Class Action

San Francisco City Attorney files antitrust and UCL action against prescription drug wholesaler

By Kimberly A. Kralowec

From a press release issued by San Francisco City Attorney Dennis Herrera on May 20, 2008:

City Attorney Dennis Herrera and the San Francisco Health Plan, the City-sponsored program that provides health insurance to more than 50,000 low-income San Franciscans, today filed suit against McKesson Corporation for illegally conspiring to manipulate pharmaceutical drug prices beginning as far back as 2001. The 88-page complaint filed in U.S. District Court in Boston this morning alleges an elaborate scheme to increase the markup on more than four hundred brand-name prescription drugs in violation of federal and state laws, forcing consumers and health coverage plans ?to make hundreds of millions of dollars of excess payments.?

A copy of the complaint is available at this link. The plaintiffs are the San Francisco Health Plan, "individually and on behalf of the State of California and on behalf of a class of political subdivisions of the State of California," and the People of the State of California, "acting by and through San Francisco City Attorney Dennis Herrera."

The UCL claim appears on pp. 80-82 and is pleaded in a relatively plain-vanilla way. The meat of the allegations appears in the earlier sections of the complaint. The prayer, however, seeks $2,500 per violation in statutory penalties, which the UCL authorizes in public prosecutor actions. See Bus. & Prof. Code § 17206(a). The plaintiffs are represented by a well-known plaintiffs' class action firm, Hagens Berman Sobol Shapiro LLP, in addition to the city attorney's office. [Via SFBG Politics Blog]

Incidentially, last summer, S.B. 376 was signed into law. The bill amended Business and Professions Code sections 17204 and 17206(a) to ensure that the City and County of San Francisco could still pursue UCL claims even if its population dropped below 750,000 (which it did, slightly, according to the latest federal census). The Assembly Floor Analysis explains:

According to the author, [Senator Carole Migden,] the consolidated City and County of San Francisco has a population that hovers around 750,000. As a result, it continually has to prove standing whenever it seeks to bring an unfair competition action. This bill would appear to avoid this potential confusion by reconfirming standing to the City and County of San Francisco regardless of minor fluctuations in its population.

The Senate Committee Analysis further explained:

A federal census has recently put San Francisco's population at under 750,000. This has prompted defendants in unfair competition actions to argue, albeit unsuccessfully, that San Francisco no longer has standing to bring these actions. The San Francisco City Attorney's office is concerned that it will continuously need to defend attacks on its standing, which will consume scarce public resources unless the issue is clarified in the statute.

This bill would remove the population requirement pertaining to a city and county, and instead authorize the city attorney of any city and county to bring an action for unfair competition and recover a civil penalty from the defendant in those actions.

Here is Senator Migden's press release on the bill's passage last June. The amendments went into effect on January 1, 2008.

Full post as published by The UCL Practitioner on May 30, 2008 (boomark / email).