078005303 METHERGINE 0.2 MG/ML AMPUL Privileged and Confidential Information Page 9 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 130 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION 3M PHARMACEUTICALS 00089020025 METROGEL-VAGINAL 0.75% GEL BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597006601 MEXITIL 150 MG CAPSULE BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597006701 MEXITIL 200 MG CAPSULE BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597006801 MEXITIL 250 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078031190 MIACALCIN 200 UNITS NASAL SPRA ABBOTT LABORATORIES 00597003928 MICARDIS 20 MG TABLET ABBOTT LABORATORIES 00597004028 MICARDIS 40 MG TABLET ABBOTT LABORATORIES 00597004128 MICARDIS 80 MG TABLET ABBOTT LABORATORIES 00597004328 MICARDIS HCT 40/12.5 MG TAB ABBOTT LABORATORIES 00597004428 MICARDIS HCT 80/12.5 MG TAB WATSON LABORATORIES INC 52544062201 MICROZIDE 12.5 MG CAPSULE XCEL PHARMACEUTICALS 66490024598 MIGRANAL 4 MG/ML NASAL SPRAY ORGANON USA INC 00052028106 MIRCETTE 28 DAY TABLET ABBOTT LABORATORIES 00597003001 MOBIC 15 MG TABLET ABBOTT LABORATORIES 00597002901 MOBIC 7.5 MG TABLET JOHNSON & JOHNSON GROUP 00062171415 MODICON 28 TABLET JOHNSON & JOHNSON GROUP 00107171427 MODICON 28 TABLET JOHNSON & JOHNSON GROUP 00062543701 MONISTAT 3 200 MG VAG SUPP JOHNSON & JOHNSON GROUP 00062543401 MONISTAT-DERM 2% CREAM JOHNSON & JOHNSON GROUP 00062543402 MONISTAT-DERM 2% CREAM JOHNSON & JOHNSON GROUP 00062543403 MONISTAT-DERM 2% CREAM WATSON LABORATORIES INC 55515025904 MONODOX 100 MG CAPSULE WATSON LABORATORIES INC 55515026006 MONODOX 50 MG CAPSULE BRISTOL MYERS SQUIBB CO 00087015846 MONOPRIL 10 MG TABLET BRISTOL MYERS SQUIBB CO 00087015885 MONOPRIL 10 MG TABLET BRISTOL MYERS SQUIBB CO 00087060942 MONOPRIL 20 MG TABLET BRISTOL MYERS SQUIBB CO 00087060945 MONOPRIL 20 MG TABLET BRISTOL MYERS SQUIBB CO 00087060985 MONOPRIL 20 MG TABLET BRISTOL MYERS SQUIBB CO 00087120213 MONOPRIL 40 MG TABLET BRISTOL MYERS SQUIBB CO 00087149201 MONOPRIL HCT 10/12.5 MG TABLET BRISTOL MYERS SQUIBB CO 00087149301 MONOPRIL HCT 20/12.5 MG TABLET FOREST PHARMACEUTICALS INC 00456430008 MONUROL 3 GM SACHET JOHNSON & JOHNSON GROUP 17314940001 MYCELEX 10 MG TROCHE JOHNSON & JOHNSON GROUP 17314940002 MYCELEX 10 MG TROCHE JOHNSON & JOHNSON GROUP 17314940003 MYCELEX 10 MG TROCHE GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173071325 MYLERAN 2 MG TABLET SANOFI SYNTHELABO INC 00024128704 MYTELASE 10 MG CAPLET HOFFMANN LA ROCHE INC 00004631301 NAPROSYN 250 MG TABLET HOFFMANN LA ROCHE INC 00004631114 NAPROSYN 375 MG TABLET HOFFMANN LA ROCHE INC 00004631014 NAPROSYN 500 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071027024 NARDIL 15 MG TABLET MERRELL PHARMACEUTICALS INC 00075150616 NASACORT AQ NASAL SPRAY MERRELL PHARMACEUTICALS INC 00075150543 NASACORT NASAL INHALER SCHERING CORP 00085119701 NASONEX 50 MCG NASAL SPRAY WARNER CHILCOTT INC 00430022723 NATACHEW TABLET CHEW WARNER CHILCOTT INC 00430022640 NATAFORT TABLET SANOFI SYNTHELABO INC 00024132203 NEGGRAM 500 MG CAPLET SANOFI SYNTHELABO INC 00024135901 NEO-SYNEPHRINE 10% EYE DROP SANOFI SYNTHELABO INC 00024136201 NEO-SYNEPHRINE 10% EYE DROP SANOFI SYNTHELABO INC 00024135801 NEO-SYNEPHRINE 2.5% EYE DRP PFIZER LABORATORIES DIV PFIZER INC 00071080324 NEURONTIN 100 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00071080340 NEURONTIN 100 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00071080524 NEURONTIN 300 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00071080540 NEURONTIN 300 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00071080624 NEURONTIN 400 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00071080640 NEURONTIN 400 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00071041624 NEURONTIN 600 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071042624 NEURONTIN 800 MG TABLET ASTRAZENECA LP 00186502031 NEXIUM 20 MG CAPSULE ASTRAZENECA LP 00186502054 NEXIUM 20 MG CAPSULE ASTRAZENECA LP 00186502082 NEXIUM 20 MG CAPSULE ASTRAZENECA LP 00186502228 NEXIUM 20 MG CAPSULE ASTRAZENECA LP 00186504031 NEXIUM 40 MG CAPSULE ASTRAZENECA LP 00186504054 NEXIUM 40 MG CAPSULE ASTRAZENECA LP 00186504082 NEXIUM 40 MG CAPSULE ASTRAZENECA LP 00186504228 NEXIUM 40 MG CAPSULE KOS PHARMACEUTICALS INC 60598000301 NIASPAN 1,000 MG TABLET SA KOS PHARMACEUTICALS INC 60598000101 NIASPAN 500 MG TABLET SA KOS PHARMACEUTICALS INC 60598000201 NIASPAN 750 MG TABLET SA MERRELL PHARMACEUTICALS INC 00088111114 NILANDRON 150 MG TABLET SCHERING CORP 00085331530 NITRO-DUR 0.3 MG/HR PATCH SCHERING CORP 00085331535 NITRO-DUR 0.3 MG/HR PATCH SCHERING CORP 00085081930 NITRO-DUR 0.8 MG/HR PATCH SCHERING CORP 00085081935 NITRO-DUR 0.8 MG/HR PATCH JOHNSON & JOHNSON GROUP 50458022115 NIZORAL 2% CREAM JOHNSON & JOHNSON GROUP 50458022130 NIZORAL 2% CREAM JOHNSON & JOHNSON GROUP 50458022160 NIZORAL 2% CREAM JOHNSON & JOHNSON GROUP 50458022304 NIZORAL 2% SHAMPOO JOHNSON & JOHNSON GROUP 50458022010 NIZORAL 200 MG TABLET ASTRAZENECA LP 00310060018 NOLVADEX 10 MG TABLET ASTRAZENECA LP 00310060060 NOLVADEX 10 MG TABLET ASTRAZENECA LP 00310060075 NOLVADEX 10 MG TABLET ASTRAZENECA LP 00310060412 NOLVADEX 20 MG TABLET ASTRAZENECA LP 00310060430 NOLVADEX 20 MG TABLET ASTRAZENECA LP 00310060490 NOLVADEX 20 MG TABLET WATSON LABORATORIES INC 52544053901 NORCO 10/325 TABLET Privileged and Confidential Information Page 10 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 131 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION WATSON LABORATORIES INC 52544053905 NORCO 10/325 TABLET WATSON LABORATORIES INC 52544026528 NORINYL 1+50-28 TABLET PFIZER LABORATORIES DIV PFIZER INC 00025275231 NORPACE 100 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00025275252 NORPACE 100 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00025276231 NORPACE 150 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00025273231 NORPACE CR 100 MG CAPSULE SA PFIZER LABORATORIES DIV PFIZER INC 00025273234 NORPACE CR 100 MG CAPSULE SA PFIZER LABORATORIES DIV PFIZER INC 00025273251 NORPACE CR 100 MG CAPSULE SA PFIZER LABORATORIES DIV PFIZER INC 00025274231 NORPACE CR 150 MG CAPSULE SA PFIZER LABORATORIES DIV PFIZER INC 00025274234 NORPACE CR 150 MG CAPSULE SA PFIZER LABORATORIES DIV PFIZER INC 00025274251 NORPACE CR 150 MG CAPSULE SA MERRELL PHARMACEUTICALS INC 00068000701 NORPRAMIN 10 MG TABLET MERRELL PHARMACEUTICALS INC 00068002001 NORPRAMIN 100 MG TABLET MERRELL PHARMACEUTICALS INC 00068002150 NORPRAMIN 150 MG TABLET MERRELL PHARMACEUTICALS INC 00068001101 NORPRAMIN 25 MG TABLET MERRELL PHARMACEUTICALS INC 00068001501 NORPRAMIN 50 MG TABLET MERRELL PHARMACEUTICALS INC 00068001901 NORPRAMIN 75 MG TABLET JOHNSON & JOHNSON GROUP 00062190315 ORTHO TRI-CYCLEN 28 TABLET JOHNSON & JOHNSON GROUP 00062179615 ORTHO-CEPT 28 DAY TABLET JOHNSON & JOHNSON GROUP 00062190115 ORTHO-CYCLEN 28 TABLET JOHNSON & JOHNSON GROUP 00062176115 ORTHO-NOVUM 1/35-28 TABLET JOHNSON & JOHNSON GROUP 00107176104 ORTHO-NOVUM 1/35-28 TABLET JOHNSON & JOHNSON GROUP 00107176107 ORTHO-NOVUM 1/35-28 TABLET JOHNSON & JOHNSON GROUP 00107176127 ORTHO-NOVUM 1/35-28 TABLET JOHNSON & JOHNSON GROUP 00062133215 ORTHO-NOVUM 1/50-28 TABLET JOHNSON & JOHNSON GROUP 00062133220 ORTHO-NOVUM 1/50-28 TABLET JOHNSON & JOHNSON GROUP 00107133207 ORTHO-NOVUM 1/50-28 TABLET JOHNSON & JOHNSON GROUP 00107133227 ORTHO-NOVUM 1/50-28 TABLET JOHNSON & JOHNSON GROUP 00062177115 ORTHO-NOVUM 10/11-28 TABLET JOHNSON & JOHNSON GROUP 00062178115 ORTHO-NOVUM 7/7/7-28 TABLET JOHNSON & JOHNSON GROUP 00062178120 ORTHO-NOVUM 7/7/7-28 TABLET JOHNSON & JOHNSON GROUP 00062178122 ORTHO-NOVUM 7/7/7-28 TABLET WARNER CHILCOTT INC 00430058214 OVCON-35 28 TABLET WARNER CHILCOTT INC 00430058514 OVCON-50 28 TABLET PAN AMERICAN LABORATORIES INC 00525942216 PANCOF HC LIQUID PAN AMERICAN LABORATORIES INC 00525975816 PANCOF XP LIQUID JOHNSON & JOHNSON GROUP 00045034260 PANCREASE MT 10 CAPSULE EC JOHNSON & JOHNSON GROUP 00045034360 PANCREASE MT 16 CAPSULE EC JOHNSON & JOHNSON GROUP 00045034660 PANCREASE MT 20 CAPSULE EC JOHNSON & JOHNSON GROUP 00045034160 PANCREASE MT 4 CAPSULE EC PAN AMERICAN LABORATORIES INC 00525079516 PANMIST DM SYRUP PAN AMERICAN LABORATORIES INC 00525076801 PANMIST JR 595/48 TABLET PAN AMERICAN LABORATORIES INC 00525079201 PANMIST LA 795/85 TABLET JOHNSON & JOHNSON GROUP 00045032560 PARAFON FORTE DSC 500 MG CPT NOVARTIS PHARMACEUTICALS CORP 00078001705 PARLODEL 2.5 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00078001715 PARLODEL 2.5 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00078010205 PARLODEL 5 MG CAPSULE NOVARTIS PHARMACEUTICALS CORP 00078010215 PARLODEL 5 MG CAPSULE SANOFI SYNTHELABO INC 00024150906 PEDIACOF LIQUID ZYBER PHARMACEUTICAL INC 65224017516 PEDIATEX LIQUID ZYBER PHARMACEUTICAL INC 65224045716 PEDIATEX-D LIQUID ATLEY PHARMACEUTICALS INC 59702015201 PEDIOX CHEWABLE TABLET BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597001701 PERSANTINE 25 MG TABLET BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597001801 PERSANTINE 50 MG TABLET BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597001901 PERSANTINE 75 MG TABLET SANOFI SYNTHELABO INC 00024153502 PHISOHEX 3% CLEANSER SANOFI SYNTHELABO INC 00024153506 PHISOHEX 3% CLEANSER SANOFI SYNTHELABO INC 00024153508 PHISOHEX 3% CLEANSER SANOFI SYNTHELABO INC 00024153524 PHISOHEX 3% CLEANSER SANOFI SYNTHELABO INC 00024153548 PHISOHEX 3% CLEANSER SANOFI SYNTHELABO INC 00024156210 PLAQUENIL 200 MG TABLET BRISTOL MYERS SQUIBB CO 63653117101 PLAVIX 75 MG TABLET BRISTOL MYERS SQUIBB CO 63653117103 PLAVIX 75 MG TABLET BRISTOL MYERS SQUIBB CO 63653117105 PLAVIX 75 MG TABLET BRISTOL MYERS SQUIBB CO 63653117106 PLAVIX 75 MG TABLET ASTRAZENECA LP 00186045228 PLENDIL 10 MG TABLET SA ASTRAZENECA LP 00186045231 PLENDIL 10 MG TABLET SA ASTRAZENECA LP 00186045258 PLENDIL 10 MG TABLET SA ASTRAZENECA LP 00186045028 PLENDIL 2.5 MG TABLET SA ASTRAZENECA LP 00186045031 PLENDIL 2.5 MG TABLET SA ASTRAZENECA LP 00186045058 PLENDIL 2.5 MG TABLET SA ASTRAZENECA LP 00186045128 PLENDIL 5 MG TABLET SA ASTRAZENECA LP 00186045131 PLENDIL 5 MG TABLET SA ASTRAZENECA LP 00186045158 PLENDIL 5 MG TABLET SA JOHNSON & JOHNSON GROUP 17314932201 POLYCITRA SYRUP JOHNSON & JOHNSON GROUP 17314932001 POLYCITRA-K CRYSTALS PACKET JOHNSON & JOHNSON GROUP 17314932101 POLYCITRA-K SOLUTION JOHNSON & JOHNSON GROUP 17314932301 POLYCITRA-LC SOLUTION S/F BRISTOL MYERS SQUIBB CO 00087048741 POLY-VI-FLOR 0.25 MG TAB CHW BRISTOL MYERS SQUIBB CO 00087046841 POLY-VI-FLOR 0.5 MG TABLET BRISTOL MYERS SQUIBB CO 00087047402 POLY-VI-FLOR 1 MG TABLET BRISTOL MYERS SQUIBB CO 00087048841 POLY-VI-FLOR/IRON 0.25 MG TB FERNDALE LABORATORIES INC 00496071603 PRAMOSONE 1% CREAM FERNDALE LABORATORIES INC 00496071604 PRAMOSONE 1% CREAM FERNDALE LABORATORIES INC 00496072903 PRAMOSONE 1% LOTION FERNDALE LABORATORIES INC 00496072904 PRAMOSONE 1% LOTION Privileged and Confidential Information Page 11 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 132 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION FERNDALE LABORATORIES INC 00496072906 PRAMOSONE 1% LOTION FERNDALE LABORATORIES INC 00496076304 PRAMOSONE 1% OINTMENT FERNDALE LABORATORIES INC 00496071703 PRAMOSONE 2.5% CREAM FERNDALE LABORATORIES INC 00496071704 PRAMOSONE 2.5% CREAM FERNDALE LABORATORIES INC 00496072604 PRAMOSONE 2.5% LOTION FERNDALE LABORATORIES INC 00496072606 PRAMOSONE 2.5% LOTION FERNDALE LABORATORIES INC 00496077704 PRAMOSONE 2.5% OINTMENT NOVO NORDISK PHARMACEUTICAL INDUSTRIES INC 00169008181 PRANDIN 0.5 MG TABLET NOVO NORDISK PHARMACEUTICAL INDUSTRIES INC 00169008281 PRANDIN 1 MG TABLET NOVO NORDISK PHARMACEUTICAL INDUSTRIES INC 00169008481 PRANDIN 2 MG TABLET BAYER CORP PHARMACEUTICAL DIV 00026286251 PRECOSE 100 MG TABLET BAYER CORP PHARMACEUTICAL DIV 00026286148 PRECOSE 50 MG TABLET MONARCH PHARMACEUTICALS INC 61570012563 PREFEST TABLET FIRST HORIZON PHARMACEUTICAL CORP 59630042090 PRENATE ADVANCE TABLET TAP PHARMACEUTICALS INC 00300154111 PREVACID 15 MG CAPSULE DR TAP PHARMACEUTICALS INC 00300154119 PREVACID 15 MG CAPSULE DR TAP PHARMACEUTICALS INC 00300154130 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TABLET Privileged and Confidential Information Page 12 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 133 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION WARNER CHILCOTT INC 00430018124 PYRIDIUM 200 MG TABLET WARNER CHILCOTT INC 00430018215 PYRIDIUM PLUS TABLET BERLEX INC 50419010110 QUINAGLUTE DURA-TABS 324 MG BERLEX INC 50419010111 QUINAGLUTE DURA-TABS 324 MG BERLEX INC 50419010125 QUINAGLUTE DURA-TABS 324 MG BERLEX INC 50419010150 QUINAGLUTE DURA-TABS 324 MG SCHERING CORP 00085119403 REBETOL 200 MG CAPSULE SCHERING CORP 00085132704 REBETOL 200 MG CAPSULE SCHERING CORP 00085135105 REBETOL 200 MG CAPSULE SCHERING CORP 00085138507 REBETOL 200 MG CAPSULE JOHNSON & JOHNSON GROUP 00045081015 REGRANEX 0.01% GEL GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173068101 RELENZA 5 MG DISKHALER ORGANON USA INC 00052010530 REMERON 15 MG TABLET ORGANON USA INC 00052010590 REMERON 15 MG TABLET ORGANON USA INC 00052010730 REMERON 30 MG TABLET ORGANON USA INC 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PHARMACEUTICALS INC 00072140015 ULTRAVATE 0.05% CREAM WESTWOOD SQUIBB PHARMACEUTICALS INC 00072140050 ULTRAVATE 0.05% CREAM WESTWOOD SQUIBB PHARMACEUTICALS INC 00072145015 ULTRAVATE 0.05% OINTMENT WESTWOOD SQUIBB PHARMACEUTICALS INC 00072145050 ULTRAVATE 0.05% OINTMENT ODYSSEY PHARMACEUTICALS INC 65473070301 URECHOLINE 10 MG TABLET ODYSSEY PHARMACEUTICALS INC 65473070401 URECHOLINE 25 MG TABLET ODYSSEY PHARMACEUTICALS INC 65473069701 URECHOLINE 5 MG TABLET ODYSSEY PHARMACEUTICALS INC 65473070001 URECHOLINE 50 MG TABLET JOHNSON & JOHNSON GROUP 17314922001 URISPAS 100 MG TABLET HOFFMANN LA ROCHE INC 00004003822 VALCYTE 450 MG TABLET HOFFMANN LA ROCHE INC 00140000601 VALIUM 10 MG TABLET HOFFMANN LA ROCHE INC 00140000614 VALIUM 10 MG TABLET HOFFMANN LA ROCHE INC 00140000401 VALIUM 2 MG TABLET HOFFMANN LA ROCHE INC 00140000501 VALIUM 5 MG TABLET HOFFMANN LA ROCHE INC 00140000514 VALIUM 5 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173056502 VALTREX 1 GM CAPLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173093303 VALTREX 500 MG CAPLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173093356 VALTREX 500 MG CAPLET SCHERING CORP 00085073604 VANCERIL INHALER Privileged and Confidential Information Page 15 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 136 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION ELI LILLY AND CO 00002312542 VANCOCIN HCL 125 MG PULVULE ELI LILLY AND CO 00002312642 VANCOCIN HCL 250 MG PULVULE WOMEN FIRST HEALTHCARE INC 64248015030 VANIQA 13.9% CREAM JOHNSON & JOHNSON GROUP 00045068233 VASCOR 200 MG TABLET JOHNSON & JOHNSON GROUP 00045068333 VASCOR 300 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173032198 VENTOLIN 90 MCG INH REFILL GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173032188 VENTOLIN 90 MCG INHALER BRISTOL MYERS SQUIBB CO 00015309145 VEPESID 50 MG CAPSULE HOFFMANN LA ROCHE INC 00004016851 VERSED 10 MG/5 ML SYRUP HOFFMANN LA ROCHE INC 00004025001 VESANOID 10 MG CAPSULE BRISTOL MYERS SQUIBB CO 00087661443 VIDEX 100 MG PACKET BRISTOL MYERS SQUIBB CO 00087665201 VIDEX 100 MG TABLET CHEWABLE BRISTOL MYERS SQUIBB CO 00087665301 VIDEX 150 MG TABLET CHEWABLE BRISTOL MYERS SQUIBB CO 00087661543 VIDEX 167 MG PACKET BRISTOL MYERS SQUIBB CO 00087663241 VIDEX 2 GM PEDIATRIC SOLN BRISTOL MYERS SQUIBB CO 00087666515 VIDEX 200 MG TABLET CHEWABLE BRISTOL MYERS SQUIBB CO 00087665001 VIDEX 25 MG TABLET CHEWABLE BRISTOL MYERS SQUIBB CO 00087661643 VIDEX 250 MG PACKET BRISTOL MYERS SQUIBB CO 00087663341 VIDEX 4 GM PEDIATRIC SOLN BRISTOL MYERS SQUIBB CO 00087665101 VIDEX 50 MG TABLET CHEWABLE BRISTOL MYERS SQUIBB CO 00087667117 VIDEX EC 125 MG CAP SA BRISTOL MYERS SQUIBB CO 00087667217 VIDEX EC 200 MG CAP SA BRISTOL MYERS SQUIBB CO 00087667317 VIDEX EC 250 MG CAP SA BRISTOL MYERS SQUIBB CO 00087667417 VIDEX EC 400 MG CAP SA AGOURON PHARMACEUTICALS INC 63010001030 VIRACEPT 250 MG TABLET AGOURON PHARMACEUTICALS INC 63010001190 VIRACEPT POWDER BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597004601 VIRAMUNE 200 MG TABLET BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597004660 VIRAMUNE 200 MG TABLET BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597004661 VIRAMUNE 200 MG TABLET BOEHRINGER INGELHEIM PHARMACEUTICALS INC 00597004724 VIRAMUNE 50 MG/5 ML SUSP PEDIAMED TM PHARMACEUTICALS INC 66346003158 VIRAVAN-S SUSPENSION PEDIAMED TM PHARMACEUTICALS INC 66346003165 VIRAVAN-S SUSPENSION PEDIAMED TM PHARMACEUTICALS INC 66346003223 VIRAVAN-T TABLET CHEWABLE GILEAD SCIENCES INC 61958040101 VIREAD 300 MG TABLET ODYSSEY PHARMACEUTICALS INC 65473070201 VIVACTIL 10 MG TABLET ODYSSEY PHARMACEUTICALS INC 65473070101 VIVACTIL 5 MG TABLET NOVARTIS PHARMACEUTICALS CORP 00083232508 VIVELLE 0.0375 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00083232562 VIVELLE 0.0375 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00083232708 VIVELLE 0.075 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00083232762 VIVELLE 0.075 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00078034342 VIVELLE-DOT 0.0375 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00078034345 VIVELLE-DOT 0.0375 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00078034442 VIVELLE-DOT 0.05 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00078034445 VIVELLE-DOT 0.05 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00078034542 VIVELLE-DOT 0.075 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00078034545 VIVELLE-DOT 0.075 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00078034642 VIVELLE-DOT 0.1 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00078034645 VIVELLE-DOT 0.1 MG PATCH NOVARTIS PHARMACEUTICALS CORP 00028025801 VOLTAREN 25 MG TABLET EC NOVARTIS PHARMACEUTICALS CORP 00028005801 VOLTAREN 25MG TABLET EC NOVARTIS PHARMACEUTICALS CORP 00028026201 VOLTAREN 50 MG TABLET EC NOVARTIS PHARMACEUTICALS CORP 00028016201 VOLTAREN 50MG TABLET EC NOVARTIS PHARMACEUTICALS CORP 00028026401 VOLTAREN 75 MG TABLET EC NOVARTIS PHARMACEUTICALS CORP 00028016401 VOLTAREN 75MG TABLET EC NOVARTIS PHARMACEUTICALS CORP 00028020501 VOLTAREN-XR 100 MG TABLET SA GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173017855 WELLBUTRIN 100 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173017755 WELLBUTRIN 75 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173094755 WELLBUTRIN SR 100 MG TAB SA GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173013555 WELLBUTRIN SR 150 MG TAB SA OVATION PHARMACEUTICALS INC 00024225304 WINSTROL 2 MG TABLET HOFFMANN LA ROCHE INC 00004110051 XELODA 150 MG TABLET HOFFMANN LA ROCHE INC 00004110116 XELODA 500 MG TABLET HOFFMANN LA ROCHE INC 00004025652 XENICAL 120 MG CAPSULE ASTRAZENECA LP 00186033001 XYLOCAINE 2% JELLY ASTRAZENECA LP 00186033036 XYLOCAINE 2% JELLY ASTRAZENECA LP 00186036001 XYLOCAINE 2% VISCOUS SOLN ASTRAZENECA LP 00186036011 XYLOCAINE 2% VISCOUS SOLN ASTRAZENECA LP 00186032001 XYLOCAINE 4% SOLUTION ASTRAZENECA LP 00186031521 XYLOCAINE 5% OINTMENT GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173038354 ZANTAC 15 MG/ML SYRUP GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173042702 ZANTAC 150 MG EFFERDOSE TAB GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173034412 ZANTAC 150 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173034414 ZANTAC 150 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173034417 ZANTAC 150 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173034442 ZANTAC 150 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173034447 ZANTAC 150 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173039306 ZANTAC 300 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173039340 ZANTAC 300 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173039347 ZANTAC 300 MG TABLET PFIZER LABORATORIES DIV PFIZER INC 00071023724 ZARONTIN 250 MG CAPSULE PFIZER LABORATORIES DIV PFIZER INC 00071241823 ZARONTIN 250 MG/5 ML SYRUP ASTRAZENECA LP 00310014110 ZESTORETIC 10/12.5 TABLET ASTRAZENECA LP 00310014210 ZESTORETIC 20/12.5 TABLET ASTRAZENECA LP 00310014510 ZESTORETIC 20/25 TABLET ASTRAZENECA LP 00310013110 ZESTRIL 10 MG TABLET ASTRAZENECA LP 00310013134 ZESTRIL 10 MG TABLET Privileged and Confidential Information Page 16 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 137 of 181 Appendix A Drugs by NDC FIRM NAME NDC DRUG NAME AND DESCRIPTION ASTRAZENECA LP 00310013139 ZESTRIL 10 MG TABLET ASTRAZENECA LP 00310013173 ZESTRIL 10 MG TABLET ASTRAZENECA LP 00310013510 ZESTRIL 2.5 MG TABLET ASTRAZENECA LP 00310013210 ZESTRIL 20 MG TABLET ASTRAZENECA LP 00310013234 ZESTRIL 20 MG TABLET ASTRAZENECA LP 00310013239 ZESTRIL 20 MG TABLET ASTRAZENECA LP 00310013273 ZESTRIL 20 MG TABLET ASTRAZENECA LP 00310013310 ZESTRIL 30 MG TABLET ASTRAZENECA LP 00310013410 ZESTRIL 40 MG TABLET ASTRAZENECA LP 00310013010 ZESTRIL 5 MG TABLET ASTRAZENECA LP 00310013034 ZESTRIL 5 MG TABLET ASTRAZENECA LP 00310013039 ZESTRIL 5 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173066400 ZIAGEN 20 MG/ML SOLUTION GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173066100 ZIAGEN 300 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173066101 ZIAGEN 300 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173068000 ZOFRAN 24 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173044600 ZOFRAN 4 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173044602 ZOFRAN 4 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173044604 ZOFRAN 4 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173048900 ZOFRAN 4 MG/5 ML ORAL SOLN GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173044700 ZOFRAN 8 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173044702 ZOFRAN 8 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173044704 ZOFRAN 8 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173056900 ZOFRAN ODT 4 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173057000 ZOFRAN ODT 8 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173057004 ZOFRAN ODT 8 MG TABLET ASTRAZENECA LP 00037721020 ZOMIG 2.5 MG TABLET ASTRAZENECA LP 00037721125 ZOMIG 5 MG TABLET ASTRAZENECA LP 00310020920 ZOMIG ZMT 2.5 MG TABLET ASTRAZENECA LP 00310021321 ZOMIG ZMT 5 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173099155 ZOVIRAX 200 MG CAPSULE GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173099156 ZOVIRAX 200 MG CAPSULE GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173095396 ZOVIRAX 200 MG/5 ML SUSP GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173094955 ZOVIRAX 400 MG TABLET BIOVAIL PHARMACEUTICALS INC 00173099341 ZOVIRAX 5% OINTMENT GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173094555 ZOVIRAX 800 MG TABLET GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173055601 ZYBAN 150 MG TABLET SA GLAXO WELLCOME DIVISION SMITHKLINE BEECHAM CORP 00173055602 ZYBAN 150 MG TABLET SA PROMETHEUS LABORATORIES INC 65483099110 ZYLOPRIM 100 MG TABLET PROMETHEUS LABORATORIES INC 65483099310 ZYLOPRIM 300 MG TABLET PROMETHEUS LABORATORIES INC 65483099350 ZYLOPRIM 300 MG TABLET ELI LILLY AND CO 00002411704 ZYPREXA 10 MG TABLET ELI LILLY AND CO 00002411733 ZYPREXA 10 MG TABLET ELI LILLY AND CO 00002411760 ZYPREXA 10 MG TABLET ELI LILLY AND CO 00002441504 ZYPREXA 15 MG TABLET ELI LILLY AND CO 00002441533 ZYPREXA 15 MG TABLET ELI LILLY AND CO 00002441560 ZYPREXA 15 MG TABLET ELI LILLY AND CO 00002411204 ZYPREXA 2.5 MG TABLET ELI LILLY AND CO 00002411233 ZYPREXA 2.5 MG TABLET ELI LILLY AND CO 00002411260 ZYPREXA 2.5 MG TABLET ELI LILLY AND CO 00002442004 ZYPREXA 20 MG TABLET ELI LILLY AND CO 00002442033 ZYPREXA 20 MG TABLET ELI LILLY AND CO 00002442060 ZYPREXA 20 MG TABLET ELI LILLY AND CO 00002411504 ZYPREXA 5 MG TABLET ELI LILLY AND CO 00002411533 ZYPREXA 5 MG TABLET ELI LILLY AND CO 00002411560 ZYPREXA 5 MG TABLET ELI LILLY AND CO 00002411633 ZYPREXA 7.5 MG TABLET ELI LILLY AND CO 00002411660 ZYPREXA 7.5 MG TABLET ELI LILLY AND CO 00002445401 ZYPREXA ZYDIS 10 MG TABLET ELI LILLY AND CO 00002445485 ZYPREXA ZYDIS 10 MG TABLET ELI LILLY AND CO 00002445501 ZYPREXA ZYDIS 15 MG TAB ELI LILLY AND CO 00002445585 ZYPREXA ZYDIS 15 MG TAB ELI LILLY AND CO 00002445685 ZYPREXA ZYDIS 20 MG TAB ELI LILLY AND CO 00002445601 ZYPREXA ZYDIS 20 MG TABLET ELI LILLY AND CO 00002445301 ZYPREXA ZYDIS 5 MG TABLET ELI LILLY AND CO 00002445385 ZYPREXA ZYDIS 5 MG TABLET Privileged and Confidential Information Page 17 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 138 of 181 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 139 of 181 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 140 of 181 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 141 of 181 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 142 of 181 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 143 of 181 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 144 of 181 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 145 of 181 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 146 of 181 Case 1:05-cv-11148-PBS Document 324 Filed 10/09/2007 Page 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