In re McKesson Governmental Entities Average Wholesale Price Litigation

264 F.R.D. 595, 2009 U.S. Dist. LEXIS 108703, 2009 WL 3706898
CourtDistrict Court, N.D. California
DecidedNovember 4, 2009
DocketNo. C-09-80170 MISC MHP (JCS)
StatusPublished
Cited by7 cases

This text of 264 F.R.D. 595 (In re McKesson Governmental Entities Average Wholesale Price Litigation) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re McKesson Governmental Entities Average Wholesale Price Litigation, 264 F.R.D. 595, 2009 U.S. Dist. LEXIS 108703, 2009 WL 3706898 (N.D. Cal. 2009).

Opinion

ORDER GRANTING MOTION TO COMPEL [Docket No. 1]

JOSEPH C. SPERO, United States Magistrate Judge.

I. INTRODUCTION

Defendant McKesson Corporation’s Motion to Compel came on for hearing on Friday, October 30, 2009, at 9:30 a.m. For the reasons stated below, the Defendant’s Motion is GRANTED.

II. BACKGROUND

A. The Litigation

On May 20, 2008, the San Francisco City Attorney and the San Francisco Health Plan (“SFHP”) filed suit against Defendant McKesson alleging violations of various statutes, including the Racketeer Influenced Corrupt Organizations Act (18 U.S.C. § 1962) and the California False Claims Act (Cal. Gov.Code § 12651). The lawsuit is pending in the District of Massachusetts. The lawsuit involves published prices for brand-name prescription drugs. In particular, Plaintiffs allege that Defendant McKes-son and First Databank (“FDB”) entered into a scheme by which the published Average Wholesale Price or “AWP” for prescription drugs was artificially increased from 20% to 25%. Defendant’s Motion to Compel (“the Motion”) at 4. Plaintiff alleges that although FDB represented that the published AWP was a weighted average of the list price of the three national drug wholesalers — McKesson, Cardinal Health and Ameri-sourceBergen — this representation was untrue. Instead of constituting an average of the three, FDB’s published AWP’s were based on McKesson’s list prices alone. Id. According to Plaintiffs, this resulted in the State of California overpaying for over 400 brand-name prescription drugs beginning in August 2001 up until the present. Id. On April 29, 2009, the district court entered a protective order that governs the confidentiality of documents produced in the litigation by both parties and nonparties. See Declaration of Paul Flum, ¶ 2, Exh. F.

In July 2009, Plaintiffs moved to certify the action as a class action comprised of all governmental entities in California including “the State itself.” Motion at 3. In support of the class certification motion, the Plaintiff submitted a declaration from its damages expert, who “estimated the damages to be approximately $550 million, 90% of which is attributable to injuries allegedly suffered by California’s Medicaid program. CDHCS is the state agency responsible for overseeing and operating California’s medicaid program.” Flum Deck, ¶ 4

In addition, in 1998, Ven-A-Care filed a qui tam suit on behalf of California. The Judicial Panel on Multidistrict Litigation transferred that case to the District of Massachusetts to include it as part of that court’s AWP MDL litigation. See In re Pharm. Indus. Average Wholesale Price Litig., 478 F.Supp.2d 164, 170 (D.Mass.2007). In that case, the State of California filed a complaint-in-intervention (in 2005) “alleging" that the manufacturer defendants provided inflated AWP’s to FDP, which FDP published and Medi-Cal then used to reimburse providers for certain prescription drugs.” Defendant’s Motion at 4. According to Defendant, CDHCS “as the state agency responsible for Medi-Cal, has been the focal point for discovery in the Ven-A-Care litigation.” Id. In response to document requests in that ease, CDHCS put over one million documents into a central database that is maintained by Bridge City Legal, and then produced some of those documents to the Ven-a-Care defendants. Id. at 5.

[598]*598B. The Defendant’s Motion to Compel

The Defendant’s Motion to Compel arises out of a subpoena that Defendant served on CDHCS for the production of documents, many of which were produced in the related AWP litigation. The subpoena seeks the following documents:

Request No. 21: “For each litigation matter, not responsive to Request No. 20, concerning AWP or prescription drug reimbursement: (a) All transcripts of depositions of you and Your current and former employees; (b) All exhibits to depositions of you and Your current and former employees; and (c) All Documents produced by You in discovery.”

See Flum Declaration, Exhibit A at 11.

In response to the subpoena, CDHCS served objections on May 7, 2009. See Flum Deck, Exh. B. CDHCS did not file a motion to quash the subpoena. In response to Request No. 21, CDHCS objected as follows:

DHCS objects to this request on the basis that “all documents produced” is vague, ambiguous and overbroad because some of those documents are defendant-specific or subject to a protective order that the documents produced can only be viewed in connection with the Ven-A-Care litigation. Without waiving the above objections, due to the volume of materials and the search required to locate the responsive documents, the burden of producing the materials is overwhelming. Pursuant to Federal Rules of Civil Procedure, Rule 45, subdivision (c)(3)(A)(iv), DHCS will disclose this information if an appropriate cost-shifting arrangement can be agreed upon. An estimate of the cost obtained from Bridge City Legal is $10,190. There may be additional costs to the extent other redactions or special treatment of documents is required. DHCS also reserves the right to review the documents and to assert further objections if necessary.

Id. at 13-14.

According to Defendant, CDHCS indicated in its response to other document requests that it had previously produced in the Ven-a-Care litigation, documents that were responsive to those requests. According to CDHCS, the documents produced in the Ven-a-Care litigation would be produced to McKesson “if an appropriate cost-shifting arrangement can be agreed upon.” Flum Deck, Exh. B, Response to Request Nos. 1, 2(e), 5, 7, 10, 14-16 and 19. The parties met and conferred and “agreed that if McKesson gets CDHCS’s document production in the Ven-a-Care litigation, most of its requests would be fulfilled.” Flum Deck, ¶ 7. CDHCS agrees that the documents produced in the Ven-a-Care litigation “are the subject of the instant dispute.” CDHCS’s Opposition at 2, citing Gorospe Deck, ¶ 3.

The dispute, therefore, centers around CDHCS’s stated need to re-review all of the documents that were produced in the Ven-a-Care litigation before producing them again in this litigation to Defendant McKesson. CDHCS claims that it needs to conduct this re-review because some of the documents are subject to the deliberative process privilege and other documents contain confidential pricing information, which are trade secrets. Id. CDHCS estimates that this review of the entire document production would cost approximately $250,000 and constitutes an overwhelming burden, especially in light of the difficult budgetary times in the State of California.- Defendant claims that this review, and related expense, is completely unnecessary because these documents were already produced in another litigation, and any confidentiality concerns may be ameliorated by an appropriate protective order such as was done at the time of the initial production in the MDL litigation and was also done here in this litigation.1

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Bluebook (online)
264 F.R.D. 595, 2009 U.S. Dist. LEXIS 108703, 2009 WL 3706898, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-mckesson-governmental-entities-average-wholesale-price-litigation-cand-2009.