# Commonwealth v. Tap Pharmaceutical Products, Inc.

> Commonwealth Court of Pennsylvania · August 31, 2011 · 36 A.3d 1197

URL: https://www.frixlaw.com/law-library/cases/2325944

## Case

- **Full name:** COMMONWEALTH of Pennsylvania, Plaintiff v. TAP PHARMACEUTICAL PRODUCTS, INC.; Abbott Laboratories; AstraZeneca PLC; AstraZeneca, Holdings, Inc.; AstraZeneca Pharmaceuticals LP; AstraZeneca LP; Bayer AG; Bayer Corporation; SmithKline Beecham Corporation D/B/A GlaxoSmithKline; Pfizer, Inc.; Pharmacia Corporation; Johnson & Johnson; Alza Corporation; Centocor, Inc.; Ethicon, Inc.; Janssen Pharmaceutical Products, L.P.; McNeil-PPC, Inc.; Ortho Biotech, Inc.; Ortho Biotech Products; L.P.; Ortho-McNeil Pharmaceutical, Inc; Amgen, Inc.; Immunex Corporation; Bristol-Myers Squibb Company; Baxter International Inc.; Baxter Healthcare Corporation; Immuno-U.S., Inc.; Aventis Pharmaceuticals, Inc.; Aventis Behring, L.L.C.; Hoechst Marion Roussel, Inc., Boehringer Ingelheim Corporation; Boehringer Ingelheim Pharmaceuticals, Inc.; Ben Venue Laboratories; Bedford Laboratories; Roxane Laboratories; Schering-Plough Corporation; Warrick Pharmaceuticals Corporation; Schering Sales Corporation; Dey, Inc., Defendants
- **Court:** Commonwealth Court of Pennsylvania
- **Decided:** August 31, 2011
- **Citations:** 36 A.3d 1197; 2011 Pa. Commw. LEXIS 415; 2011 WL 4056170
- **Precedential status:** Published
- **Opinion:** Opinion by Simpson
- **Judges:** Leadbetter, Simpson, Feudale
- **Cited by:** 15 later opinions in the Frix Law Library

## Citator (automated)

- **Red flag:** Vacated on other grounds by Commonwealth v. TAP Pharmaceutical Products, Inc., 626 Pa. 1 (2014).
- Negative treatments: 1
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/2325944

## How later opinions describe it (automated extraction)

- discussing, inter alia, Commonwealth v. Percudani, 825 A.2d 743 (Pa. Cmwlth. 2003) (rejecting Superior Court’s continuing requirement of proof of common law fraud under Section xxi, given that it would render the addition of the phrase “deceptive conduct” superfluous and contr…
- stating Commonwealth Court has adopted “deceptive” standard under post-amendment catchall section of UTPCPL because language of 1996 amendment signaled approval of less restrictive pleading requirements
- holding that a jury’s defense verdict on common law claims for fraudulent and negligent misrepresentation did not bar a public CPL enforcement action

## Opinion text

OPINION re POST-TRIAL MOTIONS of the COMMONWEALTH of PENNSYLVANIA and BRISTOL-MYERS SQUIBB COMPANY
OPINION BY
Judge SIMPSON.
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I. BACKGROUND
A. Opening
This complex original jurisdiction action, which comes before a panel of this Court for a third time, involves the pricing of pharmaceuticals reimbursed by the Pennsylvania Department of Public Welfare (DPW), which administers Pennsylvania’s Medicaid program, and by the Department of Aging, which administers the Pharmaceutical Assistance Contract for the Elderly (PACE) program, based on Average Wholesale Price (AWP) between 1991 and 2008.
In particular, the Commonwealth, through its Attorney General, filed suit against numerous pharmaceutical companies, including defendant Bristol-Myers Squibb Co. (BMS), which, the Commonwealth claimed, engaged in improper conduct that caused DPW and PACE (collectively, “Plaintiff Agencies”) to pay inflated prices for pharmaceuticals the defendant pharmaceutical companies manufactured, marketed and sold. Among other things, the Commonwealth alleged the defendant pharmaceutical companies, including BMS, reported or contributed to the reporting of inflated AWPs for certain specified drugs that are published in commercial publications and that these inflated prices caused overpayment by DPW and PACE, which relied on these reported prices.
Central among the Commonwealth’s claims is that the published AWPs for BMS’ drugs are fictitious because they do not reflect an accurate average wholesale price charged by wholesalers to providers,
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including physicians and pharmacists. Because AWP was the predominant benchmark for reimbursement by government and third-party payors, including DPW and PACE, the Commonwealth asserted BMS and other pharmaceutical companies inflated or contributed to the inflation of each drug’s AWP to create a “spread” between a provider’s actual acquisition cost and the fictitious, published AWP, and that pharmaceutical companies, including BMS, market this spread in order to gain market share over a competitor’s drug.
The Commonwealth’s suit against Defendant BMS, which asserted claims of common law fraud or misrepresentation and civil conspiracy, as well as violations of the Unfair Trade Practices and Consumer Protection Law (CPL),
1
culminated in a five-week jury trial. After the close of evidence, issues relating to the Commonwealth’s claims of fraud or misrepresentation and civil conspiracy were submitted to the jury, while issues relating to the statutory claims were submitted to the trial judge for non-jury decision.
Ultimately, the jury returned a verdict in favor of BMS on the common law claims. Shortly thereafter, the trial judge issued a Decision Awarding Injunction and Restoration (Decision) against BMS, finding that BMS violated the CPL. As to the remedy for the CPL violations, the Decision provided for injunctive relief, which essentially restrains BMS from contributing to the reporting of inflated AWPs for its drugs and from creating, marketing or promoting the spread for its drugs. In addition, the trial judge ordered BMS to restore to the Commonwealth the amount of $27,617,952.
Both the Commonwealth and BMS filed post-trial motions. For its part, the Commonwealth seeks judgment
non obstante veredicto
(JNOV) or, alternatively, a new trial on its negligent misrepresentation and civil conspiracy claims as well as modification of the trial judge’s Decision on its statutory claims, to provide for relief in addition to that granted by the trial judge.
On the other hand, BMS challenges the Court’s determinations that it violated the CPL. It therefore requests the Court vacate its Decision awarding injunctive relief and restoration.
For the following reasons, we deny the Commonwealth’s post-trial motions. In addition, we decline BMS’ request to vacate the award of injunctive relief and restoration; however, as explained more fully below, we modify the injunction.
B. History
1. Average Wholesale Price— Origin & Evolution
The AWP-based system for drug reimbursement is inherently a complicated system in which “average wholesale price” or “AWP” is the cornerstone of a larger pricing infrastructure.
Since the late 1960s, nearly every branded prescription drug sold in the United States has an AWP, which is published in commercial pricing compendia like Red Book, First DataBank, and Medispan.
See In re Pharm. Indus. Average Wholesale Price Litig.,
491 F.Supp.2d 20 (D.Mass.2007), aff
'd,
582 F.3d 156 (1st Cir.2009),
cert. dismissed sub. nom., AstraZeneca Pharm. LP v. Blue Cross Blue Shield of Massachusetts,
— U.S. -, 131 S.Ct. 60 , 177 L.Ed.2d 1150 (2010)
(MDL 2007).
During the period covered by this lawsuit, AWP is provided in a current, digital format for each available branded pharmaceutical, in each dosage and packaging size. The digital format and the constantly updated value facilitate use in the computer-dominated reimbursement systems,
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such as those used by the Plaintiff Agencies. -See BMS Trial, Notes of Testimony (N.T.), 8/24/10, at 1903-04 (Thomas Sned-den, Director of PACE); 2020 (Dr. Terri Cathers, Director of Pharmacy for the Fee-for-Service Program of DPWs Office of Medical Assistance Programs).
The federal government used AWP as the pricing benchmark for Medicare reimbursement until the 2005 effective date of the Medicare Prescription Drug, Improvement & Modernization Act of 2003.
2
MDL 2007.
By statute and regulation, it has also been the pricing benchmark used by the Plaintiff Agencies for Medicare Part B and Medicaid drug reimbursements.
Neither the federal government’s Centers for Medicare and Medicaid Services (CMS) (and its predecessor, the Healthcare Finance Administration, also known as HCFA), nor the Plaintiff Agencies regulate or set the AWPs; rather, they entrusted the pharmaceutical companies with the task of reporting the AWPs accurately to the publications.
Id.
Initially, AWP was, in fact, the average price charged by wholesalers to providers, like doctors and pharmacies. N.T., 8/16/10, at 673-75. It was derived from the markup charged by wholesalers over their actual acquisition cost, sometimes called the “wholesale acquisition cost” or “WAC.”
Id.
at 675. However, the market evolved.
In general, and on the specific topic of evolution of the AWP-based pricing system, the trial judge accepted the testimony of the Commonwealth’s expert witness on liability and causation, Dr. William Coma-nor, currently Professor of Economics at UC Santa Barbara, and Professor of Health Services at UCLA, and Director of the research program of pharmaceutical economics and policy at UCLA.
Dr. Comanor testified WAC (or in BMS’ case, “Wholesale List Price,” or WLP) is a conventional term that signifies the price paid by the wholesalers before discounts. N.T., 8/16/10, at 672. In contrast, the AWP is the average wholesale price, which is the basis under which most reimbursement payments are made to pharmacies and other providers.
Id.
at 682.
Originally, the AWP was 20-25% higher than the WAC/WLP because that reflected the typical costs at the outset of the distribution process of pharmaceuticals.
Id.
at 675-76. However, competition and improved efficiency forced wholesale prices to decrease.
Id.
at 676. Eventually, the markup was eliminated in the market, so that prices paid to wholesalers approached WAC/WLP values.
Id.
BMS often sold its branded drugs to wholesalers at WLP less 2%, reflecting a prompt pay discount. N.T., 8/19/10, at 1370 (Zoltán Szabo, BMS’ Vice President of Global Pricing). In addition, through various arrangements with wholesalers, BMS offered high volume purchasers, such as Group Purchasing Organizations (GPOs), significant discounts off the WLPs for its drugs.
Id.
at 1380-85. BMS also offered substantial discounts below its WLPs to long term care pharmacies such as Omnicare, resulting in higher volume sales of BMS drugs, and, as a direct result, an increased market share for BMS.
Id.
at 762, 764-770; PX-8962; PX-8963.
It is undisputed that wholesalers’ profit margins were very thin or nonexistent. N.T., 8/19/10, at 676 (Comanor) (“there’s essentially no difference between the manufacturer’s price and the wholesaler’s price because of the improved efficiency of the wholesaler.”) From all these circumstances the trial judge inferred that an actual average of wholesale prices for
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BMS branded drugs was below WAC/ WLP. Evidence to the contrary was rejected, and the trial judge declined to draw inferences favorable to BMS.
3
Despite the greatly reduced prices in sales from wholesalers to pharmacies, BMS and manufacturers of other branded drugs did not change the process for determining and reporting AWP.
Id.
at 678. Indeed, pharmaceutical manufacturers, including BMS, understood the AWPs for their branded drugs would be subject to a markup of approximately 25 percent over their reported WACs/WLPs.
Id.
at 678; 688-86. Thus, despite market changes, the AWPs continued to be set equal to the WAC/WLP plus an established markup.
Id.
In other words, although the market changed, the mechanism by which AWPs were set did not change, so there became an increasing disconnect between reality and price-setting.
Id.
at 680-81. In reality, AWP “was not the actual price that [a] pharmacist purchased the drug.” N.T., 8/26/10, at 2421 (Love). This resulted in AWP being a “fictitious number.” N.T., 8/24/10, at 2072 (Cathers).
The trial judge found no believable evidence that any Pennsylvania pharmacy or physician ever paid full AWP to acquire BMS branded drugs. Nevertheless, for years the Plaintiff Agencies reimbursed Pennsylvania pharmacies and other providers at full AWP for BMS branded drugs. Gradually, the Plaintiff Agencies were able to convince other parties involved in setting reimbursement rates to lower rates to reflect discounts off AWP. Only recently was DPW able to escape an AWP-dominated reimbursement regime.
BMS recognized that AWPs were “the legacy of a distribution system which ceased to exist in the early 1980s,” and were previously used to represent the price at which wholesalers sold drugs to pharmacies and physicians. PX-491. BMS also understood that AWPs continue to play a pivotal role in the overall prescription drug pricing and reimbursement systems.
Id.
BMS further understood the high costs of reimbursement for prescription drugs by public payors placed pressure on state budgets.
See
PX-548; PX-580.
In addition, BMS recognized that general confusion existed over AWP.
See
PX-491 (“The media often refers to AWP as the cost of the drug. Generally implying that this is the amount that manufacturers charge.”) Indeed, at times there was confusion among BMS executives and employees regarding AWP.
See, e.g.,
N.T., 8/19/10, at 1418, 1460-62 (testimony of Rose Crane, former BMS President of U.S. Primary Care, regarding her belief that AWP was a price paid by wholesalers); N.T., 8/11/10, at 824 (testimony of Paul Norris, BMS’ Regional Business Director for the Northeast Region, Oncology Division, that some BMS employees within the global marketing organization believed AWP was “representative of the price that we sold the product.”)
Further, while the testimony of DPW and PACE witnesses reveals they had some knowledge that AWP represented a flawed reimbursement benchmark, their testimony also showed they did not definitively understand the extent of the inaccuracy as it pertained to the BMS branded drugs at issue here. These witnesses never testified they knew WAC/WLP represented a price that providers actually paid for BMS drugs and, in any event, there was evidence that providers paid less than
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WAC/WLP. The testimony of DPW and PACE witnesses shows that although they knew problems existed within the existing AWP system, substantial confusion existed, and they lacked an awareness of an actual average of wholesale prices for BMS branded drugs. More importantly, DPW and PACE witnesses did not have an accurate estimate of acquisition costs in a format suitable for calculating the tens of thousands of claims they receive each day.
Also, BMS emphasized it reported WLPs for its branded drugs to the pricing compendia, rather than AWPs, and sought to distinguish itself in that regard from the conduct of other defendant pharmaceutical manufacturers who reported AWPs; nevertheless, BMS understood, expected and intended that the pricing compendia would apply a standard markup to its WLPs to derive an AWP.
See
N.T., 8/19/10, at 1374-76, 1385-86 (Szabo); N.T., 8/17/10, at 1019-20 (Douglas Soule, Senior Territory Representative for BMS); PX-491; N.T., 8/11/10, at 158-162, 170-71, 173, 189-92, 194-95, 198-99, 218-19, 220-21, PX-133, PX-487, PX-478, PX-474, PX-476 (Denise Kaszuba, BMS Senior Pricing Analyst/Associate Manager of Pricing Support); N.T., 8/11/10, at 247-49 (Norris); N.T., 8/16/10, at 678 (Comanor).
2. Plaintiff Agencies
As noted above, the Commonwealth, through its Attorney General, filed this action on behalf of DPW and PACE.
4
A brief description of the roles of the Plaintiff Agencies is helpful.
a. DPW/Pennsylvania Medicaid
DPW administers Pennsylvania’s Medicaid program. Medicaid is a joint state-federal funded program for medical assistance in which the federal government approves a state plan for the funding of medical services for the needy and then subsidizes a significant portion of the financial obligations the state has agreed to assume.
See
N.T., 8/24/10, at 2017, 2021;
Eastwood Nursing & Rehab. Ctr. v. Dep’t of Pub. Welfare,
910 A.2d 134 (Pa.Cmwlth.2006). Once a state voluntarily chooses to participate in Medicaid, the state must comply with the requirements of Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396 (q), and applicable regulations.
Eastwood Nursing.
According to Dr. Terri Cathers, who testified as designee for DPW, and who serves as the Director of Pharmacy for the Fee-for-Service Program of DPWs Office of Medical Assistance Programs:
Medicaid covers the poorest of the poor in Pennsylvania and the sickest of the sick. Roughly today two-thirds are children. Many of those children are either very poor or very ill. We cover the blind, the disabled. And it’s at a hundred percent of the federal poverty level, so these people are very poor and desperately need good quality health care coverage and pharmacy benefits, and that’s what the Medicaid program provides.
N.T., 8/24/10, at 2017.
With regard to prescription reimbursement, Pennsylvania Medicaid processes roughly 30,000 claims per
day,
which are submitted electronically. The Medicaid fee-for-service program covers approximately 25,000 national drug codes (NDCs).
Pennsylvania Medicaid benefits are delivered through two systems: the “fee-for-service” system and the managed care system. In Pennsylvania, 42 counties operate under the fee-for-service program. These
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counties are located in the center and the northern tier of the state (configured in a “T” formation). The fee-for-service program reimburses providers on a “claim-by-claim” basis.” N.T. 8/24/10, at 2032.
Pennsylvania’s lower southeast and southwest regions are known as “mandatory managed care” zones; nine managed care organizations (MCOs) contract with DPW to provide Medicaid benefits and services.
Id.
DPW reimburses these MCOs on a monthly, fixed fee basis per recipient.
5
DPW reimburses drug providers, like pharmacies, at the lesser of estimated acquisition cost, which is DPW’s best estimate of the rate that ensures access to the provider, or a “usual and customary” charge, which is the amount a pharmacy would submit or charge a cash-paying customer.
The “baseline” for DPW reimbursement is AWP, which is listed in the national pricing compendia, including First DataBank, Red Book and Medispan. The national pricing compendia receive their data from drug manufacturers.
Id.
at 2022 .
The reimbursed formula for Medicaid is fixed by state regulation. Between 1991 and 1995, DPW reimbursed providers at 100% of AWP. From 1996 through 2004, DPW reimbursed providers at a rate of AWP-10%.
Id.
at 2025-26 .
b. Department of Aging/P ACE
PACE provides a comprehensive, prescription drug benefit to qualified, older Pennsylvania residents throughout all of the state’s 67 counties. PACE is available to Pennsylvania residents, aged 65 or older, with limited incomes. PACE eligibility requirements are based on income, residency and age.
PACE is funded through revenue generated by the Pennsylvania Lottery. PACE has an annual budget that exceeds $200 million, approximately 96-97% of which is used to pay for prescription drugs for its beneficiaries.
Thomas Snedden, who has served as the Director of PACE for over 25 years, gave partly credible testimony as to the program. He believably explained the typical PACE beneficiary is a 78-year-old, widowed female who lives alone in a private residence, who has less than a 10th grade education, who has four or five different disease states, and who takes five or six prescription medications daily.
PACE reimburses providers for a drug’s ingredient cost and a dispensing fee. When a pharmacy fills a PACE beneficiary’s prescription, it collects a small co-payment from the beneficiary and bills PACE, which, in turn, reimburses the pharmacy for the balance of the prescription price.
Because of the complex administration of the PACE program, claims are handled and processed electronically. To that end, Snedden credibly explained:
[0]ur foremost concern with the PACE program is [to] make sure that people don’t get medications that are inappropriate for them, that the dose might be too high, the duration too long, the mix of medications could cause them to be hospitalized. So the pharmacy, when the prescriptions are presented, they have to be input by the pharmacist into a computer, which comes into the PACE main frame, where they are scanned and checked to ensure that there won’t be any drug misadventure. All of that happens within about one second from the
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time the pharmacist inputs prescriptions. There’s just no practical way you could do that in a paper environment.
N.T., 8/24/10, at 1903.
Approximately 300 drug companies have participated in the PACE program, and PACE covers roughly 30,000 drugs.
PACE’S reimbursement formula is fixed by statute. AWP is the “price basis” upon which PACE reimburses pharmacies. N.T., 8/24/10, at 1913. PACE initially reimbursed providers at 100% of AWP. After 12 years of reimbursing providers at 100% of AWP, the statutory reimbursement rate changed to AWP-10%. In 2003, PACE’S reimbursement formula changed to AWP-12%. PACE uses the pricing publication Red Book.
3. BMS
Defendant BMS is a Delaware corporation engaged in the business of manufacturing, distributing, marketing and selling brand-name pharmaceutical drugs.
The specific BMS branded drugs at issue in this case are: Etopophos, Vepesid, Avapro, Blenoxane, Buspar, Cefzil, Coum-adin, Cytoxan, Glucophage, Monopril, Monopril HCT, Paraplatin, Plavix, Prava-chol, Rubex, Serzone, Sustiva, Taxol, Te-quin, Videx, Zerit, and Ability.
Most of the claims by the Plaintiff Agencies involve self-administered branded drugs, such as pills. Self-administered branded drugs are usually obtained from pharmacies, which are reimbursed for their cost through the Medicaid and PACE programs. During the period of Plaintiff Agencies’ claims, reimbursement for these drugs was based on estimated acquisition cost paid by the pharmacies, for which some variation of AWP was a proxy. Pharmacies were also paid a dispensing fee.
A small percentage of the Plaintiff Agencies’ claims here involve Medicare Part B drugs. These are injectable or infusible drugs which require administration by a physician. Eighty percent of the cost is reimbursed by the government.
See
42 U.S.C. § 1395Z;
MDL 2007,
491 F.Supp.2d at 33 . Patients or someone on their behalf (such as an insurer) are responsible for a 20% co-payment.
Id.
Since 1992, reimbursement and co-payment for Medicare Part B drugs has been based on a formula which included an AWP factor (plus an allowance for other costs, such as a dispensing fee).
See MDL 2007,
491 F.Supp.2d at 33-34 .
There are no generic drugs involved in this case.
BMS sells its branded drugs to wholesalers or specialty distributors at a price around the drug’s WLP, as discussed more fully elsewhere. In turn, these wholesalers sell BMS branded drugs to providers, such as pharmacies and physicians. In some instances, BMS sells its branded, Medicare Part B injectable drugs directly to physicians.
C. Procedural History
The initial procedural background to this complex litigation is set forth in this Court’s two prior
en banc
decisions at the preliminary objection stage.
See Commonwealth ex rel. Pappert v. TAP Pharm. Prods., Inc.,
885 A.2d 1127 (Pa.Cmwlth.2005)
(TAP II); Commonwealth ex rel. Pappert v. TAP Pharm. Prods., Inc.,
868 A.2d 624 (Pa.Cmwlth.2005)
(TAP
I).
Briefly, in March 2004, the Commonwealth filed its original complaint against 14 pharmaceutical companies alleging the companies engaged in improper conduct that caused certain Commonwealth entities, including DPW and PACE, to pay inflated prices for various pharmaceuticals the companies manufacture, market and sell. In response, the companies filed preliminary objections. In
TAP I,
we sustained the defendant pharmaceutical com
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panies’ preliminary objections challenging the sufficiency of the factual averments in the Commonwealth’s original complaint, but granted the Commonwealth leave to amend.
Shortly thereafter, the Commonwealth filed a corrected amended complaint, to which the defendant pharmaceutical companies again filed preliminary objections. The Commonwealth’s corrected amended complaint pled four causes of action: fraud or misrepresentation, civil conspiracy, unjust enrichment and violations of the CPL.
In
TAP II,
we overruled the defendant pharmaceutical companies’ global preliminary objections that challenged the sufficiency of the corrected amended complaint. We directed the defendant pharmaceutical companies to file answers, which they did.
This case then proceeded through a lengthy period of robust discovery administered in part by a discovery master. Counsel for BMS served as liaison counsel for all remaining defendants. By order, discovery closed on July 80, 2010.
In late-May 2010, the trial judge scheduled the case for jury trial in Northampton County on August 9, 2010. The pharmaceutical company defendants filed motions seeking separate trials.
After status conference with all remaining defendants, the trial judge granted in part, and deferred in part, the defendants’ motion for separate trials. In particular, the trial judge granted BMS’ motion so that only BMS would be involved in the August 9, 2010 jury trial.
6
After final pretrial conference, the trial judge issued an order indicating his intention to submit issues related to the Commonwealth’s fraud and misrepresentation and civil conspiracy claims to the jury. The judge also indicated he would render a non-jury decision on the Commonwealth’s unjust enrichment and CPL claims.
7
Additionally, shortly before trial, the trial judge disposed of 18 motions
in limine,
filed by the Commonwealth and BMS.
Trial commenced as scheduled on August 9 and continued over the ensuing five weeks. More than a dozen witnesses testified, prior testimony by more than 20 witnesses was read or presented by videotape, and over 300 exhibits, many voluminous, were received.
In addition to numerous trial rulings, at the close of the Commonwealth’s case-in-chief, the trial judge granted BMS’ motion for compulsory non-suit on the Commonwealth’s unjust enrichment claim on the ground the Commonwealth did not identify any fund to which a common-law equitable remedy would apply.
Consistent with the pretrial order, following the close of evidence the trial judge submitted issues relating to the Commonwealth’s claims of negligent misrepresentation, fraudulent misrepresentation and civil conspiracy to the jury. Additionally, issues relating to the Commonwealth’s claims under the CPL were submitted to the trial judge for non-jury decision.
Ultimately, the jury returned verdicts in favor of BMS on the Commonwealth’s claims for negligent and fraudulent mis
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representation.
See
Verdict Form, Phase I (Attachment A). More specifically, the jury answered “no” to the question of whether BMS was liable for negligent misrepresentation or fraudulent misrepresentation. Based on its response to these questions, the jury did not answer questions concerning causation. Additionally, the jury did not answer any questions relating to civil conspiracy, to damages or to outrageous conduct.
The next day, the trial judge heard oral argument on the Commonwealth’s claims under the CPL. Shortly thereafter, the judge issued his Decision, finding BMS violated the CPL by engaging in unfair or deceptive practices.
See
Decision Awarding Injunction and Restoration of 9/10/10 (Attachment B).
Consistent with Pa. R.C.P. No. 1038, the trial judge did not issue findings and conclusions, but he did dispose of all issues. In addition, he added sufficient explanation so that the parties could understand why he did not follow the jury verdict and how he calculated restoration amounts.
In particular, the trial judge acknowledged the jury verdicts finding neither negligent misrepresentation nor fraudulent misrepresentation. However, the trial judge concluded that a different standard applied in a CPL enforcement action.
See Weinberg v. Sun Co., Inc.,
565 Pa. 612 , 777 A.2d 442 (2001). Specifically, the judge indicated that, unlike claims for common law fraud or misrepresentation, a plaintiffs knowledge of the inaccuracy of a representation and a plaintiffs lack of reliance, while factors to be considered, are not necessarily complete defenses in an enforcement action brought in the public interest under Section 4 of the CPL, 73 P.S. § 201-4.
See MDL 2007; see also Com. v. Parisi,
873 A.2d 3 (Pa.Cmwlth.2005) (CPL to be liberally construed to effectuate legislative goal of consumer protection).
Ultimately, the trial judge issued a perpetual injunction restraining BMS from: contributing in any manner, directly or indirectly, to the reporting to DPW or to PACE of inflated AWPs for BMS drugs; and, contributing in any manner, directly or indirectly, to the creation, promotion or marketing of spreads for BMS drugs that are reimbursed by DPW or PACE.
In addition, pursuant to Section 4.1 of the CPL,
8
73 P.S. § 201-4.1, the trial judge directed BMS to restore to the Commonwealth money in the amount of $27,617,952. To that end, the trial judge credited the damage methodology set forth in Exhibits 6A, 6B and 6C of the revised report of Commonwealth damage expert Frederick R. Warren-Boulton, Ph.D., for the period 1991 through 2004, with one exception. Specifically, the trial judge credited only that portion of the testimony of BMS expert Gregory K. Bell, Ph.D., that Dr. Warren-Boulton’s estimates were inflated by inclusion of drugs not in the case. To account for this problem, the trial judge reduced Dr. Warren-Boulton’s estimates by 40%.
The trial judge further found BMS willfully used practices declared unlawful by the CPL; however, the trial judge determined he lacked sufficient information to calculate civil penalties; as such, he declined to award any civil penalties under Section 8(b) of the CPL, 73 P.S. § 201-8(b). The trial judge credited Dr. Warren-Boulton’s civil penalty methodology that assumed a CPL violation occurred each time the reported AWP changed for a BMS drug, and assessing each violation at $1000. However, the trial judge indicated Dr. Warren-Boulton’s calculations were not limited to the period 1991-2004 for which restoration was awarded and could
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be inflated by drugs not in the case. As such, the trial judge declined to award civil penalties. The trial judge also declined to award any sums under Section 9.2 of the CPL,
9
73 P.S. § 201-9.2.
As a final point, the trial judge indicated the Decision was not immediately effective and would not become effective until the completion of post-trial practice.
See
Pa. R.A.P. 311(a)(4).
Shortly thereafter, both the Commonwealth and BMS filed post-trial motions. For its part, the Commonwealth seeks JNOV or, alternatively, a new trial on its negligent misrepresentation and civil conspiracy claims as well as modification of the Decision under the CPL to include an award of civil penalties, costs and attorney’s fees.
On the other hand, BMS challenges the trial judge’s findings that it violated the CPL and, therefore, requests the Court vacate its Decision awarding injunctive relief and restoration under the CPL.
II. BMS’ CHALLENGE TO STATUTORY INJUNCTION
A. Summary of BMS’ Argument
Through its Brief in Support of Its Motion for Post-Trial Relief or in the Alternative for a Stay, BMS asks this Court to change the Decision by vacating both the injunction and the order of restoration. BMS argues there is no evidence to support the relief granted, and it is inconsistent with the jury’s conclusion that BMS was not liable for negligent misrepresentation or fraud. Specifically, it contends the proposed injunction should be vacated for the following 15 primary reasons (with numerous sub-arguments):
• It will cause irreparable harm to innocent third parties.
• It is procedurally defective and violates due process.
• It interferes with the legislative and regulatory scheme.
• It will cause BMS irreparable harm.
• It unconstitutionally interferes with interstate commerce.
• Greater harm will come from entering the injunction than not entering it.
• It is not justified by any urgent necessity since, as the Court acknowledges in its Decision, the Commonwealth was not damaged after 2004.
• There is no threat of ongoing injury.
• The proposed injunction will not give the Commonwealth any information it does not already have.
• Even if they were harmed, DPW and PACE could be adequately compensated by monetary damages.
• The Decision is inconsistent with the jury’s verdict.
• BMS’ conduct is not in fact fraudulent or deceptive, or even unfair.
• The Decision is inconsistent with Judge Saris’ decision in
MDL 2007
on which the Court relies.
• There is no proof of causation because pharmacies are not overpaid.
• There is no proof that would support an injunction against marketing the spread because the practice makes no sense in the context of this case.
BMS’ Br. in Support of its Mot. for Post-Trial Relief or in the Alternative for a Stay at 8-9 (BMS’ Br.).
Of particular concern, BMS asserts, is the harm the injunction will cause to innocent third parties, including patients who rely on BMS drugs. BMS maintains the proposed injunction requires it to take steps to ensure the AWPs for its drugs are equal to their acquisition costs. It contends pharmacies will refuse to stock BMS drugs if they will lose 12 to 14 percent on every drug, which is the percentage below
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AWP that PACE and DPW currently reimburse pharmacies for drugs.
B. Sufficiency of Evidence
1. Contentions
BMS begins by reciting the common law elements necessary to obtain permanent injunctive relief. It then argues there is no proof that would justify the relief awarded here. Specifically, BMS maintains there was no proof that it made any misrepresentation to the Plaintiff Agencies. It contends there was no proof that DPW or PACE relied on anything BMS said or did. In fact, BMS asserts, Thomas Snedden, the Director of PACE, affirmatively testified he did not rely on BMS, and he was not defrauded or deceived by BMS. N.T., 8/24/10, at 1936-38, 2005-2006.
BMS maintains all present and former DPW and PACE employees testified they knew AWPs were not acquisition costs.
See
N.T., 8/24/10, at 1914; N.T., 8/24/10, at 2057-60; N.T., 8/26/10, at 2420-22; N.T., 8/30/10, at 2736; N.T., 8/30/10, at 2763-64; N.T. 8/30/10, at 2791-93; N.T., 8/31/10, at 2994. BMS argues there was overwhelming and unrebutted testimony and documents demonstrating DPW and PACE knew what acquisition costs were.
See
DX 1, DX 3-6, DX 8-12, DX 405, DX 482, DX 501, DX 514, DX 551, DX 553, DX 558, DX 564. BMS asserts the reimbursement formulas used by the Plaintiff Agencies were the product of choice, not any fraud or deception.
In addition, BMS maintains there was unrebutted testimony that pharmacies were not overpaid. BMS argues the Commonwealth’s own expert agreed pharmacies are not overpaid. N.T., 8/16/10, at 853 (Comanor). BMS contends there is no proof here that it caused the Commonwealth any harm.
For these reasons alone, BMS argues, the Decision should be vacated. It maintains an award under the CPL is improper where no evidence exists to support it.
See, e.g., Braccia v. Arlington Capital Mortg. Corp.,
Civ. Action No. 08-1370, 2009 WL 3756351 , at *12 (E.D.Pa. Nov. 9, 2009);
Sheikh v. Travelers Pers. Ins. Co.,
Civ. Action No. 06-1477, 2007 WL 2571451 , at *4 (E.D.Pa. Aug. 31,2007).
2. Analysis
The remedy of entry of judgment in a party’s favor is proper only where a party successfully challenges the sufficiency of the evidence. On the other hand, the remedy of a new trial is proper when the verdict rendered by the trial court indicates the trial court abused its discretion when weighing the evidence.
Morin v. Brassington,
871 A.2d 844 (Pa.Super.2005). “This distinction is crucial and is repeated
ad nauseum
by the appellate courts of this Commonwealth in both civil and criminal cases.”
Id.
at 851 . Here, BMS does not ask for a new trial.
A sufficiency analysis must begin by accepting the credibility and reliability of all evidence, viewed in the light most favorable to the verdict winner regardless of whether the losing party thinks the evidence was believable.
Id.
10
“In Pennsylvania, a permanent injunction will issue if the party establishes
*1221
[a] clear right to relief. The party need not establish either irreparable harm or immediate relief, as is necessary when seeking a preliminary injunction, and a court may issue a final injunction if such relief is necessary to prevent a legal wrong for which there is no adequate redress at law.”
Bd. of Revision of Taxes, City of Phila. v. City of Phila.,
607 Pa. 104, 133 , 4 A.3d 610, 627 (2010) (citations and quotations omitted).
Here, however, the remedy of injunctive relief is explicitly provided by statute. Specifically, Section 4 of the CPL, which relates to “Restraining prohibited acts,” states, as pertinent:
Whenever the Attorney General ... has reason to believe that any person is using or is about to use any method, act or practice declared by section 3 of this act to be unlawful, and that proceedings would be in the public interest,
he may bring an action in the name of the Commonwealth against such person to restrain by temporary or permanent injunction the use of such method, act or practice.
73 P.S. § 201 4 (footnote omitted) (emphasis added). By the plain terms of the statute, the Attorney General must prove: 1) that a person is using or about to use a practice declared unlawful by the CPL; and 2) that proceedings would be in the public interest.
Although BMS relies on the common law elements necessary to obtain an injunction, the basis for the injunction entered here is statutory. As a result, BMS’ arguments lack merit. This point is discussed in more detail below.
The proper analysis is set forth in
Commonwealth v. Burns,
663 A.2d 308 (Pa. Cmwlth.1995), a case involving a post-trial challenge to a permanent injunction under the CPL. There, this Court accepted the Attorney General’s argument that whenever a violation of a statute is found, such violation constitutes irreparable harm
per se,
and injunctive relief is appropriate. The only issue therefore is whether the record adequately supports the findings and conclusions.
Review of the record here reveals ample support for the trial judge’s determinations that BMS violated the CPL by engaging in unfair or deceptive acts or practices within the meaning of the “catchall provision” in Section 2(4)(xxi) of the CPL, 73 P.S. § 201-2(4)(xxi) (“Engaging in any other ... deceptive conduct which creates a likelihood of confusion or of misunderstanding.”). Based on his determinations that BMS violated the CPL,
see
Section 3 of the CPL, 73 P.S. § 201-3, (“Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce as defined by subclauses (i) through (xxi) of clause (4) of section 2 of this act ... are hereby declared unlawful”), the trial judge had a duty to issue an injunction to restrain BMS’ unlawful practices.
More specifically, similar to Judge Saris’ decision in
MDL 2007,
the trial judge first determined BMS engaged in unfair or deceptive practices by contributing to the reporting of inflated AWPs for its drugs to the Plaintiff Agencies. The record clearly supports this determination. To that end, as in
MDL 2007,
BMS claimed to be unique among drug manufacturers in that it did not directly report AWPs or suggested AWPs to the pricing compendia. However, as in
MDL 2007,
the trial judge here determined BMS knew, expected, and intended that when it reported a price, the publications would predictably calculate an AWP that was 20 to 25 percent higher than BMS’ WLP.
See
N.T., 8/19/10, at 1374-76, 1385-86 (Szabo); N.T., 8/17/10, at 1019-20 (Soule); PX-491; N.T., 8/11/10, at 158-162, 170-71, 173, 189-92, 194-95, 198-99, 218-19, 220-21, PX-133, PX-487, PX-
*1222
478, PX-474, PX-476 (Kaszuba); N.T., 8/11/10, at 247-49 (Norris); N.T., 8/16/10, at 678 (Comanor);
see MDL 2007,
491 F.Supp.2d at 60 . As in
MDL 2007,
the evidence was sufficient to conclude that BMS could affect, and at times fully control, the AWP for its drugs.
Id.
at 60-61 .
In addition, similar to
MDL 2007,
the trial judge determined BMS contributed to or participated in the promotion or marketing of spreads for its Medicare Part B drugs. Review of the record also discloses ample support for this determination.
See
N.T., 8/11/10, at 303 (Norris); N.T., 8/17/10, at 1004-05 (Soule); PX-399; N.T., 8/17/10, at 1010-11; PX-211;
see also
N.T., 8/12/10, at 487 (Peterson) (regarding Lynx20TN); PX-111; PX-8869 (AWP price report); N.T., 8/12/10, at 488-89, 490-93 (AWP price report showing Oncology Therapeutics Network Corporation (OTN) dispensing unit price and AWP based on selected modifier), 493 (spread-difference between amount of reimbursement and amount paid).
In short, contrary to BMS’ contentions, the trial judge’s determinations that BMS violated the CPL by engaging in unfair or deceptive practices are supported by substantial evidence. Based on these determinations, the trial judge was duty-bound to issue an injunction to restrain BMS’ unlawful practices.
BMS’ remaining arguments regarding the alleged lack of sufficient evidence to support the award of injunctive relief are addressed throughout this opinion, where appropriate. However, there are four important points to make here. First, regarding deception, the trial judge gave greater weight to evidence regarding confusion about AWP, and he rejected as not credible evidence suggesting that AWP was a term of art, widely known outside the pharmaceutical industry to be derived from a formulaic relationship of known proportions over WAC/WLP.
Second, also regarding deception, the trial judge rejected BMS’ contentions regarding “government knowledge.” Some evidence was not credible, some documentary evidence was given little weight, and the trial judge declined to draw inferences favorable to BMS. This is especially true of testimony by Thomas Snedden on this point, whose credibility was compromised by his demeanor, bias, and strong tendency to agree with whoever was questioning him.
Third, as to reliance, the trial judge rejected BMS’ contentions regarding “government choice.” Most importantly, the contention that the Plaintiff Agencies made deliberate policy decisions to reimburse at higher rates than other third-party payors was rejected as inconsistent with more credible evidence that pharmacy participation, also referred to as “access,” was never threatened and that reimbursement rates were beyond the sole control of the Plaintiff Agencies. The rejection was also based on the limited weight given documentary evidence and the refusal of the trial judge to draw inferences favorable to BMS on this issue. The trial judge determined that in Pennsylvania the level of reimbursement and the continuing reliance on formulae based on some form of AWP were the result of several factors: confusion over AWP; lack of a better proxy for provider acquisition costs; and, an inflexible reimbursement system where changes to laws and regulations came slowly, if at all.
Fourth, as to causation, the trial court accepted the expert opinion of the Commonwealth’s liability and causation expert, Dr. William Comanor, that the Plaintiff Agencies were harmed by enhanced price discrimination by the drug manufacturers, including BMS. The enhanced price discrimination took the form of different pricing/rebate schemes for public and private payors, resulting in public payors, such as
*1223
DPW and PACE, paying more than private payors. The trial judge rejected the testimony of pharmacist David Smith, relied upon by BMS, as not credible based on demeanor.
Further, the two unreported federal district court cases cited by BMS do not compel a different result. Specifically, in
Sheikh ,
a federal trial court dismissed a private plaintiffs CPL claim against an automobile insurance company based on the company’s alleged failure to pay benefits where the court determined the company acted properly in cancelling the policy prior to an accident for which the plaintiff sought benefits.
In
Braccia ,
a federal trial court rejected a private plaintiffs CPL claim against a mortgage company where the court determined the plaintiff did not prove reliance or injury as a result of an alleged misrepresentation that occurred when the plaintiff sought to obtain a residential mortgage.
Clearly,
Sheikh
and
Braccia
are distinguishable on their facts. Neither case involved an Attorney General enforcement action under the CPL’s catchall provision where, as explained below, the burden of proof is relaxed. Also, unlike in
Sheikh
and
Braccia
the evidence supports a determination that BMS violated the CPL by engaging in deceptive conduct (as further explained below) and that DPW and PACE suffered harm in the form of over-payments as a result of that violation.
C. Alleged Irreparable Harm to Others
1. Alleged Irreparable Harm to Innocent Third Parties
a. Contentions
BMS next asserts that today DPW reimburses pharmacies at the lower of AWP-14% or WAC + 7%. 55 Pa.Code § 1121.56(a)(l)(i). PACE currently reimburses pharmacies at AWP-12%.
See
Section 509(6) of the State Lottery Law.
11
BMS contends the undisputed evidence at trial showed these formulae were developed over a period of years after careful negotiation with pharmacies in an effort to arrive at an amount that would ensure patients’ access to care.
See
DX-501.
BMS maintains that while the proposed injunction prohibits it from contributing in any manner, directly or indirectly, to the reporting to DPW or PACE of inflated AWPs for its drugs, the undisputed evidence showed BMS does not report AWPs to the pricing compendia. Rather, BMS reports a list price that the pricing com-pendia mark up by 20-25% to arrive at an AWP. N.T., 8/11/10, at 215, 221-22. BMS argues the proposed injunction would require it to ask the pricing services to make the AWPs for its drugs equal to the list prices. BMS contends that if the pricing compendia were willing to do this, the AWPs for BMS drugs would be equal to their list prices. BMS maintains there was extensive, unrebutted trial testimony — by witnesses for both sides — that pharmacies acquire drugs at or near list price. It asserts if AWPs were made equal to list prices, the regulatory and statutory provisions cited above would be unaffected by the injunction, and pharmacies would immediately lose at least 12-14% on every BMS drug they acquired.
BMS argues that, as its expert Dr. Fiona Seott-Morton pointed out, if pharmacies were placed in a position where they lost 12-14% on every BMS drug, they would simply refuse to stock BMS drugs. N.T., 9/2/10, at 3456-58. BMS contends this would not only harm pharmacies; it
*1224
would also harm patients who would not have access ■ to BMS drugs. It argues some of these drugs are of critical importance in treating serious illnesses.
BMS contends the potential harm to innocent third parties is a critical factor that courts should consider in deciding whether to grant injunctive relief.
See Weinberger v. Romero-Barcelo,
456 U.S. 305, 312 , 102 S.Ct. 1798 , 72 L.Ed.2d 91 (1982);
accord Bradley v. Pittsburgh Bd. of Educ.,
910 F.2d 1172 , 1175 (3d Cir.1990). Indeed, it argues, courts refused to grant injunctive relief where interested parties were or could have been adversely affected.
See Weinberger; North Jersey Media Grp., Inc. v. Ashcroft,
308 F.3d 198 , 229 (3d Cir.2002).
b. Analysis
i. Waiver
BMS never raised an issue of alleged harm to others in such a way as to alert the trial judge to consider it in rendering the Decision.
See
BMS’ Proposed Findings of Fact and Conclusions of Law, filed 7/26/10 (pretrial); N.T., 9/9/10, at 3890-92 (after jury verdict, BMS closing on CPL). Also, there was no credible evidence offered by BMS as to the alleged harm to others in the context of an injunction. Indeed, BMS offered no evidence other than that applicable to the common law causes of action.
See id.
Therefore, this issue of alleged irreparable harm to others and its numerous sub-contentions are waived.
In a footnote to its Motion for Post-Trial Relief or Stay, BMS contends that “neither the Court nor the Plaintiff ever suggested entry of this type of injunction prior to September 10, 2010.” Mot. at 2, n. 1. This contention is a canard, for several reasons. First, contrary to BMS’ assertions, BMS had ample notice of the Commonwealth’s request for injunctive relief, which was specifically requested in the Commonwealth’s corrected amended complaint. Count. XXVII of the corrected amended complaint included a request that the Court enter “an Order permanently enjoining each and every Defendant from continuing the deceptive and/or unfair acts or practices complained of herein, and requiring corrective measures.” Corrected Am. Compl. at p. 215, ¶¶ 3,11.
Second, both the Commonwealth and the trial judge repeatedly raised issues regarding injunctive relief prior to and during the course of the trial.
See
N.T., 8/2/10, at 68 (mentioned at the pre-trial conference by the Commonwealth’s counsel when discussing the claims set forth in the complaint); N.T., 8/10/10, at 96 (mentioned by the Commonwealth’s counsel); N.T., 8/26/10, at 2365 (mentioned by the trial judge), 2370 (mentioned by the Commonwealth’s counsel prior to the start of BMS’ case-in-chief).
Also, the trial judge raised the injunction issue during closing arguments on the Commonwealth’s CPL claims, and a discussion occurred regarding the type of in-junctive relief sought.
See
N.T., 9/9/10, at 3860.
Third, BMS’ position throughout trial was to defend both the common law claims and the statutory claims in the same way, without additional issues or evidence related to the statutory claim.
Compare
BMS’ Proposed Findings of Fact and Conclusions of Law, filed 7/26/10 (pretrial), Conclusion # 31 (“The Commonwealth is thus unable to meet its burden of proving a violation of the [CPL] for the same reasons outlined with respect to its common law fraud claim.”),
with
N.T., 9/9/10, at 3892-3894
{after jury verdict,
during BMS’ closing on CPL claim, “the statutory claim fails for the very same reasons the jury found against the Commonwealth [on the common law claims].”).
As such, BMS received ample notice that the Commonwealth sought and the
*1225
trial judge was considering injunctive relief, but, consistent with its pretrial strategy, it did not present additional evidence or defenses to challenge the entry of such relief. By failing to present evidence or defenses at trial, BMS did not properly preserve an affirmative defense of harm to others.
ii. Failure of Proof
In addition, BMS’ irreparable-harm-to-others contentions are not supported by credible evidence. Accordingly, they fail for factual reasons. As discussed below, BMS presented no believable evidence showing pharmacies would drop out of these programs as a result of the injunction. Instead, opinion evidence to the contrary was accepted. Also, BMS’ argument that DPW recipients or PACE claimants will suffer if it cannot charge the Plaintiff Agencies the fictitious AWPs for its drugs, is entirely speculative.
The record does not support BMS’ assertions that the proposed injunction will cause irreparable harm to innocent third parties, namely, pharmacies, which would not stock BMS drugs, and patients, who would be deprived access to BMS drugs. Significantly, the trial judge rejected as not credible the testimony of BMS’ experts, Drs. Bell and Scott-Morton, upon which BMS bases its assertions. With regard to Dr. Bell, the trial judge rejected his testimony based on demeanor and on bias because of his strong financial relationship with BMS. N.T., 9/1/10, at 3114-15, 3217-24. The trial judge rejected the testimony of Dr. Scott-Morton based on demeanor. In any event, neither of BMS’ expert witnesses expressed opinions on the impact on pharmacies or patients that would result from requiring BMS to cease reporting or contributing to the reporting of inflated AWPs for its drugs.
Regarding the alleged effects of the proposed injunction on patients, BMS asserts some of its drugs are of critical importance in treating serious illnesses. However, BMS cites no record evidence to support its argument that the proposed injunction would have the effect of preventing patients from obtaining necessary medications or the actual effects on patients if that occurred.
iii. Modification of Injunction
Further, BMS views the injunction as requiring it to exercise some degree of control over the pricing compendia, which, it argues, would likely not comply with a request to change AWPs for BMS products.
12
BMS references the testimony of Kay Morgan, a former First DataBank employee whose deposition from a different case was
excluded
by the trial judge here.
See
N.T., 8/31/10, at 2967. BMS complains the exclusion was improper.
13
*1226
BMS asserts Morgan testified regarding First DataBank’s refusal to publish Average Sales Prices (ASPs) for other drug manufacturers. BMS argues it would have attempted to prove this fact if it had received notice of the requested relief. BMS’ Br. at 12, n. 8.
Contrary to BMS’ claim of surprise, BMS had ample notice of the request for injunctive relief. This notice is more fully discussed above.
More importantly, this Court can modify the terms of the injunction awarded against BMS so that it more closely resembles the injunction awarded against Johnson & Johnson Defendants, following the second trial in this case. Specifically, in that decision, the trial judge issued an injunction, which, among other things, restrained Johnson & Johnson Defendants from contributing, directly or indirectly, to the reporting to DPW and PACE of inflated AWPs
without also arranging for the transmission to the agencies of current, accurate estimated acquisition costs, such as Average Manufacturers Prices (AMPs) or ASPs, for each of their branded drugs in a format equivalent to that in which AWPs are reported to the agencies, or in another format acceptable to the agencies.
Thus, as modified, the injunction would not require the pricing compendia to make the AWPs for BMS drugs equal to WACs/ WLPs; rather, it would require BMS to transmit current, accurate estimated acquisition cost data to DPW and PACE in an appropriate format so as to allow these agencies to make informed decisions based on accurate data when developing their reimbursement formulae.
iv. Failure of Legal Support
In addition, BMS’ harm-to-others contentions fail as a matter of law because this is not a relevant consideration in determining whether to issue a statutory injunction. As discussed more thoroughly below, “[w]hen the Legislature declares certain conduct to be unlawful, it is tantamount to calling it injurious to the public.”
Pennsylvania Pub. Util. Comm’n v. Israel,
356 Pa. 400, 406 , 52 A.2d 317, 321 (1947). Such conduct cannot be permitted to continue.
Id.
Also, the cases cited by BMS do not compel the result it seeks. More specifically, in
Weinberger ,
the U.S. Supreme Court considered “whether the Federal Water Pollution Control Act
[14]
[FWPCA] requires a district court to enjoin immediately all discharges of pollutants that do not comply with the [FWPCA]’s permit requirements or whether the district court retains discretion to order other relief to achieve compliance.”
Id.
456 U.S. at 306-07 , 102 S.Ct. 1798 . There, the district court found the Navy violated the FWPCA by discharging ordnance into the sea during its weapons-training exercises without first obtaining a required permit. However, the Court declined to enjoin the Navy’s training operations; rather, it simply ordered the Navy to apply for a permit. The court reasoned the Navy’s “technical violations” were not causing any “appreciable harm” to the quality of the water, and an injunction would cause grievous harm to the Navy’s military preparedness and therefore to the Nation.
Id.
at 310 , 102 S.Ct. 1798 . On appeal, however, the First Circuit reversed, directing the district court to enjoin all training activities until the Navy obtained the required permit. It concluded the traditional equitable balancing of competing interests was inappropriate where there was an absolute statutory duty to obtain a permit.
On further appeal, however, the U.S. Supreme Court reversed. Initially, the Court acknowledged the fundamental principle that an injunction is an equitable
*1227
remedy that does not issue as of course. The Court reviewed the established principles governing the award of equitable relief in federal courts. The Court explained the essential bases for injunctive relief are irreparable injury and inadequacy of legal remedies. The Court stated that, where the plaintiff and the defendant advance competing claims of injury, a court must balance the competing claims and consider the effect on each party of the granting or withholding of the requested relief. The Court explained that, although “particular regard” should be afforded to the public interest, “[t]he grant of jurisdiction to ensure compliance with a statute hardly suggests an absolute duty to do so under any and all circumstances, and a federal judge sitting as chancellor is not mechanically obligated to grant an injunction for every violation of law.”
Id.
at 313 , 102 S.Ct. 1798 . Finally, the Court stated:
Of course, Congress may intervene and guide or control the exercise of the courts’ discretion,
but we do not lightly assume that Congress has intended to depart from established principles....
Unless a statute in so many words, or by a necessary and inescapable inference, restricts the court’s jurisdiction in equity,
the full scope of that jurisdiction is to be recognized and applied.
Id.
(citation omitted) (quoting
Porter v. Warner Holding Co.,
328 U.S. 395, 398 , 66 S.Ct. 1086 , 90 L.Ed. 1332 (1946)) (emphasis added).
Applying these principles, the Court concluded the purpose of the FWPCA — to restore and maintain the integrity of the Nation’s waters — would not be undermined by allowing the Navy’s statutory violation to continue during the permit application process because the ordnance was not polluting the water. The Court determined an injunction against all discharges was not the only means of ensuring compliance with the FWPCA; it found nothing in the statute that suggested Congress intended to deny courts their traditional equitable discretion.
Unlike the FWPCA, at issue in
Wein-berger,
here the CPL specifically contemplates issuance of an injunction as the primary form of relief in an action brought by the Attorney General in the public interest. 73 P.S. § 201-4. Moreover, unlike in
Weinberger ,
where the facts indicated the Navy committed “technical violations” that did not cause “appreciable harm,” here BMS’ unlawful and deceptive business practices violate the primary purpose of the CPL, which is to “protect citizens from unfair or deceptive practices [and] to benefit the public at large by eradicating unfair or deceptive business practices.”
Chatham Racquet Club v. Commonwealth, by Zimmerman,
116 Pa.Cmwlth. 55 , 541 A.2d 51, 53 (1988) (citation omitted);
see also Commonwealth by Creamer v. Monumental Props.,
459 Pa. 450 , 329 A.2d 812 (1974) (CPL is to be construed liberally to effectuate its purpose of ensuring fairness in market transactions and placing sellers and consumers on equal ground). In addition, BMS’ unlawful practices directly harmed DPW and PACE by causing them to overpay for BMS drugs.
Further, BMS’ reliance on the Third Circuit’s decision in
Bradley
is misplaced. BMS cites
Bradley
for the proposition that a “district court should consider the effect of the issuance of a preliminary injunction on other interested persons and the public interest.”
Id.
910 F.2d at 1175. In
Bradley,
the Third Circuit considered “the propriety of [a] district’s court’s denial,
without a hearing or findings of fact or conclusions of law,
of [a teacher’s]
motion for preliminary injunction
preventing ... school officials from banning ... a teaching methodology she favored, and retaliating against her for using and advocating [that methodology].”
Id.
at 1174 (emphasis added). Ultimately, the Third Circuit
*1228
held the district court erred in failing to provide any basis for dismissal of the request for preliminary injunctive relief without a hearing.
Aside from the obvious factual distinctions between
Bradley
and this case, BMS offers no clear explanation as to how
Bradley
applies here. Specifically, the case presently before this Court involves the grant of a clearly-defined, statutorily-authorized permanent injunction issued after an extensive trial.
Bradley,
on the other hand, involved dismissal of a request for preliminary injunctive relief without a hearing or any explanation for the dismissal. Thus,
Bradley
does not advance BMS’ position.
In addition, BMS’ citation to
North Jersey Media
is puzzling.
North Jersey Media
involved a suit by media groups seeking access to certain “special interest” deportation hearings involving persons who the U.S. Attorney General determined might have connections to or knowledge of the September 11, 2001 terrorist attacks.
Id.
308 F.3d at 199. The district court found in favor of the media groups, and issued a preliminary injunction preventing the U.S. Attorney General from denying access to the hearings. On appeal, however, a divided panel of the Third Circuit reversed, holding the district court did not adequately consider evidence concerning the potential threat to national security posed by allowing access to the hearings.
While BMS cites
North Jersey Media
for the proposition that an injunction should not go “beyond providing relief to plaintiffs,” the language quoted by BMS is actually found in a dissenting opinion in the case.
Id.
at 229 (Scirica, J., dissenting). In any event, as with
Weinberger
and
Bradley,
discussed above, aside from the glaring factual distinctions between this case and
North Jersey Media,
BMS offers no explanation as to how the case applies here, particularly in light of the fact that it did not involve a statutorily authorized injunction.
2. Alleged Procedural Defect
a. Contentions
BMS next maintains that, because the Decision does not take into áccount the effects of the injunction, it is procedurally defective. BMS argues that, before granting or denying an injunction, a court must provide clear notice of the conduct to be enjoined, and an opportunity for all affected parties to be heard.
See Allegheny v. Milk Control Comm’n,
417 Pa. 22 , 207 A.2d 838 (1965) (lower court’s denial of injunction was erroneous “in the absence of a hearing, answer of proper motions filed and opportunity for the parties to be heard”). BMS argues that here the Commonwealth did not even ask for the relief the trial judge awarded. It contends, therefore, the proposed injunction violates fundamental principles of due process, including notice and an opportunity to be heard.
Pa. Bankers Ass’n v. Pa. Dep’t of Banking,
598 Pa. 313 , 956 A.2d 956 (2008).
b. Analysis
Due process requires a person be provided notice and an opportunity to be heard prior to an adjudication affecting that person’s rights.
Fountain Capital Fund, Inc. v. Pa. Secs. Comm’n,
948 A.2d 208 (Pa.Cmwlth.2008). It does not, however, confer an absolute right to be heard.
Id.
Due process is a right that a party may waive.
Id.
BMS’ arguments fail. As discussed above, the Commonwealth raised a claim for injunctive relief in its corrected amended complaint, as well as before and during the trial in this matter. In addition, the issue of injunctive relief was raised at the closing arguments on the Commonwealth’s CPL- claims, and a discussion occurred re
*1229
garding the type of injunctive relief sought.
Further, at trial BMS was on notice as to the specific conduct that was the target of the request for injunctive relief. In particular, at oral argument on BMS’ motion for compulsory non-suit, the trial judge inquired about the Commonwealth’s theory on its conspiracy claim.
See
N.T., 8/26/10, at 2353. In response, the Commonwealth identified four components to its theory of conspiracy, two of which, inflation of AWP, and creation, promotion or marketing of spreads,
see id.
at 2354, involve the specific conduct restrained by the trial judge through his award of in-junctive relief.
Additionally, when charging the jury on the Commonwealth’s conspiracy claim, the trial judge utilized a proposed contention point for charge submitted by the Commonwealth, which stated: “Plaintiff agencies assert that Bristol-Myers Squibb combined or agreed with one or more drug companies or others to do all of the following:
To cause to be reported inflated wholesale prices for their prescription drugs; to create and maintain spreads between their reported average wholesale prices and the actual prices charged for their
drugs.... ”
See
N.T., 9/8/10, at 3787 (emphasis added); Plaintiffs Proposed Jury Instructions, No. 27, served 8/31/10. Because BMS received the contention in writing days before the close of evidence, and because the trial judge specifically mentioned the type of conduct that was ultimately restrained in his instructions to the decision-maker on the common law claims, BMS had ample notice of the type of conduct that was the target of the request for relief.
In short, it is clear that BMS received notice and an opportunity to be heard on the Commonwealth’s claim for injunctive relief during the course of the five-week trial in this matter. Therefore, no due process violation occurred.
3. Alleged Interference with Statutory/Regulatory Schemes
a. Contentions
BMS further asserts if the Plaintiff Agencies had been given an opportunity to consider the relief ordered, they may have opposed it. BMS observes that Thomas Snedden testified PACE could not reduce drug reimbursement to actual acquisition cost without raising the dispensing fee to $10 — something that can only be done by the Legislature. N.T., 8/24/10, at 1976-78. BMS asserts DPW made clear that its reimbursement formula is designed to “assure the availability to MA clients of high quality pharmacy services, equal to that of the general population in the same geographic regions, at the best possible prices.” DX-501 at p. 3. BMS notes the Commonwealth affirmatively contended that obtaining changes in the reimbursement formulas is an arduous process at best. N.T., 9/9/10, at 3782.
BMS asserts additional testimony showed DPW’s actions are constrained by the Independent Regulatory Review Commission (IRRC), which considers proposals for changes in reimbursement after receiving input from various stakeholders, including the General Assembly, the Governor and the pharmacies.
See
N.T., 8/26/10, at 2457-61; 8/30/10, at 2570-72 (Love); N.T., 8/30/10, at 2735-36, 2740 (Yearsley); DX-500; DX-501 at p. 6; DX-699 at PA 501104; DX-804. It argues the IRRC rejected DPW’s efforts to lower reimbursement in the past. N.T., 8/26/10, at 2483; DX-500. BMS contends the proposed injunction upsets the delicate balance, which the IRRC, the General Assembly, the Governor and PACE established over the years.
*1230
BMS further asserts a court should not issue an injunction when it would “interfere with the exercise of ... discretionary powers” by other arms of government.
Jones v. Bonner,
107 Pa.Cmwlth. 283 , 523 A.2d 849, 850 (1987). Here, BMS maintains, as recently as 2008, DPW decided not to sponsor a proposal to lower reimbursement by 2% from AWP-14% to AWP-16% because “the overall savings that were estimated did not outweigh the costs of disruption to providers and access.” N.T., 9/1/10, at 3097 (Cathers). BMS argues the proposed injunction effectively trumps that 2008 determination and lowers reimbursement (at least on BMS drugs) to an amount significantly below pharmacy acquisition cost.
BMS contends the proposed injunction also threatens to harm the Commonwealth in other ways. It asserts the Commonwealth is required by federal law to establish reimbursement rates that will ensure access. 42 U.S.C. § 1396a(30)(A); 42 C.F.R. § 447.204 . BMS argues that if patients in Pennsylvania do not have access to BMS drugs, the federal funding the Commonwealth receives for its Medicaid program could be jeopardized. It maintains the Commonwealth currently receives approximately 65% of its funding for the Medicaid program from the federal government. BMS contends it would cause a major financial crisis for the Commonwealth, not to mention a health crisis for the recipients of Medicaid, if that funding were denied.
b. Analysis
BMS did not invite the fact-finder to consider any of these contentions during trial.
See
N.T., 9/9/10, at 3890-92 (closing arguments on CPL claim). Accordingly, they are waived.
Further, BMS’ arguments fail on the merits. As with several other arguments advanced by BMS, its arguments on this point begin with a mischaracterization of the language of the injunction.
As noted, the injunction as currently formulated restrains BMS from, among other things, “[cjontributing in any manner, directly or indirectly, to the reporting to [DPW] or to [PACE] of inflated [AWPs] for [BMS] drugs.... ” Decision at 2. The trial judge’s action in enjoining BMS from contributing to the reporting of fictitious prices in no way results in the alleged harm suggested by BMS. Also, if the Court modifies the injunction to more closely resemble the injunction issued against Johnson & Johnson Defendants, as explained above, it would simply require BMS to provide DPW and PACE with current, accurate estimated acquisition costs, in a useful format for each of their branded drugs. No change in the current AWP reporting would be needed.
There is no reason in this record or in common sense to support the claim that the Plaintiff Agencies would oppose the receipt of useful, accurate pricing data. This is the data for which the AWPs were intended as a proxy. This is particularly true if, as BMS asserts, the Agencies are unable to adequately defend their positions when proposing changes to their reimbursement rates because of the lack of clear information on estimated acquisition costs.
Most importantly, the trial judge rejected BMS’ contentions that the reimbursement levels utilized by the Plaintiff Agencies are the product of “choice.” BMS’ assertions on this point are based on the premise that DPW and PACE employees were concerned with ensuring access (i.e., protecting pharmacy participation) to their respective programs. To the extent DPW and PACE witnesses testified to concerns over access, however, the trial judge rejected this testimony as not credible because it was at odds with the accepted
*1231
expert testimony of Dr. Warren-Boulton, who explained in detail that no access problem existed (i.e., pharmacies leaving the network), even when reimbursement rates
decreased. See
N.T., 8/25/10, at 2173-78 (regarding DPW program); 2178-79 (regarding PACE program);
see also
N.T., 8/25/10, at 2204, 2212-18, 2219-20.
4. Alleged Irreparable Harm to BMS
a. Contentions
BMS next contends the proposed injunction will cause it irreparable harm. BMS asserts that if, as a result of the injunction, pharmacies refuse to stock its drugs, it will effectively be out of business in Pennsylvania. It argues an injunction that prevents a company from engaging in otherwise lawful activity is constitutionally invalid.
See Commonwealth ex rel. Davis v. Van Emberg,
464 Pa. 618 , 347 A.2d 712 (1975) (injunction must be narrowly tailored to avoid restraining lawful activities);
see also Commonwealth v. Zasloff,
137 Pa.Super. 96 , 8 A.2d 801, 803 (1939),
aff'[d,
338 Pa. 457 , 13 A.2d 67 (1940) (government edict that prevents “innocent transactions” violates due process).
BMS also maintains the proposed injunction will affect its business outside of Pennsylvania. BMS argues it does not report prices solely for use by the Plaintiff Agencies; rather, it reports list prices to national pricing services, which publish those prices on a nationwide basis. At this point, BMS asserts, it is unknown how the pricing services would react to a request by BMS that they change the way they report AWPs. BMS argues if the pricing services were unable, or refused, to limit any changes to Pennsylvania, the impact would be felt nationwide.
BMS also asserts other states, in an effort to ensure access to their Medicaid beneficiaries, established reimbursement formulas based on AWP. N.T., 8/25/10, at 2192-93 (Warren-Boulton). It contends private payors, located throughout the country, also have contracts with providers based on AWPs. N.T., 8/16/10, at 682-83, 690-92 (Comanor); N.T., 8/25/10, at 2205-07 (Warren-Boulton). BMS argues that if, as a result of the trial judge’s order, the pricing services decided to change the way they calculate AWPs, modification of regulations and statutes and the renegotiation of contracts nationwide would be required.
b. Analysis
As with the rest of its harm-to-others arguments, BMS does not indicate where in the record these concerns were preserved at trial. Accordingly, the argument is waived.
Also, BMS cites no record evidence to support its speculative assertions of harm to BMS. Accordingly, it failed to prove its contentions.
Additionally, BMS’ contentions mischar-acterize the terms and intended effect of the injunction. Moreover, as with the injunction entered after trial against Johnson & Johnson Defendants, the injunction against BMS can be modified to prohibit BMS from: contributing, directly or indirectly, to the reporting to DPW and PACE of inflated AWPs
without also arranging for the transmission to the agencies of current, accurate estimated acquisition costs, such as AMPs or ASPs, for each of their branded drugs in a format equivalent to that in which AWPs are reported to the agencies, or in another format acceptable to the agencies
and, promoting and/or marketing of spreads for branded drugs reimbursed by DPW and PACE (thereby eliminating the prohibition on
creation
of spread). This would limit the effect of the proposed injunction to the two Pennsylvania agencies, and it would moot BMS’ unsupported “parade of horribles.”
Further, BMS fails to support its contentions with applicable legal authority;
*1232
rather, the authority upon which BMS relies is distinguishable. In
Van Emberg ,
the Pennsylvania Supreme Court considered the validity of an injunction that prohibited the proprietor of an adult bookstore from engaging in “any business activity at the premises.”
Id.
at 619 , 347 A.2d at 713 . In that case, a court of common pleas initially granted an
ex parte
injunction prohibiting any business activity. No record of the proceeding was made. After hearing, the common pleas court entered a second decree continuing the injunction and specifying the defendants were enjoined from distributing in any manner “the book, papers, magazines and all other materials and exhibits referred to in the testimony taken in this matter.”
Id.
at 620 , 347 A.2d at 713 . Vacating the grant of the injunction, the Supreme Court explained:
The ex parte injunction enjoined defendants from ‘...
operating any business activity at the premises.’
The later decree issued after the hearing was not much more specific. The record indicates that there was a variety of books, magazines and other items, not established to be obscene, sold in this store. There is no basis in the record before us upon which the chancellor could have found that every item in the store was obscene and all sales properly enjoina-ble. The injunction is manifestly invalid on its face because of its failure to specify with particularity what materials were obscene and to limit its mandate to affect only those so designated.
The broad prohibition of this decree, enjoining all business activity, cannot be upheld.
This Court stated in
Collins v. Wayne Iron Works,
227 Pa. 326, 330 , 76 A. 24, 25 (1910):
‘The entry of an injunction is, in some respects, analogous to the publication of a penal statute. It is a notice that certain things must be done or not done.... Such a decree should be as definite, clear and precise in its terms as possible.... ’
The dissemination of printed material is one of the most zealously protected rights accorded by the United States Constitution and the Pennsylvania Constitution. In some circumstances specific publication may be enjoined because they do not enjoy constitutional protection. However, a blanket prohibition against the dissemination of all ‘books, papers, magazines and all other materials’ cannot be tolerated.
Id.
at 623-25, 347 A.2d at 715-16 (emphasis added) (citations and footnotes omitted).
Clearly, this is not a case like
Van Em-berg.
Unlike the broad prohibition on all business activity condemned by the Supreme Court in
Van Emberg ,
the language of the injunction here is sufficiently specific as to the conduct prohibited, and does not broadly prohibit BMS from conducting all business activity. Indeed, the trial judge here tailored his injunction so as to prohibit two discrete unlawful and deceptive business practices, which violated Pennsylvania law.
In addition, BMS’ reliance on
Zaslojf,
a 1939 Superior Court decision, is misplaced. There, the Superior Court declared unconstitutional the former Fair Sales Act
15
in response to a challenge by an individual who was charged with violating a provision that prohibited a retailer from selling any merchandise at less than his cost. The Pennsylvania Supreme Court affirmed, stating: “the right of an owner of property to fix the price at which he will sell it is an inherent attribute of the property itself, and as such within the protection of the
*1233
14th Amendment....”
Zasloff,
338 Pa. at 459 , 13 A.2d at 69 .
BMS’ reliance on
Zasloff
is unavailing given that it involved a statute that preceded the CPL, which the Supreme Court invalidated. Further, the underlying conduct at issue in
Zasloff
which simply involved a retailer’s sale of merchandise at a cost less than he paid, is far different from the unlawful and deceptive conduct, which the trial judge determined BMS employed here.
5. Alleged Commerce Clause Violation
a. Contentions
BMS next maintains the injunction unconstitutionally interferes with interstate commerce in two ways. First, BMS argues the injunction impermissibly acts as a direct regulation on interstate commerce by prohibiting BMS from marketing WAC to AWP spreads. BMS contends the injunction inappropriately uses Pennsylvania law to alter “industry-wide practices that thousands of companies, pharmacies and physicians nationwide have relied on to structure their business dealings for more than 40 years.” BMS’ Br. at 17.
In addition, BMS argues the injunction constitutes a form of “economic protectionism,” which benefits Pennsylvanians at the expense of non-Pennsylvanians. Specifically, BMS argues the injunction relieves the Plaintiff Agencies of the burden of negotiating discounts from industry-standard drugs and redistributes the burden to payors in the rest of the country.
b. Analysis
This argument fails for several reasons. First and foremost, BMS did not raise any issue regarding the Commerce Clause of the U.S. Constitution before the trial judge. Therefore, this issue is waived.
Second, as to the merits, the Commerce Clause of the U.S. Constitution enumerates to “the Congress [the] Power ... to regulate Commerce ... among the several States.” U.S. Const, art. I, § 8, cl. 3. The U.S. Supreme Court interprets the Commerce Clause as containing “an implicit or ‘dormant’ limitation on the authority of the States to enact legislation affecting interstate commerce.”
Healy v. Beer Inst., et al.,
491 U.S. 324 , 326 n. 1, 109 S.Ct. 2491 , 105 L.Ed.2d 275 (1989). The dormant Commerce Clause “prohibits economic protectionism-that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.”
New Energy Co. of Indiana v. Limbach,
486 U.S. 269, 273 , 108 S.Ct. 1803 , 100 L.Ed.2d 302 (1988) (citations omitted). In sum, since Congress possesses plenary power to regulate commerce among the states, states are prohibited from passing laws that discriminate against interstate commerce.
Indianapolis Power & Light Co. v. Pa. Pub. Util. Comm’n,
711 A.2d 1071 (Pa.Cmwlth.1998).
Courts apply a two-tiered approach when analyzing whether state economic regulation violates the Commerce Clause:
When a state statute directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests, we have generally struck down the statute without further inquiry. When, however, a statute has only indirect effects on interstate commerce and regulates evenhandedly, we have examined whether the State’s interest is legitimate and whether the burden on interstate commerce clearly exceeds the local benefits.
Brown-Forman Distillers Corp. v. New York State Liquor Auth.,
476 U.S. 573, 579 , 106 S.Ct. 2080 , 90 L.Ed.2d 552 (1986);
see also Empire Sanitary Landfill, Inc. v. Dep’t of Envtl. Res.,
546 Pa. 315 , 684 A.2d 1047 (1996);
Kerbeck Cadillac Pontiac, Inc. v. State Bd. of Vehicle Mfrs., Dealers
*1234
& Salespersons,
854 A.2d 663 (Pa.Cmwlth. 2004).
In
Healy ,
the U.S. Supreme Court further explained:
The principles guiding this assessment ... reflect the Constitution’s special concern both with the maintenance of a national economic union unfettered by state-imposed limitations on interstate commerce and -with the autonomy of the individual States within their respective spheres. Taken together, our cases concerning the extraterritorial effects of state economic regulation stand at a minimum for the following propositions:
First, the “Commerce Clause ... precludes the application of a state statute to commerce that takes place wholly outside of the State’s borders, whether or not the commerce has effects within the State,
” ...
and, specifically, a State may not adopt legislation that has the practical effect of establishing “a scale of prices for use in other states.
” Second, a statute that
directly controls commerce occurring wholly outside the boundaries of a State exceeds the inherent limits of the enacting State’s authority and is invalid
regardless of whether the statute’s extraterritorial reach was intended by the legislature.
The critical inquiry is whether the practical effect of the regulation is to control conduct beyond the boundaries of the State.
Third, the practical effect of the statute must be evaluated not only by considering the consequences of the statute itself, but also by
considering how the challenged statute may interact with the legitimate regulatory regimes of other States and what effect would arise if not one, but many or every, State adopted similar legislation.
Generally speaking, the Commerce Clause protects against inconsistent legislation arising from the projection of one state regulatory regime into the jurisdiction of another State. And, specifically,
the Commerce Clause dictates that no State may force an out-of-state merchant to seek regulatory approval in one State before undertaking a transaction in another.
Healy,
491 U.S. at 335-37 , 109 S.Ct. 2491 (citations and footnotes omitted). The cases cited by BMS all involve instances of a court interpreting legislative action. None of the cases involve review of the terms of an injunction to determine if it violates the Commerce Clause. The Commerce Clause itself is directed at legislative power, enumerating power vested in the U.S. Congress. The dormant Commerce Clause implicitly identifies the limits of states in impacting interstate commerce.
Third, if the injunction is modified to conform to the injunction issued after Johnson & Johnson Defendants’ trial, no Commerce Clause violation is evident. This is because BMS will be able to comply with the injunction in a manner in current industry-wide use: reporting ASPs for its drugs. This has been a statutory requirement of all Medicare Part B drugs of all drug manufacturers nationwide since January 1, 2005. Also, because of settlement in the related Lupron litigation, reporting of ASPs has been a matter of Consent Agreement between the Commonwealth and TAP Pharmaceuticals, another Defendant in this case.
See
Def. TAP Pharmaceutical Products, Inc.’s Mem. in Support of its Mot. For Summ. J. at 4; Ex. 6, ¶ 17 (TAP agreed to report ASP data for all of its products reimbursed by Pennsylvania Medicaid).
16
Given this na
*1235
tionwide statutory change, and the existing reporting situation involving a co-Defendant, a commerce clause violation under a modified injunction is unclear at best.
6. Balancing the Harm
a. Contentions
BMS further argues that, in contrast to the harm that would follow from the injunction, no harm would result from refusing to grant relief. As discussed more fully below, BMS contends that the Plaintiff Agencies already have all the information they need to set appropriate reimbursement rates. BMS asserts witness after witness from the Plaintiff Agencies testified the current reimbursement levels (including payments for the drugs and the dispensing fees) are appropriate.
See
N.T., 8/30/10, at 2794-95 (Nardone); N.T., 8/31/10, at 2061-62 (Cathers); N.T., 8/24/10, at 1975-78, 1994-96 (Snedden). BMS further contends no court in any other AWP case granted an injunction of the type ordered here. It asserts the proposed injunction is unprecedented and unnecessary, and greater injury will result from entering than refusing to enter the injunction.
b. Analysis
BMS’ argument fails for several reasons. First, although BMS baldly asserts greater harm will result from upholding the grant of the injunction rather than denying it, BMS provides no explanation
from the record
of the harm that would result. This is not surprising given that, at trial, BMS presented no clear proof of the alleged harm that would result from the grant of any injunctive relief.
In addition, although BMS asserts that testimony by DPW and PACE witnesses confirmed that these Agencies have the information needed to set appropriate reimbursement rates, the record does not support this assertion. As explained in detail below, the testimony revealed significant confusion over the various pricing benchmarks used in the pharmaceutical industry and the import of each of these benchmarks as they relate to estimated acquisition costs for BMS branded drugs. Much of the testimony relied upon by BMS on this issue was given little weight by the trial judge, because the DPW and PACE witnesses, particularly Mr. Sned-den, appeared biased in favor of supporting their past decision-making.
Also, as explained above, the trial judge rejected BMS’ contentions that the reimbursement levels utilized by the Plaintiff Agencies were the product of “choice” by these agencies. BMS’ assertions on this point are based on the premise that DPW and PACE employees were concerned with ensuring access to their respective programs. To the extent DPW and PACE witnesses testified to concerns over access, however, the trial judge rejected this testimony as not credible because it was at odds with the accepted expert testimony of Dr. Warren-Boulton, who explained in detail that no access problem existed, even when reimbursement rates
decreased. See
N.T., 8/25/10, at 2173-78 (regarding DPW program); 2178-79 (regarding PACE program);
see also
N.T., 8/25/10, at 2204, 2212-13,2219-20.
Further, while BMS asserts a grant of injunctive relief is unprecedented, it makes no effort to discuss or compare other judicial opinions granting relief in AWP-related litigation with a case brought under a statutory scheme like the CPL, which expressly authorizes the Attorney General to seek injunctive relief to restrain CPL violations where such proceedings are in the public interest.
*1236
D. Alleged Lack of Urgent Necessity
1. Alleged Inconsistency in the Decision
a.Contentions
BMS next argues an injunction should be denied where there is no urgent necessity to avoid an injury that cannot be compensated by damages. It contends that the Decision recognizes there is no urgent necessity that cannot be compensated by monetary damages because the trial judge refused to award restitution after 2004, which is an obvious acknowl-edgement that the Commonwealth did not suffer harm after 2004.
b.Waiver
As with the preceding issue, the issue of alleged lack of urgent necessity (and its four sub-contentions) was not brought to the attention of the factfinder before entry of the non-jury Decision.
See
N.T., 9/9/10, at 3890-92 (during BMS’ closing on CPL claim, “the statutory claim fails for the very same reasons the jury found against the Commonwealth [on the common law claims].”). These arguments simply were not made during the closing, or at any other time during trial. Further, no affirmative evidence was offered on any of these points. The issue and its subparts are therefore waived.
c.Standard for Injunction Under CPL
Moreover, for the following reasons lack of urgent necessity (and its four sub-contentions) are not elements of the Commonwealth’s proof for an injunction in the public interest under the CPL. Rather, the Commonwealth must prove a violation of the CPL.
The remedy of injunctive relief here is explicitly provided by statute. Section 4 of the CPL, which relates to “Restraining prohibited acts,” states, as pertinent:
Whenever the Attorney General ... has reason to believe that any person is using or is about to use any method, act or practice declared by section 3 of this act to be unlawful, and that proceedings would be in the public interest,
he may bring an action in the name of the Commonwealth against such person to restrain by temporary or permanent injunction the use of such method, act or practice.
73 P.S. § 201-4 (emphasis added). This provision sets forth no express elements for injunctive relief beyond: 1) a person is believed to be using or about to use a practice declared unlawful by the CPL, and 2) proceedings would be in the public interest.
Commentators observe that where a statute authorizes a court to issue an injunction restraining a person from violating the statute, relief is available without regard to the adequacy of a remedy at law. 15 STANDARD Pá. PRACTICE 2d, § 83:245 (citing former Section 4 of the Food Act,
17
formerly
31 P.S. § 20.4). As an obvious corollary, where a statute authorizes restoration when an injunction issues, the existence of the additional restoration remedy does not diminish the availability of the injunction. Section 4.1 of the CPL, 73 P.S. § 201-4.1. To hold otherwise would produce an absurd result. In these ways,
*1237
statutory provisions may alter the elements needed to obtain a statutorily authorized injunction.
Consistent with this analysis, in
Bums,
a case involving a post-trial challenge to a permanent injunction under the CPL, this Court accepted the Attorney General’s argument that whenever a violation of a statute is found, such violation constitutes irreparable harm
per se,
and injunctive relief is appropriate. The only issue therefore is whether the record adequately supports the findings and conclusions.
This analysis is also consistent with the leading case on this issue, our Supreme Court’s decision in
Israel .
In
Israel ,
the Public Utility Commission filed suit in Dauphin County Common Pleas Court (sitting as Commonwealth Court) seeking to enjoin a transportation company from operating taxicabs because the company did not possess a certificate of public convenience as required by statute. Notably, Section 903 of the Public Utility Law,
18
then in effect, provided, as pertinent:
Whenever the commission shall be of opinion that any person * * * is violating, or is about to violate, any provisions of this act; or has done, or is about to do, any act, matter, or thing herein prohibited or declared to be unlawful; * * * then and in every such ease
the commission may institute in the court of common pleas of Dauphin County, injunction, mandamus, or other appropriate legal proceedings, to restrain such violations of the provisions of this act, or of the regulations, or orders of the commission, and to enforce obedience
thereto....
The operators of the transportation company challenged the commission’s request for a preliminary injunction, asserting, because there was no allegation of irreparable injury, no preliminary injunction could issue. Adopting and quoting from the well-reasoned opinion of the Honorable Robert E. Woodside, Jr., our Supreme Court stated:
At the hearing the Commonwealth ... made a prima facie showing that the defendants are operating taxicabs in violation of law.
The argument that a violation of law can be a benefit to the public is without merit. When the Legislature declares certain conduct to be unlawful it is tantamount in law to calling it injurious to the public. For one to continue such unlawful conduct constitutes irreparable injury.
* * *
In
Commonwealth v. Pittsburgh & Connellsville Railroad Co.,
1854, 24 Pa. 159, 160 , 62 Am. Dec. 372 , the Court said:
‘The argument that there is no ‘irreparable damage,’ would not be so often used by wrongdoers, if they would take the trouble to observe that the word ‘irreparable’ is a very unhappily chosen one, used in expressing the rule that
an injunction may issue to prevent wrongs of a repeated and continuing character,
or which occasion damages which are estimable only by conjecture and not by any accurate standard. * * *
Besides this, where the right invaded is secured by statute ... there is generally no question of the amount of damage, but simply of the right.’
Id.
at 406-07 , 52 A.2d at 321 .
Ultimately, the Court concluded:
When the provisions of the Public Utility Commission Law are being violated the Legislature provided for the Commission to come before this Court,
*1238
and prevent the violation by obtaining an injunction.
When the right to such injunction is clear, as it is here, under the undisputed facts, it is our duty to issue a preliminary injunction.
Id.
at 409 , 52 A.2d at 321 (emphasis added).
Israel
stands for the proposition that, for purposes of injunctive relief, statutory violations constitute irreparable harm
per se.
Although
Israel
concerned the irreparable harm criterion for issuance of a preliminary injunction, it is helpful here because it involved a scenario in which an agency, which was statutorily authorized to obtain an injunction to restrain statutory violations, was granted such an injunction upon proof that a clear statutory violation occurred.
Further support for our conclusion that the common law criteria for a permanent injunction do not apply here can be found in the recent AWP litigation decision in
Commonwealth of Kentucky ex rel. Conway v. Alpharma USPD, Inc. et al.,
No. 04-CI-1487 (Franklin Cir. Ct., Div. 1, Jan. 19, 2011) (unpublished decision denying post-trial motions of drug manufacturer found guilty of violating Kentucky Consumer Protection Act, Ky.Rev.Stat. Ann. §§ 367.110-367.360). In that decision, Franklin Circuit Court Judge Phillip J. Shepherd denied post-trial motions of a drug manufacturer which was found to have violated the Kentucky Consumer Protection Act by manipulating and falsely reporting AWPs for its drugs reimbursed by the Kentucky Medicaid Program. Discussing the standard for injunctive relief under that consumer protection statute, Judge Shepherd wrote: “KRS 367.190 authorizes the issuance of injunctive relief upon proof of a violation, without demonstration of irreparable injury, inadequate remedies at law, or other common law requirements for an injunction.”
Id.,
slip op. at 16.
As discussed more fully above, our review of the record here reveals ample support for the trial judge’s determinations that BMS violated the CPL by engaging in unfair or deceptive acts or practices within the meaning of the “catchall provision” in Section 2(4)(xxi) of the CPL, 73 P.S. § 201-2(4)(xxi) (“Engaging in any other ... deceptive conduct which creates a likelihood of confusion or of misunderstanding.”). Based on the trial judge’s determinations that BMS violated the CPL, the trial judge had a duty to issue an injunction to restrain BMS’ unlawful practices.
Israel .
d. Urgent Necessity
Based on the foregoing discussion, we do not believe that proof of “urgent necessity to avoid an injury that cannot be compensated by damages” is an element of the Commonwealth’s proof under Section 4 of the CPL. Nevertheless, there are additional reasons why we discern no merit in BMS’ position on this issue. Specifically, we conclude: 1) that an injunction can issue to restrain future conduct based on prior unlawful activity; 2) that cessation of the offending conduct does not, in and of itself, bar a claim for injunctive relief; and 3) the Court may consider whether the offending conduct is likely to reoccur absent the grant of an injunction.
Section 4 of the CPL, which relates to “Restraining prohibited acts,” states, as pertinent:
Whenever the Attorney General ... has reason to believe that any person
is using or is about to use
any method, act or practice declared by section 3 of this act to be unlawful, and that proceedings would be in the public interest, he may bring an action in the name of the Commonwealth against such person to restrain by temporary or permanent in
*1239
junction the use of such method, act or practice.
73 P.S. § 201-4 (emphasis added).
Our Supreme Court holds that the mere fact that an illegal practice has been abandoned does not necessarily render a controversy moot.
Tamagno v. Waiters & Waitresses Union, Local No. 301,
373 Pa. 457 , 96 A.2d 145 (1953). In particular, the fact that the defendants had for two years obeyed a permanent injunction did not justify vacation of the injunction. “[E]ven though the defendant may give assurance that he will not err again it is for the court to say whether the complainant should be compelled to accept such assurance instead of insisting upon the continuance of the injunctive relief which he has obtained.”
Id.
at 461 , 96 A.2d at 147 .
Similarly, in
Commonwealth v. Percudani,
844 A.2d 35 (Pa.Cmwlth.),
amended on reconsideration by,
851 A.2d 987 (Pa. Cmwlth.2004)
(Percudani II),
this Court considered whether under Section 4 the Attorney General could seek to enjoin future conduct based on past violations of the CPL where the alleged offending conduct ceased prior to the Attorney General’s filing of the complaint.
Factually,
Percudani II
involved a complaint in equity filed by the Attorney General against various defendants alleging CPL violations that arose out of the defendants’ construction, sale and mortgage of residential homes. Pertinent here, the Attorney General averred one of the defendants, a certified appraiser, misled consumers by issuing inflated appraisals of their homes. As a result, the Attorney General sought to enjoin the appraiser from committing further CPL violations. The defendants, including the appraiser, filed preliminary objections to the Attorney General’s complaint.
In particular, the appraiser sought dismissal of the suit on the grounds the Attorney General lacked standing to pursue the action, and this Court lacked subject matter jurisdiction over the suit. Specifically, the appraiser argued that prior to the filing of the suit, he entered into a consent agreement with the State Bureau of Professional and Occupational Affairs in which he agreed to surrender his appraisal license and agreed not to seek reinstatement for at least five years. The appraiser asserted Section 4 of the CPL authorized the Attorney General to bring suit against any person who is believed to be
“using or is about to use
” any deceptive act or practice, but did not permit an action based on past acts or practices.
Percudani II,
844 A.2d at 45 (emphasis in original). The appraiser asserted:
the Legislature’s use of the present tense limits the Commonwealth’s ability to pursue violations of the [CPL] to ongoing deceptive acts or practices. In essence, [the appraiser] claims that because he cannot perform appraisals by virtue of the consent order, which was entered prior to the filing of the Commonwealth’s complaint, he cannot presently use or in the near future use allegedly deceptive acts or practices. Therefore, there is nothing that the Commonwealth can prohibit nor can he be held accountable for his past conduct. He argues that the [CPL] does not create a cause of action against those who cannot presently or in the future use deceptive acts or practices.
Id.
Rejecting this argument, a divided panel of this Court, speaking through Senior Judge Jiuliante, stated:
Our research has uncovered several cases in which the Commonwealth had sought to enjoin future conduct based on past acts.
Consequently, case law indicates that the Commonwealth may
*1240
pursue -violations of the Law based on past illegal activities.
[19]
In his reply brief, [the appraiser] cites
Eugene Dietzgen Co. v. FTC,
142 F.2d 821 (7th Cir.1944), to suggest that since the consent order has stopped the allegedly unfair practice, the object of the [AG’s] action, namely an injunction to prevent further violations of the [CPL], is unnecessary. Notwithstanding, the propriety of the actual issuance of an injunction against [the appraiser] is premature inasmuch as presently before the Court are [defendants’ preliminary objections.
Whether the [AG] is able to sustain its burden of proof and the appropriateness of any remedy imposed is a matter to be heard at another time.
Furthermore, if we adopted [the appraiser’s] interpretation of Section U of [CPL] and limited the [AG’s] actions to ongoing activities, the purpose of the[CPL] would be frustrated.
As
even [the appraiser] points out, a party could simply avoid liability under the[CPL] by discontinuing its actions even after proceedings are commenced and claim that the matter is moot. Such an interpretation would do little in the way of preventing unfair or deceptive acts or practices and compensating injured consumers. In ascertaining legislative intent, we may consider the con sequences of a particular interpretation and may presume that the legislature did not intend a result that is absurd or unreasonable.
1 Pa.C.S. § 1921(c) and § 1922;
Pennsylvania State Police, Bureau of Liquor Control Enforcement v. McCabe,
163 Pa.Cmwlth. 11 , 644 A.2d 1270 (1993).
To allow a party to avoid liability for its actions by merely discontinuing its conduct would render the penalty provisions of the [CPL] meaningless in their application.
Percudani II,
844 A.2d at 45-46 (emphasis added). Thus, the panel majority (Senior Judge Judiante and Judge Cohn-Jubelirer) held the Attorney General could seek an injunction against the appraiser despite the lack of a current threat of ongoing injury because of the underlying consent order, which restrained the appraiser from conducting appraisals.
In a dissenting opinion, Judge Leavitt disagreed that the Attorney General could seek an injunction against the appraiser where the professional licensing body previously restrained the appraiser from engaging in the alleged unlawful conduct.
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Judge Leavitt also disagreed with the majority’s interpretation of the CPL, stating:
The [CPL] authorizes the [AG] to institute an action to enjoin an unfair trade method, act or practice “[whenever the [AG] ... has reason to believe that any person
is using or is about to me”
this practice. 73 P.S. § 201-4. The [AG] asserts that this provision authorizes his action against [the appraiser], who is out of the business of appraising real estate and will be for at least the next five years. Stated otherwise, the [AG] sees no distinction between “has used” in the past, “is using” in the present or “about to use” in the future. However, the only way to read the actual words of the [CPL] is that past conduct that is no longer continuing cannot support a complaint.
The distinction between “has used,” “is using” and “is about to use” has been given effect in precedent interpreting an unfair trade practice statute very similar to Pennsylvania’s [CPL]. In
State ex rel. McLeod v. Brown,
278 S.C. 281 , 294 S.E.2d 781 (1982), the defendants contended that the state attorney general could not pursue an action against them because they had voluntarily ceased the conduct cited in the complaint. The South Carolina Supreme Court rejected this defense because the unfair trade practice statute expressly authorized actions against a person who “has used” an unlawful practice.
Brown,
294 S.E.2d at 782-783 . Indeed, the South Carolina statute authorized the state attorney general to seek civil penalties as well as injunctive relief for violations that had occurred in the past but had discontinued.
In sum, the words “is using or is about to use” have a meaning separate from “has used.” We must enforce the actual language used by the General Assembly in the [CPL], and we must not insert words that are not there under the principle
expressio unius est exclu-sio alterius.
The allegation that [the appraiser] may have engaged in an unfair trade practice in the past, but is no longer, cannot support an action under the [CPL], The [AG] cannot aver that [the appraiser] “is using” or “is about to use” an unfair method of doing real estate appraisals. By virtue of the ... consent order, [the appraiser] is barred from doing
any
real estate appraisals, whether fair or unfair.
Percudani II,
844 A.2d at 51-53 (Leavitt, J., dissenting) (emphasis in original) (footnotes omitted).
Of further note, Judge Leavitt’s dissenting opinion also briefly explained how this issue would be addressed under the Federal Trade Commission Act (FTC Act), 15 U.S.C. §§ 41-58 , the federal law upon which the CPL is modeled. Specifically, Judge Leavitt stated:
The parties are in agreement that the [CPL] is modeled on the ... FTC Act.... The FTC Act includes the language “has used,” and, in this respect, FTC case law precedent has limited value to this controversy. Nevertheless,
the FTC may not issue a cease and desist order to restrain a practice long discontinued and where there is no reason to believe it will be renewed. Rodale Press, Inc. v. Federal Trade Commission,
407 F.2d 1252 (D.C.Cir.1968);
Marlene's Inc. v. Federal Trade Commission,
216 F.2d 556 (7th Cir.1954).
The result is different where the defendant claims the right to renew the practice.Stanley Laboratories v. Federal Trade Commission,
138 F.2d 388 (9th Cir.1943)....
Percudani II,
844 A.2d at 53, n. 6 (Leavitt, J., dissenting) (emphasis added). Thus, the FTC cannot issue a cease and desist order to restrain prior unlawful conduct where the conduct ceased,
and
where
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there is no reasonable probability that the conduct will reoccur.
With regard to the FTC’s power to issue a cease and desist order where the offending conduct ceased, in
Hershey Chocolate Corp. v. Federal Trade Commission,
121 F.2d 968, 971-72 (3d Cir.1941) (footnotes omitted), the Third Circuit explained:
[T]he petitioners contend that the order is invalid in that the practices ordered ceased were discontinued shortly before the complaint was issued.... The [FTC] would have no power at all if it lost jurisdiction every time a competitor halted an unfair practice just as the [FTC] was about to act.
The practice may have been discontinued but without the [FTC’s] order it could be immediately resumed.
Likewise the [FTC’s] power would be limited indeed if it were restricted to enjoining unfair acts of competitors only as evidenced in the past. To be of any value the order must proscribe the method of unfair competition as well as the specific acts by which it has been manifested. In no other way could the [FTC] fulfill its remedial function.
See also Beneficial Corp. v. Fed. Trade Comm’n,
542 F.2d 611, 617 (3d Cir.1976) (citations omitted) (“[T]his and other courts have held that at least where a discontinued deceptive trade practice could be resumed, the prior practice may be the subject of a cease and desist order.”);
Fleet v. U.S. Consumer Council Inc.,
95 B.R. 319, 339 (E.D.Pa.1989) (citations omitted) (“[W]e shall issue an injunction enjoining [defendants ... from continuing to engage in deceptive and unconscionable commercial practices.... Even though [the corporate defendant] is and has been out of business for over five years, it is clearly not an impossibility that either [the corporate defendant], under different management, or [its chief operating officer], under a different corporate guise, could attempt to resume a like business again.”) (citing
City of Mesquite v. Aladdin’s Castle, Inc.,
455 U.S. 283, 289 , 102 S.Ct. 1070 , 71 L.Ed.2d 152 (1982);
United States v. W.T. Grant Co.,
345 U.S. 629, 632 , 73 S.Ct. 894 , 97 L.Ed. 1303 (1953) (defendant’s voluntary cessation of activity does not render request for injunctive relief moot because otherwise defendant would be free to return to his old ways));
People ex rel. Spitzer v. Applied Card Sys., Inc.,
27 A.D.3d 104 , 805 N.Y.S.2d 175, 179 (N.Y.App.Div.2005) (“To the extent that respondents voluntarily discontinued [their conduct] ... such voluntary discontinuance of fraudulent or deceptive practices will not bar the issuance of an injunction to prevent future practices.”)
The rules that can be synthesized from the above authority are: (1) an injunction can issue to restrain future conduct based on prior unlawful conduct,
Percudani;
(2) cessation of the alleged offending conduct does not, in and of itself, bar a claim for injunctive relief,
Hershey Chocolate; id.;
and, (3) the Court should consider whether the alleged offending conduct is likely to reoccur absent the grant of an injunction.
Applying the principles gleaned from the authority outlined above, we reject BMS’ position. While it asserts the record contains no proof of an ongoing threat of injury, there is also no evidence that BMS, in fact, ceased all its offending conduct and promised not to renew it. To the contrary, BMS contended that all past activity was lawful and it did nothing wrong.
Moreover, BMS continues to report WLPs to the pricing compendia, which in turn continue to report fictitious AWPs to the Plaintiff Agencies. Also, there was no believable evidence that BMS intended to permanently change any marketing or reporting practice without a court order. In this regard, there was no believable evidence that BMS would make more transaction pricing information available in a
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usable format to the Plaintiff Agencies without a court order. Thus, issuance of a perpetual injunction under Section 4 of the CPL was proper.
In addition, the CPL contains a more formal mechanism by which an alleged offender can provide assurance that such conduct has, in fact, ceased and will not be renewed. Specifically, Section 5 of the CPL (relating to “Assurances of voluntary compliance”), states:
In the administration of this act, the Attorney General may accept an assurance of voluntary compliance with respect to any method, act or practice deemed to be violative of the act from any person who has engaged or was about to engage in such method, act or practice. Such assurance may include a stipulation for voluntary payment by the alleged violator providing for the restitution by the alleged violator to consumers, of money, property or other things received from them in connection with a violation of this act. Any such assurance shall be in writing and be filed with the court. Such assurance of voluntary compliance shall not be considered an admission of violation for any purpose. Matters thus closed may at any time be reopened by the Attorney General for further proceedings in the public interest, pursuant to section 4.
73 P.S. § 201-5. Thus, a voluntary compliance agreement, which must be filed with the court, is the formal mechanism by which a party can assure its alleged offending conduct ceased and will not reoccur.
Indeed, TAP Pharmaceutical Products, Inc., a former defendant in this suit, entered into such an agreement in connection with its settlement of the related Lupron litigation. As part of its settlement, TAP agreed to report ASP data for
all
of its products reimbursed by Pennsylvania Medicaid.
See
Def. TAP Pharmaceutical Products, Inc.’s Mem. in Support of its Mot. For Summ. J. at 4; Ex. 6, ¶ 17. As such, the type of agreement contemplated by Section 5 of the CPL is not unfamiliar to the drug companies in the context of this litigation.
Because there is a specific CPL provision to ensure a voluntary permanent cessation of conduct, and BMS did not utilize the available procedure, the non-CPL cases they cite do not control. Absent the filing of such an enforceable agreement, an injunction should remain in effect to restrain the unlawful conduct.
Also, the decision not to award statutory restoration after 2004 is in no way inconsistent with the trial judge’s grant of in-junctive relief. First, BMS fails to acknowledge the structure of the CPL as it relates to Attorney General enforcement actions. Based on the plain language of Section 4.1 of the CPL, a grant of injunc-tive relief is a prerequisite to an award of restoration.
See
73 P.S. § 201-4.1. There is no authority to the contrary. Thus, upon finding violations of the CPL, the trial judge was authorized to grant injunc-tive relief, which, in turn, provided him with discretion to also award restoration.
In addition, the decision not to award statutory restoration post-2004 was based on a number of considerations, including changes in the statutory and regulatory reimbursement formulae for the Plaintiff Agencies, which occurred after 2004, and the passage of the federal Medicare Prescription Drug, Improvement and Modernization Act, which took effect in January 2005. In short, no inconsistency exists between the grant of injunctive relief and the award of statutory restoration for a closed period.
2. Alleged Lack of Ongoing Injury
a. Contentions
BMS further maintains the Commonwealth did not demonstrate a current
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threat of an ongoing injury so as to justify the grant of injunctive relief. It contends that, at the Commonwealth’s request, the trial judge barred evidence of any conduct after 2008. As a result, BMS asserts, no evidence of any ongoing injury appears of record. For the same reason, BMS argues, it was deprived the opportunity to show the Commonwealth no longer suffers from any injury it may have incurred in the past. BMS maintains where, as here, no threat of ongoing injury is shown, an injunction should be denied as there is nothing to enjoin.
See Christoffel v. Shaler Area Sch. Dist.,
60 Pa.Cmwlth. 17 , 430 A.2d 726 (1981);
Weichert Co. of Pa., Inc. v. Long & Foster Real Estate, Inc.,
Dkt. No. 03-00849, 2005 WL 6195331 (C.P. Montgomery 2005).
b. Analysis
Although another defendant group which proceeded to a separate trial raised this issue in its pretrial memorandum, BMS did not.
20
Moreover, BMS did not alert the trial judge to consider this contention at any time before the Decision.
Regardless of waiver, the contention lacks merit, for the reasons discussed in the preceding section of this opinion.
3. Alleged Failure to Provide Meaningful Relief
a. Contentions
BMS also asserts that the Plaintiff Agencies have all the information they need to determine appropriate reimbursement rates. BMS argues that DPW and PACE have access to the Health and Human Services Office of the Inspector General (OIG) reports that summarize the results of surveys concerning pharmacy acquisition costs.
See
N.T., 8/24/10, at 1972-74 (Snedden); N.T., 8/26/10, at 2421-22, 2424, 2426-27, 2473, 2480-84 (Love). Further, BMS contends that from time to time the Commonwealth conducted its own surveys or audits to determine actual acquisition costs, and can continue to do so in the future.
BMS argues the Commonwealth also has access to every piece of information BMS has in its possession, custody or control regarding actual acquisition costs of pharmacies and doctors. BMS maintains it calculates the following types of relevant pricing information in the regular course of its business: WLPs (prices at which BMS sells to wholesalers, which, according to testimony by a BMS witness, are very close to what retail pharmacies pay for drugs), N.T., 8/31/10, at 2842-43 (Larkin); AMPs (prices determined in accordance with regulatory requirements that reflect net prices, after discounts, of products destined for the retail class of trade; they are slightly below list prices — and, therefore, below pharmacy acquisition costs — because they reflect prompt pay discounts and discounts to mail order pharmacies), N.T., 8/31/10, at 2852-55, 2872-73; and, (3) ASPs (prices for physician administered drugs calculated pursuant to regulatory requirements and published on the internet), N.T., 8/31/10 at 2851-52).
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BMS contends the Commonwealth already has access to all of these prices; thus, it asserts that there is nothing more it can provide. Also, BMS asserts that it is not involved in transactions between wholesalers and retail pharmacies; therefore, it is not in a position to provide those prices other than to estimate generally that they are close to list prices, which BMS provides. N.T., 8/11/10, at 282-83 (Norris). In fact, BMS argues the Commonwealth has greater access to pharmacy acquisition costs because it can audit pharmacies, and BMS cannot.
BMS maintains where, as here, an injunction would not provide meaningful relief, it should not be issued. As noted above, BMS contends that the only practical means BMS has to comply with the injunction is to ask the pricing services to make the AWPs for BMS drugs equal to WACs/WLPs.
b. Analysis
i. Waiver
BMS did not invite the trial judge to consider that any injunction would be incapable of providing meaningful relief because of the structure of the drug pricing system.
See
N.T., 9/9/10, at 3890-92 (closing argument on CPL claim). Accordingly, this contention is waived.
Also, on the merits we reject BMS’ argument that the injunction will provide no meaningful relief because the Plaintiff Agencies have all of the information they need to set appropriate reimbursement rates. There are two general reasons for this conclusion. First, the trial judge found that there is much confusion regarding AWPs and actual provider acquisition costs. Second, the trial judge found that the information available to Plaintiff Agencies is not useful because of format, timing, and ambiguity and because it does not cover each National Drug Code (NDC).
ii. AWP Confusion
Regarding AWP confusion, the trial judge found that the pricing system utilized in the pharmaceutical industry is very complicated,
see, e.g.,
N.T., 8/16/10, at 712-13, 722 (Comanor). As a result, confusion over the meaning and import of each of the various pricing values, seriously hindered, if not completely prevented, the efforts of DPW and PACE to discover current, accurate estimated acquisition costs in a useful format for BMS drugs.
For example, with regard to her understanding of AWP, former, long-time DPW employee Suzanne Love, who had significant involvement in pharmaceutical reimbursement, testified as follows (with emphasis added):
Q. Okay. Was it also your — do you agree with the description in this proposed regulation that AWP is a misnomer? It is actually the manufacturer’s suggested list price?
A. It was my understanding that the AWP received from the pricing service was determined by the manufacturer.
[[Image here]]
Q. ... You used AWP throughout your time at DPW, correct?
A. Yes.
Q. Did you understand it to be an actual average of wholesale prices?
A.
It was always my understanding that the AWP that was reported by our pricing service represented the price identified by the manufacturer. It was my understanding that that was not the actual price that the pharmacist purchased the drug.
Q. Okay. Now, do you have a—
A.
But I didn’t have anything to prove that.
Q. Didn’t have anything to prove what?
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A.
That it wasn’t the actual price that the pharmacist paid.
Q. Okay. Did
you
— how
did you obtain the understanding that it
— that
the published AWP was not the price that the pharmacist paid?
A.
Day-to-day discussions, rumors, things like that.
Q. With whom?
A. Pharmacists, the pharmacy association.
N.T., 8/26/10, at 2420-21. Further, with regard to her understanding of WAC/ WLP, Love testified (with emphasis added):
Q. ...
You knew at this time that the WAC, the published WAC was closer to the pharmacists’ actual acquisition cost than the published AWP, isn’t that correct?
A.
It’s hard for me to say that I knew this. I mean, you hear these things in discussions, you read articles here and there that suggest that it would be closer.
Q. All right. I didn’t mean that you had a moral certainty. I just meant that you had some sort of information that would suggest to you that WAC would be closer to actual acquisition cost than—
A. I had — I’m sorry.
Q. I guess you can finish. Go ahead, answer.
A. I didn’t mean to interrupt. I,
I had anecdotal information that it was closer to actual acquisition cost.
N.T., 8/26/10, at 2472.
In addition, as to her knowledge of the various pricing benchmarks, Dr. Terri Cathers, Director of Pharmacy for the Fee-for-Service Program of DPW’s Office of Medical Assistance Programs testified (with emphasis added):
Q. Now I want to talk about up through 2008. Can you tell the jury about your understanding of AWP while you were with Pennsylvania Medicaid up through 2008. What was your understanding of AWP?
A.
Well AWP is
— is
not easily understood. I mean we’ve seen AMP today, we’ve seen WAG today, we’ve heard about actual acquisition cost, and we’ve heard about AWP.
But I don’t
— I
don’t know what any of these prices actually mean, where they come from, and I don’t know anybody who does, other than the manufacturers who have to have some sort of method for coming up with these prices. But that’s unknown to all of us.
Q. Okay. And it has been?
A.
Absolutely. It has been unknown as
— forever.
Q. Okay. But there was a suggestion in this

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2325944. Public record. Not legal advice.