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BERGEN BRUNSWIG CITES "FAILURE OF SPECIFICITY" IN CALIFORNIA PHARMACY SINGLE-PRICE SUITS AS GROUNDS FOR DISMISSAL, HEARINGS ON MOTIONS SET FOR DEC. 10 & 14

Executive Summary

A federal price discrimination suit brought by California pharmacies under the Robinson-Patman Act should be dismissed because of a "failure of specificity," Bergen Brunswig maintains in court documents filed in the case. The suit, Bacon-Normandi v. Medco Containment, et al., alleges that seven defendants -- Bergen, McKesson, Medco Containment, Bristol-Myers Squibb, Forest, Rhone-Poulenc Rorer and Schering- Plough -- violated federal law by offering deeper discounts to mail-order and other "favored" purchasers of drugs than to retail pharmacy. The suit was filed in San Francisco federal court Aug.12 ("The Pink Sheet" Aug. 16, T&G-3). In an Oct. 22 motion to dismiss, Bergen argues that "plaintiff's pleading in this case consists of nothing more than conclusory allegations of price discrimination." The wholesaler argues that Bacon-Normandi, a Mill Valley, Calif. pharmacy, has not met its obligation to "plead sufficient facts regarding each of the six elements" Bergen believes are required for a Robinson- Patman claim. Specifically, Bergen says, the plaintiff did not: "allege completion of two specific discriminatory sales by each defendant/seller to plaintiff and a specified favored buyer"; allege "contemporaneous sales by any defendant to plaintiff and to a favored buyer"; or "plead that the allegedly discriminatory sales to favored and disfavored buyers involve commodities of like grade and quality." The court filing notes that, while the case had been filed as a class action on behalf of retail pharmacies throughout the U.S., "plaintiff's counsel has advised defense counsel that plaintiff has abandoned its class action allegations." A separate price discrimination suit was filed in Harrisburg, Penn. by pharmacy chains. That suit does not name any wholesalers as defendants ("The Pink Sheet" Oct. 18, p. 10). Bergen's motion is scheduled to be heard by Judge Saundra Brown Armstrong Dec. 14. Bergen Brunswig is being represented by Morrison & Foerster attorneys Melvin Goldman, Lori Schechter and Barbara Reeves. Four other suits were filed by California pharmacies against the same defendants in San Francisco state court charging violations of the state Cartwright Act and Unfair Practices Act. On Oct. 15, Bergen joined with Rhone-Poulenc Rorer in requesting that those proceedings be stayed, again citing the vagueness of the charges. In its Oct. 15 motion, RPR argues that "presumably because any attempt at specificity would reveal the meritless nature of their allegations, plaintiffs have employed a "shotgun" approach to pleading their claims." RPR maintains that it "does not operate sales or production facilities in California, sell directly to any of the named plaintiffs or sell to any of plaintiffs' competitors at discriminatory prices or otherwise." Because the complaints are "impermissibly vague," RPR contends, the four suits should be dismissed. In joining Rhone-Poulenc Rorer's motion to have the cases dismissed, Bergen argues that "the deficiencies in plaintiff's complaint are not mere technicalities, but rather a clear indication of plaintiff's futile attempt to uncover some sort of unlawful conduct in an industry where cost containment concerns have infringed on retail pharmacies' ability to reap high profits. What plaintiff is really complaining about is the rise of companies like Medco, who have successfully implemented cost containment services and fulfilled the demand for pharmaceuticals at lower cost." A hearing on the motion to dismiss the state court cases is slated for Dec. 10, Bergen Brunswig said. Rhone-Poulenc Rorer's attorneys are Mary Cranston, Terrence Callan and Jeffrey Ross of Pillsbury, Madison & Sutro. Plaintiffs in all five cases are being represented by former San Francisco Mayor Joseph Alioto.
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