Corcoran et al v. CVS Health Corporation

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

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4 Exhibit R 4 Christopher Corcoran, et al., v. CVS Pharmacy, Inc. Case No. 15-CV-03504-YGR (N.D. Cal.) REBUTTAL EXPERT REPORT OF EDWARD G. McGINLEY, RPh MBA January 27, 2017 CONFIDENTIAL INFORMATION SUBJECT TO PROTECTIVE ORDER 4 I. Introduction I have been asked by counsel for CVS Pharmacy, Inc. ("CVS") to review and respond to portions of the December 9, 2016 reports by Drs. Navarro and Hay. This rebuttal report sets forth my responses to those portions of their reports. The materials I considered in reaching those opinions are attached as Exhibit A. II. Dr. Navarro's general definition of "U&C" Dr. Navarro states that U&C "should be the price that a pharmacy charges to individuals using cash, as opposed to insurance, to purchase the prescription." Navarro Report ¶ 29. "This should include discounted prices that are offered to members of the general public." Id. The general industry understanding of U&C is not "the price that a pharmacy charges to individuals using cash, as opposed to insurance." The absence of insurance is not the test for a "cash" transaction. Nor is a "cash" transaction necessarily an instance when the customer himself or herself pays 100% of the cost of the prescription. Instead, the hallmark of a "cash" transaction is when the customer pays for the prescription without any form of prescription benefit, meaning any kind of assistance that a customer can use to help pay for their prescriptions—such as insurance, cash discount cards, or membership programs. Dr. Navarro's U&C definition includes cash discount card transactions, such that Dr. Navarro characterizes HSP as a "cash discount program" and claims that such "cash discount prices" should be included as U&C unless a contract specifically provides otherwise. Navarro Report III.A & ¶ 57. Yet in my experience the industry does not understand transactions involving cash discount cards to count toward a pharmacy's U&C. For example, when I worked in retail pharmacy, our pharmacies did not report as their U&C the prices charged to customers using cash discount cards. CVS, too, does not report as its U&C the prices charged to customers using cash discount cards at CVS stores. 1 Industry participants do not interpret contractual U&C provisions that are silent on discounts (i.e., no mention of the word "discount") to mean that discounts should be included in the U&C determination. My experience with actually interpreting/negotiating U&C provisions is that "discount" has a specific meaning within the industry. A "discount" is understood to refer to a senior discount or something similar, i.e., a percentage or similar reduction to the retail price that applies automatically to every customer who meets certain criteria and who has no prescription benefit (since a person who has prescription benefits would not pay the retail price). A "senior" discount is the primary example. Whether or not "discounts" are included in U&C is contract-specific. Contracts between pharmacies and PBMs are negotiated, and the parties are sophisticated. Dr. Navarro has conceded that it is the contract that governs the pharmacy's obligations to the PBM or health plan. Navarro Report ¶ 17. As Dr. Navarro acknowledges, some contracts explicitly require that discounts be included in U&C, and some do not. Id. ¶ 37. Besides vague references to his own experience, Dr. Navarro provides no evidence that any pharmacy, plan, or PBM has interpreted a U&C provision in a commercial contract that is silent on discounts to nonetheless include discounts. See Navarro Report ¶¶ 34–37. My experience with actually interpreting and negotiating such provisions is that if a provision does not specifically mention 1 Deposition of Hilary Dudley 199:2–17 (Sept. 20, 2016). 1 4 discounts, then the U&C submitted by the pharmacy will not include discounts. This was the industry standard; it was true at Pathmark and Drug Fair pharmacies, and it is true at CVS. 2 Dr. Navarro asserts that a U&C provision that did not incorporate discounts would somehow "increase[] the cost and reduce[] the access to affordable medications." Id. ¶ 37. He provides no explanation why that would be true and offers no other support for the proposition. PBMs and pharmacies negotiate a benefit design—a collective package—the component parts of which should not be separated but must be considered collectively. Thus, requiring that U&C include discounts would not necessarily reduce overall costs or increase access to affordable medications for insured customers. 3 III. Dr. Navarro's and Dr. Hay's conclusion that membership programs are a type of discount that must be included as "U&C" Dr. Navarro and Dr. Hay assert that membership programs are a type of discount that must be included as U&C. Navarro Report ¶¶ 34–37; Hay Report ¶¶ 10, 62. Membership-program pricing is not a "discount," as individuals who work in the industry understand. 4 As I explained in my initial report, membership programs are a form of prescription benefit which provide cost savings for prescriptions, and sometimes offer additional benefits, such as discounts on non-prescription products or services. 5 Neither Dr. Navarro nor Dr. Hay identifies any PBM or pharmacy that has concluded that membership programs are a "discount" for U&C purposes. They do not present any document or publication to support the conclusion that it was the general understanding of the industry that membership programs are a "discount," or that they must be included in U&C. Nor do they identify any examples from their own professional experience as support. Dr. Navarro and Dr. Hay have no response to the evidence submitted by executives of some of the largest PBMs that those PBMs understood that membership-program pricing was not a "discount" and, more generally, should not be included as U&C. 6,7,8 Dr. Navarro's attempt to minimize the declarations/depositions as being a "handful of PBM employees," Navarro Report ¶ 38, ignores that these were the key personnel at the largest PBMs who had responsibility for constructing pharmacy networks and network contracting. Neither Dr. Navarro nor Dr. Hay identify anyone who worked in a relevant position at a PBM or pharmacy during the relevant time period who holds a different view. 2 Apr. 23, 2008 email re: Applied Contract (CVSC-0020441). 3 The same principle applies to membership programs like HSP (although as discussed below, such programs are not "discounts"). If pharmacies and PBMs were required to treat membership-program pricing as U&C, my experience would lead me to expect that many pharmacies would not offer such programs, leading to increased costs and decreased access for those individuals without insurance who would join the membership program if it was offered, yet resulting in no corresponding benefit to PBMs, plans, or insured patients. CVS Caremark at Odds with Connecticut Medicaid Over Discount Program, DRUG BENEFIT NEWS, at 5 (July 2010) (CVSC-0000086). 4 Deposition of William Strein 78:24–79:6 (Dec. 12, 2016). 5 McGinley Expert Report at 4 (Dec. 9, 2016). 6 Declaration of William Strein ("Strein Decl.") ¶ 9 (Nov. 18, 2016). 7 Declaration of Amber D. Compton ("Compton Decl.") ¶ 10 (Nov. 21, 2016). 8 Declaration of Michael D. Reichardt ("Reichardt Decl.") ¶ 12 (Nov. 20, 2016). 2 4 The Centers for Medicare and Medicaid Services (CMS) does not support Dr. Navarro's assertions regarding industry standard. CMS has specifically stated that it "does not have a stated policy as to whether the prices charged under [a pharmacy program that charges a fee to join] would meet the definition of a usual and customary charge to the public." Dep't of Health & Human Servs. (OIG), A Comparison of Medicaid Federal Upper Limit Amounts to Acquisition Costs, Medicare Payment Amounts, and Retail Prices (2009) at 7 n.26. This means CMS has left the task of deciding whether U&C should include membership-program prices to the Plan Sponsors who negotiate with pharmacies under Medicare Part D. Some state Medicaid programs may have provided guidance or issued regulations on this issue, but Medicaid is not negotiated and agreed to by industry participants; it is imposed by the states, and thus provides no insight into industry customs and understandings of industry participants regarding commercial agreements or practice. Furthermore, Dr. Navarro cites only to a small handful of Medicaid states that he contends have adopted regulations or definitions that require inclusion of membership-program pricing when submitting U&C. Navarro Report ¶¶ 43, 60. Even if he were accurately characterizing the positions taken by these states, the fact that he has cited so few as potentially supporting his position cuts against inferring there was, among state Medicaid programs, the common practice that Plaintiffs suggest. Dr. Navarro is thus incorrect that the HSP program was a "discount program for patients paying cash for prescriptions." Id. ¶ 44. The PBM employees' testimony shows that PBMs did not consider HSP pricing to be a "discount" for purposes of U&C and did not consider HSP members to be "cash" customers. From my experience, the HSP program differed significantly from a "discount" as that term is understood, and the components of the program (enrollment requirement, annual fee, MinuteClinic savings, the store process for enrolling a member, and the target audience for membership) 9 all support my understanding of the differences between operating a program like HSP and offering a fixed price on certain generics to every customer who came into the store and filled a prescription for an eligible medication. IV. Dr. Navarro's conclusion that HSP was not a "bona fide" membership program Dr. Navarro acknowledges testimony that the industry understanding (i.e. that membership-program prices do not factor into U&C) applies to programs in which customers must become members to obtain the program benefits. Navarro Report ¶¶ 38–39. But he is incorrect that the industry understanding depended on whether the "membership requirements to access the benefit of these programs are weak, nominal, or nonexistent." Id. ¶ 39. Notably, Dr. Navarro gives no definition to any of these terms, and identifies no objective standard that would distinguish a program with requirements that are weak/nominal/nonexistent from one in which they are not. Nor does he identify any membership program that was "bona fide" as a point of comparison. 10 Nor is that position supported by the deposition testimony and declarations cited by Dr. Navarro. Id. at nn.42, 43, 70. No PBM distinguished between "weak" and "strong" membership requirements, and no PBM required a program to be "restrictive" in order to qualify as a membership program. Id. ¶ 50. Most PBMs required only an opt-in by the customer. Only Medco (which has since been acquired by ESI) even required a fee; even for the 9 See Nov. 4, 2008 email re: Launch of Health Savings Pass ("HSP Launch Email") (CVSC-0021256); Oct. 21, 2008 Pharmacy Team Huddle Guide ("Huddle Guide") (CVSC-0001800); Sept. 12, 2008 Draft Flowchart Showing Enrollment Process (CVSHSP0002914). 10 More generally, Dr. Navarro does not discuss any other membership programs, nor does he identify any membership program with which he has any experience. 3 4 short period during which Medco required that the fee be greater than nominal, Medco considered the HSP program to satisfy the requirements. 11 CVS documents or internal communications referencing HSP as the company's "cash card" or "cash offering" do not support Dr. Navarro's position. Id. ¶ 46. The documents or statements cited by Dr. Navarro do not suggest that anyone at CVS viewed the HSP program as anything other than a membership program. The use of overlapping terminology may occur because membership programs share some characteristics of discount card programs, which are sometimes called "cash cards" or the like. Also, both discount cards and membership programs are forms of prescription benefits that may appeal to and be affordable for individuals who would otherwise be "cash customers," i.e., customers with no prescription benefits. An industry participant familiar with membership programs and cash discount cards would not understand the terms used by CVS employees in the documents cited by Dr. Navarro to mean that the CVS employees considered members of the HSP program to be the same as "cash customers," or that HSP prices should be submitted as U&C. 12 Notably, in the information I have been provided in this case, I have seen no evidence that anyone at CVS believed the HSP price was required to be reported as the U&C price under CVS's contracts, while at the same time there seems to be (correctly) a uniform consensus within CVS that its price to cash customers should be reported as its U&C. These facts can only coexist if, in fact, CVS did not believe the HSP program price was its "cash" price, and thus, its U&C price. Although the HSP program might offer value to a customer that was "comparable to the Wal-Mart [price list]," Navarro Report ¶ 46, the structure of the program was unquestionably much different. CVS's documents 13 demonstrate that enrollment was required, a fee was to be collected, and there were additional benefits to joining the HSP program—features not shared by the Wal-Mart price list. Dr. Navarro acknowledges that patients "had to fill out an enrollment form and pay a small annual fee" to participate in the HSP program. Id. ¶ 47. Navarro provides no support for the idea that a bona fide membership program requires any further "criteria" or limitations on "eligibility." Nor did the PBM declarants testify that anything further was required. Dr. Navarro contends that the annual fee was "nominal." Id. ¶ 51. But that is irrelevant to the industry standard. In the industry, the general understanding was that even pricing structures offered as part of membership programs that did not charge a membership fee were understood to not count toward the pharmacy's U&C. 14 Even assuming for sake of argument the size of the membership fee were relevant, the PBMs knew there was a membership fee for HSP and knew its amount, and the PBM declarants have testified without exception that they considered HSP to be a membership program. 15 CVS's expert economist has demonstrated that these membership fees were economically significant to many customers, 16 and PBM declarants have acknowledged this as well. 17 Their conclusions that a $10 or $15 annual fee could significantly impact customer decision-making is consistent with my own experience. 11 Declaration of Franceen Spadaccino ¶¶ 9-10; Declaration of William Strein ¶¶ 9-13 12 Id. ¶ 10. 13 HSP Launch Email; Huddle Guide. 14 Deposition of William Barre ("Barre Dep.") 24:4–19 (Nov. 17, 2016). 15 Declaration of John Lavin ¶¶ 18–20 (Nov. 18, 2016). 16 Report of Michael Salve ¶ 14 (Dec. 9, 2016). 17 Strein Decl. ¶ 12; Declaration of Franceen Spadaccino ("Spadaccino Decl.") ¶ 7 (Nov. 18, 2016). 4 4 CVS considered payment of the membership fee to be an essential requirement for joining the program. CVS documents reflect the attention given to the membership fee when designing the program from initial offering recommendations 18 through implementation, 19 "[f]or anyone to enroll in the new Health Savings Pass they must pay the enrollment fee, including those customers in the existing Health Savings Pass program." 20 CVS instructed pharmacists on how to collect the fee and prohibited them from waiving it: "There are no enrollment waivers." 21 When, during the early part of the program, it was identified that there were some members who had not paid a fee, CVS sent letters to them that they would have to pay or else forfeit their membership: "We have identified 2774 such [no-fee] members and we will be sending collection letters to these members." 22 Within the first year of the program, CVS's PBM began to charge the fee automatically on the member's first fill, and on the first fill following the member's annual anniversary. This system remained in place for the duration of the program. 23 Whether or not every single HSP member actually paid the membership fee is not relevant. Neither Dr. Hay nor Dr. Navarro cites any evidence to indicate that CVS intentionally aimed to provide membership benefits to non-members. To the contrary, all of the internal documents noted above indicate that CVS clearly intended for the fee to be collected, and took steps to address collection of the fee when no payment was identified. Business plans are not always, and cannot always be, perfectly implemented. Policies and procedures are rarely (if ever) perfect, and perfection is not required. From my experience and perspective, it is important to practice "PIE" (plan, implement, evaluate), and make adjustments accordingly. I believe CVS did this with HSP. I understand that data analysis expert Brett Barlag undertook an analysis of the incidence rate of HSP membership fee payment and found that CVS's transaction data demonstrates that at least over 84% of HSP members paid the enrollment fee. 24 I also understand that Dr. Hay's own analysis of the transaction data shows that CVS collected the enrollment fee approximately 90% of the time between 2010 and 2015. 25 Furthermore, whether fees would be refunded if membership was cancelled early is irrelevant. Navarro Report ¶ 51. Allowing customers the option to try a new program, but to receive a refund if they decline to continue participation, does not change the obligation to pay the fee to join. A customer could not remain a member without continuing to pay the fee. Likewise, whether or not CVS offered value in the form of ExtraBucks, id. ¶¶ 46, 52, to members when they filled prescriptions does not alter the fact that a fee was required to join the program and get access to the opportunity for that additional value. Dr. Navarro points to no evidence, nor am I aware of any, that the HSP membership fee was reduced or rebated with ExtraBucks. Many pharmacies in the United States have rewards programs akin to ExtraBucks. Dr. Navarro is incorrect that the HSP program was a program intended to "attract customers." Navarro Report ¶¶ 44, 61. Navarro offers no explanation of how he comes to this conclusion. Given that his testimony is that he has no experience with membership programs, it is difficult to understand what his 18 Offering Recommendations Presentation. 19 HSP Launch Email. 20 HSP Operational Overview at 12. 21 Id. 22 May 6, 2009 HSP Operational Update (CVSC-0022527). 23 Sept. 28, 2009 email re New In-Store Enrollment Process (CVSHSP0010755); Apr. 20, 2009 Business Request for Change in Enrollment Process (CVSC-0022394); June 20, 2013 ScriptSave SOW for HSP at 2 ("ScriptSave SOW") (CVSC-0231080). 24 December 9, 2016 Report of Brett Barlag ¶ 55. 25 January 27, 2017 Report of Brett Barlag, Figure 2. 5 4 basis would be for opining as to the purposes of such programs. 26 HSP was specifically aimed at retaining existing customers, not at attracting new ones. I disagree with Navarro that "CVS did not adhere to any sort of strict separation between offering the HSP prices to members and non-members," but that instead "HSP prices were offered to the general public." Navarro Report ¶ 48. Membership-program pricing was limited to members. HSP transactions were adjudicated using a specified Condor Code, 27 after which adjudication a result (including a price, if the member was eligible and the drug was on the HSP list) was returned to the pharmacist. Neither Dr. Navarro nor Dr. Hay has identified any evidence that CVS adjudicated transactions of non-HSP members using the HSP program Condor Code. CVS used third party administrators (first Alliance and Caremark, 28 and then Scriptsave 29) to administer this program as a membership program, including to collect membership fees, maintain eligibility lists, and to adjudicate claims only for eligible members. I also disagree that HSP pricing was the "everyday price" available to "all customers who walk in the door." Dr. Navarro is incorrect in equating "everyday price" and prices available to "all customers who walk in the door" to "prices under a weak membership program." Navarro Report ¶ 56. "Everyday price" and "prices available to all customers who walk in the door" would be understood in the industry to refer to the retail price that a pharmacy's computer system would provide if a person filled a prescription with no pharmacy benefits. 30 Industry standard is that the same automated process that generates a U&C for a third-party claim also generates the retail price that would be supplied to the pharmacist if a patient sought to fill a prescription without any prescription benefit. CVS's system follows this industry standard, 31 and Dr. Navarro and Dr. Hay have identified nothing to the contrary. Indeed, I understand that Brett Barlag has determined that cash customers paid more, not less, than the standard HSP price 78% of the time. 32 Dr. Navarro and Dr. Hay claim that the price paid by HSP members ($11.99) was also a common price point for non-HSP members. Navarro Report ¶¶ 53–54; Hay Report ¶ 40. They fail to account for the fact that that the published HSP price and CVS's minimum retail price were identical between January 1, 2011 and the end of the HSP program. 33 (A minimum retail price, however, would not necessarily entitle you to a 90-day supply, which HSP did. In this way, a minimum retail price transaction may well be more expensive than an HSP transaction.) Minimum retail prices are consistent with industry standard, and nothing prohibited CVS from setting that price and the HSP price to be the same for a given drug. Neither Dr. Navarro nor Dr. Hay cite any evidence to suggest that non-members who were charged $11.99 were receiving the "HSP price" as opposed to the minimum retail price. I would expect that the minimum retail price would explain most instances of non-HSP customers being charged $11.99, based on the evidence of how retail prices are generated and the fact that it involves a different Condor Code than HSP adjudication. Indeed, I understand that Brett Barlag evaluated CVS's $9.99 and $11.99 cash transactions and determined that CVS submitted a U&C price to PBMs and third party 26 Deposition of Dr. Robert Navarro ("Navarro Dep.") 197:3–12 (Nov. 7, 2016). 27 Huddle Guide at 7. 28 Aug. 8, 2008 Operational Update (CVSC-0001228). 29 ScriptSave SOW. 30 Barre Dep. 24:4–19. 31 Telephone interview of Scott Tierney (Jan. 13, 2017). 32 January 27, 2017 Report of Brett Barlag ¶ 22. 33 Deposition of Sevak Melkonian 111:13–24 (July 21, 2016). 6 4 payors that was equal to, if not lower than, $9.99 or $11.99 on 99.9% of comparable third party prescription purchases. 34 Finally, none of Dr. Navarro's cited material indicates a belief by anyone at CVS that membership- program pricing should be included as U&C. And any such understanding would have been mistaken, as demonstrated by the uniform PBM testimony in this case and Dr. Fein's publications. 35 To my knowledge, despite their awareness of the HSP program, no private payors have demanded that membership-program pricing be treated as U&C under their existing contracts. V. Dr. Navarro's conclusion that PBMs would be unable to know if CVS was submitting accurate U&C Dr. Navarro's conclusion that PBMs could not know whether CVS was submitting its HSP prices as U&C is incorrect. Navarro Report ¶ 55. PBMs knew that pharmacies had membership programs. 36 The fact that CVS had a membership program, as well as the list of drugs and the prices for those drugs, was publicly available. PBMs and others in the industry were aware that pharmacies did not generally submit membership-program pricing as U&C. 37 If a PBM believed that CVS was required to submit HSP pricing as U&C, it could have tested its belief by looking at claims submitted by CVS for drugs on the public HSP list to see if the submitted U&C equaled the publicly available HSP price. 38 Moreover, PBMs that wanted to verify whether HSP pricing was available only to members could send secret shoppers to a CVS store to get a price quote without being members of HSP. 39 Dr. Navarro offers no support for the proposition that these mechanisms would be insufficient for a PBM to inform itself about the HSP program's operations. VI. Dr. Hay's application of a "1% Fee Screen" Dr. Hay opines in his report that it would be appropriate to calculate U&C by examining the prices charged to cash customers over the period of a prior year, and setting U&C at a particular percentile of those charges. Hay Report ¶¶ 46–52. He has chosen the first percentile. In my experience, nothing like this is done by pharmacy or PBM industry participants. Dr. Hay does not even claim that industry participants do anything like this in setting, or auditing, U&C pricing. He offers no examples of anyone else in the industry ever having evaluated a U&C price by applying a 1% screen. In practice, U&C is not determined retroactively, which is effectively what Dr. Hay is doing in recalculating a U&C price in hindsight. U&C necessarily is determined at the point of sale: the same system that would generate a retail price if the customer is a cash customer also generates the U&C that 34 January 27, 2017 Report of Brett Barlag ¶ 44. 35 Adam J. Fein, Pharmacy Profits and Wal-Mart, Drug Channels: Expert Insights on Pharmaceutical Economics and the Drug Distribution System (Jan. 15, 2009), http://www.drugchannels.net/2009/01/pharmacyprofitsandwalmart.html; Adam J. Fein, The 2016 Economic Report on Retail, Mail, and Specialty Pharmacies, PEMBROKE CONSULTING, INC., AND DRUG CHANNELS INSTITUTE at 190–91 (Jan. 2016). 36 Lavin Decl. ¶¶ 13, 20. 37 Supra n.35. 38 HSP FAQs (CVSC-0041391). 39 Spadaccino Decl. ¶ 8. 7 4 gets submitted to a third party if the customer is insured. That is industry standard, and that is how CVS operated. 40 Even if a retroactive screen were applied in the industry, I am aware of no objective standard that dictates which percentile level to choose. I would not think it makes sense to use the 1% level. The reason: there are valid business reasons why a pharmacist might charge a particular patient less than the system generated retail price, including customer service accommodations. Such one-off deviations to a pharmacy's retail price cannot reasonably be interpreted to change the pharmacy's U&C, but Dr. Hay's 1% fee screen could result in just that conclusion. VII. Dr. Navarro's conclusion that patients are at risk if they fill prescriptions at multiple pharmacies I understand that in a "Rebuttal Declaration" filed with the Court on January 9, 2017, Dr. Navarro opines about the importance of continuity of care. Specifically, he opines that filling prescriptions at the same pharmacy reduces the patient's risk of drug-to-drug interactions; and that for this reason, various organizations have urged patients to utilize a single pharmacy. Navarro Rebuttal Declaration ¶¶ 28– 32. Dr. Navarro overlooks the fact that for individuals with insurance, the health plan's PBM can ensure continuity of care to a significant degree, as long as the patient uses his or her insurance for every prescription. Every time a patient uses his or her insurance when filling a prescription, the pharmacy submits a claim to the insurer's PBM containing, among other things, information about the drug being dispensed. The PBM thus obtains information on every prescription filled using the patient's insurance, even if the prescriptions are filled at different pharmacies, and stores the information in a patient profile. During the claim adjudication process, the PBM assists the pharmacist in performing Drug Utilization Review ("DUR"), the process by which an individual patient's drug therapy is evaluated for safety and appropriateness. When the patient fills a new prescription, the PBM's computer system performs electronic checks—often called "edits"—that incorporate clinical data to compare the new prescription against the patient's existing profile. These edits alert the pharmacist of potential contraindications, such as adverse drug-drug or drug-allergy interactions, which the pharmacist then addresses and resolves before dispensing the prescription. A PBM's edits increase the effectiveness of a pharmacist's DUR because the PBM has visibility into a patient's entire prescription history. Patients without insurance are differently situated. Because uninsured prescriptions are not adjudicated by a PBM, the pharmacist can consider only the prescription history stored in the pharmacy's internal computer system. The pharmacist has no way of knowing whether that uninsured customer has filled prescriptions at other pharmacies, and how those prescriptions might interact with the prescription being filled. Uninsured individuals thus face a potential health risk by filling prescriptions at multiple pharmacies, because each pharmacist will be acting with incomplete information and might be unable to recognize a potentially dangerous drug-drug interaction. Dr. Navarro identifies "several instances" in which PBMs and health plans advised their patients to fill all of their prescriptions at a single pharmacy, and that transferring prescriptions between pharmacies may be 'dangerous' and 'not recommended,'" Navarro Rebuttal Declaration ¶ 30. Notably, he does not cite any documents from a PBM. Instead, he relies on statements by a drug manufacturer, a cancer website, 40 Telephone Interview with Scott Tierney supra n.31. 8 4 a health plan, and a document from the California State Pharmacy. 41 Most of these sources appear to target readers that would include uninsured patients, whom I understand are not members of the proposed class in this case. This might explain why these sources do not discuss that for insured individuals, PBMs can and do monitor potential drug-to-drug interactions and other potential contraindications regardless of where the patient fills the prescription. Edward G. McGinley _____________________________ Date: January 27, 2017 Edward G. McGinley, RPh MBA 41 Dr. Navarro notes that CVS has partnered with America's Family Physicians to launch the "Health is Primary" campaign, and notes that one goal of the program is to improve coordination among providers. But nothing in the material he cites with respect to that program indicates that it is "dangerous" or "not recommended" for an insured patient to fill prescriptions at multiple pharmacies. Navarro Rebuttal Declaration ¶ 32. 9 4 EXHIBIT A 4 McGinley - Materials Considered I considered the documents upon which I relied to draft my Declaration and my original Report. In addition to those materials, in formulating the opinions in this Rebuttal Report, I considered: 1. Walgreens Prescription Savings Club PowerPoint, dated Feb. 27, 2008 (CVSC-0212860). 2. "Cash Card Offering" Recommendations Presentation, dated Apr. 4, 2008 (CVSC- 0178349). 3. "Cash Card" Discussion with Larry, dated Apr. 9, 2008 (CVSC-0033636). 4. Schuldes Email re Design Questions, dated July 28, 2008 (CVSC-0222779). 5. Re Confidential – "New CVS Cash Offering," dated Aug. 4, 2008 (CVSC-0020500). 6. HSP Operational Update, dated Aug. 8, 2008 (CVSC-0001228). 7. Re Modified Program, dated Sept. 2, 2008 (CVSC-0020596). 8. CVS HSP Enrollment Process Flow Chart, dated Sept. 12, 2008 (CVSHSP0002914). 9. HSP FAQs (CVSC-0041391). 10. E-mail re Enrollment Fee Process, dated Sept. 29, 2008 (CVSC-0020889). 11. HSP Operational Overview Presentation, dated Sept. 29, 2008 (CVSHSP0030669). 12. Pharmacy Team Huddle Guide, dated Oct. 21, 2008 (CVSC-0001800). 13. HSP Launch, dated Nov. 4, 2008 (CVSC-0021256). 14. HSP Administration Update re Rejecting Non-Covered Drugs, dated Dec. 23, 2008 (CVSC- 0021740). 15. E-mail re HSP Renewal Fee Automation, dated Apr. 20, 2009 (CVSC-0022394). 16. HSP Operational Update, dated May 6, 2009 (CVSC-0022527). 17. HSP Operational Update, dated Aug. 26, 2009 (CVSHSP0010587). 18. E-mail re New HSP In Store Enrollment Process, dated Sept. 28, 2009 (CVSHSP0010755). 19. Caremark HSP Administration Memo, dated Aug. 27, 2010 (CVSC-0231922). 20. ScriptSave Implementation Notes, dated May 1, 2013 (CVS_HSP_0001277392). 21. ScriptSave HSP Testing Scenarios, dated June 13, 2013 (CVSC-0231137). 22. ScriptSave SOW for HSP, dated June 20, 2013 (CVSC-0231080). 23. HSP Bulletin Cover E-mail, dated June 27, 2013 (CVSC-0225927). 24. HSP Bulletin Store Communication, dated June 27, 2013 (CVSC-0225928). 25. HSP Online Enrollment Walkthrough, dated June 5, 2014 (CVS_HSP_0001022348). 26. Email re Applied Contract, dated Apr. 23, 2008 (CVSC-0020441). 27. Expert Report of Dr. Robert Navarro, dated Dec. 9, 2016. 4 28. Sources listed in Exhibit B to the Expert Report of Dr. Robert Navarro. 29. Expert Report of Dr. Joel Hay, dated Dec. 9, 2016. 30. Rebuttal Declaration of Dr. Robert Navarro, dated Jan. 9, 2016. 31. Deposition Transcript of William Strein, dated Dec. 12, 2016. 32. Deposition Transcript of Dr. Robert Navarro, dated Nov. 7, 2016. 33. Deposition Transcript of William Barre, dated Nov. 17, 2016. 34. Deposition Transcript of Sevak Melkonian, dated July 21, 2016. 35. The Medicare Part D Prescription Drug Benefit, THE HENRY J. KAISER FAMILY FOUNDATION, available at http://kff.org/medicare/fact-sheet/the-medicare-prescription-drug-benefit-fact- sheet/. 36. U.S. GAO, Prescription Drug Discount Cards: Savings Depend on Pharmacy and Type of Card Used, Sept. 12, 2003). Report on Prescription Drug Discount Cards, dated Sept. 2003. 37. CVS Caremark at Odds with Connecticut Medicaid, Drug Benefit News, dated July 2010 (CVSC-0000086). 38. Expert Report of Ed McGinley, dated Dec. 9, 2016. 39. Declaration of William Strein, dated Nov. 18, 2016. 40. Declaration of Amber Compton, dated Nov. 21, 2016. 41. Declaration of Michael D. Reichardt, dated Nov. 20, 2016. 42. Declaration of Franceen Spadaccino, dated Nov. 18, 2016. 43. Declaration of John Lavin, dated Nov. 18, 2016. 44. Expert Report of Brett Barlag, dated Dec. 9, 2016. 45. Rebuttal Report of Brett Barlag, dated Jan. 27, 2017. 46. Expert Report of Michael Salve, dated Dec. 9, 2016. 47. Telephone Interview with Scott Tierney, dated Jan. 13, 2017. 48. Adam J. Fein, Pharmacy Profits and Wal-Mart, DRUG CHANNELS: EXPERT INSIGHTS ON PHARMACEUTICAL ECONOMICS AND THE DRUG DISTRIBUTION SYSTEM (Jan. 15, 2009), http://www.drugchannels.net/2009/01/pharmacyprofitsandwalmart.html. 49. Adam J. Fein, The 2016 Economic Report on Retail, Mail, and Specialty Pharmacies, Pembroke Consulting, Inc., and Drug Channels Institute (Jan. 2016).