Corcoran et al v. CVS Health Corporation

Northern District of California, cand-4:2015-cv-03504

Exhibit 4

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Exhibit 4 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFOßNIA OAKLAND DIVISION Christopher Corcorary et al., Case No. 15-cv-03504-YGR CLAgs ACTION Plaintiffs, DECLARATION OF FRANCEEN SPADACCINO, RPh. v CVS Pharmacy/ Inc Defendant. I, Franceen Spadaccino, pursuant to 28 U.S.C .51746, hereby affirm that I am over L8 years of age and cornpetentto make thefollowing Declaration. Prof essional Background 1. Iworked at Medco from 1998-201,3, From 2006 through20l3,I was Senior Director, Provider ltelations and Network Strategy for Medco Health Solutions, Inc. ("Medco"), which became a wholiy-owned subsidiary of Express Scripts Holding Company in2072. As Senior Director, my job responsibilities included: negotiating contrac.ts with network pharmacies, provider relations and network strategy. 2. Since 2A1.4,lhave bêen Assistant Vice President, Government Relations for Fidelis Care. 3. I graduated fromst. John's Universì.ty College of Pharmacy and have been a licensed pharmacist in New York since October 2,1987. Medco's Definition of "Usual and Customary" 4. Medco's 2009 Pharmacy Services Manual, Íinalized in or around November 2008, defined the U&C price as: The lowest net price a cash patient or customer would have paid the day the prescription uras dispensed, inclusive of all applicable discounts. These discounts include, but are not limited to, senior citizen discounts, "loss leaders" frequent shopper or special customer discounts, competitor's matched price, and other discounts offered to customers, including but not limited to buyer's clubs with nominal membership fees, discount buying cards and programs. 2009 Pharmacy Services Manual $ 8.9. 5. In the next edition of the Manual, Medco revised its definition of U&C to mean "the lowest net cash price a cash patient or customer woulcl have paid the day the prescription ì ¡as clispensecl, inclusive of all applicable discounts." 2009/2010 Pharmacy Services Manual S 3.3.1. Medco's Position on Membership-Based Genetic Programs 6. I recall discussing membership-based generic proglams with a numbêr of my colleagues, including, at a minimum, Bill Strein, Laizer Kornwasser, Calvin Corum, and in-house counsel,at Medco. We decided that pharmacies who charged customêrs a fee to enroil in a mernbership-based generic program were not required to submit the program price as U&C, and subsequently modified the U&C definition in Medco's next provider manual. I believe my colieagues ancl I discussed Medco's position with most of the pharmacies that offered mernbership- based generic programs. 7. I understood the membership fee to be the key factor differentiating (i) a membership-based generic prografiì, which did not affect a phannacy's U&C price, from (ii) a rnere discounted price list like Walmârt's $4 generic offering, which pricing was charged to all customers and which Medco required the pharmacy to submit as U&C. A membership fee poses a real barrier to entry for customers who might consider joining the program, especially when other pharmacies (like Walmart) offered the same medications, at a similar price point, without a fee. L Medco did not simply rely on pharmacies'representations that they required customers to pay an enrollment fee to access their membership program pricing. I recall that Medco sent "secret shoppers" to some retail chains to con{irm that a customer would not get the benefit of the membership program pricing unless he or she signed up for the program and paid the fee. 9. As it read in Medco's definition of "Usual and Customary" 2009 Manual, the included programs that charged no fee or a "nominal" lee, Medco did not have a standard definition of "nominal" because one's definition of "nominal" could vary based on a number of factors, including wl"rere one lives" one's income bracket, etc. L0. As noted above, Medco.ultimately removed the reference to "nominal" fees from its next edition of the Manual-the20iß9/2010 Manual. The new definition contained the language "inelusive of all applicable discounts;" this language, too, did not encompass membership pro$ams, because membership program prices were only "applicable" to customers who had paid a fee to join the program (and performed any other requirements for enrolling). The regular customer paying the retail price (i.e., the cash customer) who did not join the program was not entitled to the same pricing structure of the membership program. 11. Atthough I was not personally involved in pharmacy audits, I recall that Medco's team audited the U&C prices being submitted by pharmacies to ensure that Medco's clients were getting the benefit of discounted pricing that pharmacies offered to all customers. I am not aware of Medco ever taking action against a pharmacy for not submitting its membership prices as its U&C prices, Date: November 18, 201..6