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Jul 10, 2023

Late last week Wisconsin’s Circuit Court, Branch II, joined the California Court of Appeals in finding OptumRx’s forced arbitration contract clause “unconscionable.” The judgment is a victory worthy of its own fireworks, but it surely also came as a huge relief to Wisconsin pharmacies, whose fellow pharmacies in the neighboring state of Illinois received a very different ruling from their 5th District Appellate Court.

The California Appellate court decision described in detail how OptumRx’s contracts meet the legal definition of “unconscionability” in which a contract may be written in such a way as to greatly favor one party over another. OptumRx’s ability to unilaterally change arbitration terms while pushing arbitration costs - which can exceed $250,000 per arbitration event - onto the pharmacies were among the many reasons the Court ruled OptumRx’s forced arbitration as “unconscionable”.

However, in May, the Illinois Appellate Court reversed a similar order by the trial court and ordered the plaintiff and other 42 pharmacies to bring separate arbitrations, requiring the pharmacies to travel to California to arbitrate and pay at least $60,000 in arbitration fees per arbitration. So now the attorneys representing Illinois independent pharmacies are seeking to have the case heard in the Illinois Supreme Court.

Mark Cuker, the attorney representing both the Illinois and Wisconsin pharmacies bringing the suit against OptumRx, said “The Wisconsin Circuit Court found that, by constantly changing the arbitration clause to suit its own purposes, OptumRx was not dealing in good faith. The Circuit Court recognized that, by controlling access to 20% of pharmacy customers, Optum has absolute power to impose whatever terms it wants, to change those terms at will, and to impose terms that make it impossible for pharmacies to benefit from arbitration.”

In a ringing condemnation of Optum’s practices, the Wisconsin Circuit Court stated:

“Optum gets to decide the terms of an arbitration agreement even when they have agreed there will not be one, decides when and if it will change those terms, changes those terms without advance notice or negotiation, implements those terms for several months before it affirmatively notifies the pharmacies that substantial, unfavorable changes in the arbitration provisions are being implemented. …When the Court considers the cost of the arbitration (three arbitrators, ten years of experience, limited discovery, etc.) the Court can only conclude that in all but the most substantial disputes the cost of proceeding to arbitration will substantially outweigh any benefit that could be achieved in arbitration and that this will undoubtedly have a substantial chilling effect upon pharmacies presenting objectively meritorious positions. ‘You can’t fight City Hall so why try’ appears to be the result that this scheme creates. This is the product of a one sided agreement foisted upon pharmacies who need to make a deal with Optum or have a substantial part of a market closed to them and this is fundamentally unfair.” (emphasis added)

At PUTT, we are greatly encouraged by the Circuit Court’s ruling, which reflects a depth of understanding of the degree to which OptumRx makes arbitration so expensive and cumbersome that it prevents small business pharmacies from bringing ‘objectively meritorious’ claims. There can be no fair dealing between two parties to a contract when one party makes the rules so one-sided in its favor that the other party has no chance to prevail.

We applaud the Wisconsin Circuit Court for seeing the truth about the “unconscionability” of Optum’s contracts, and find ourselves wondering if the Illinois Supreme Court will also see the truth about Optum’s contract terms, and overturn the toxic precedent set by Optum and the other “Big PBMs” with their contracting terms and conditions.

If small businesses matter, as we say they do in this country, then we call on the Illinois Supreme Court to rule against Optum’s unconscionable contract terms and restore the balance of power between PBMs and the community pharmacies they claim to respect.

Deborah Keaveny
PUTT Board of Directors

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