The opinion of the court was delivered by: Magistrate Judge Smyser
This civil action was initiated by a complaint that was filed in the United States District Court for the Western District of Pennsylvania on September 27, 2007. The plaintiffs are the Stanton-Negley Drug Company, and Meyer Simon and Steven Simon. Meyer Simon and Steven Simon are the owners and operators of Stanton-Negley. The defendants named in the complaint are the Pennsylvania Department of Public Welfare; Estelle B. Richman, Secretary of Pennsylvania Department of Public Welfare; the Office of Medical Assistance Programs; James L. Hardy, Acting Deputy Secretary of the Office of Medical Assistance Programs; the Office of Administration Contract Policy, Management and Procurement, Department of Public Welfare; and, Daniel R. Boyd, Official-in-Charge, Division of Procurement Department of Public Welfare.*fn1
A motion to dismiss the complaint was filed on behalf of all of the defendants, and a supporting brief, on December 20, 2007. (Docs. 4 and 5). A brief in opposition was filed on January 16, 2008. (Doc. 10). A reply brief was filed by the defendants on March 8, 2008. (Doc. 25). The plaintiffs filed a sur-reply brief on March 21, 2008. (Doc. 29).
By Order of April 24, 2008, the United States District Court for the Western District of Pennsylvania ordered that this civil action be transferred to the United States District Court for the Middle District of Pennsylvania. (Doc. 30).
The parties filed a joint case management plan on June 16, 2008. (Doc. 35). In the plan, the parties stated that they agree to jurisdiction by a magistrate judge. The case was reassigned pursuant to LR 73.1(c) to the undersigned. A case management conference was held on June 19, 2008.
The issues raised in the defendants' motion to dismiss the complaint have been decided in part. One of the defendants' positions was that the complaint should be dismissed as to defendants Pennsylvania Department of Public Welfare, Office of Medical Assistance Programs, and Office of Administration, Contract Policy, Management and Procurement. As noted above, the complaint has been (voluntarily) dismissed as to these three former defendants. Another position was that venue is properly in the Middle District of Pennsylvania. The case was transferred here pursuant to the Order of Judge Fischer of the United States District Court for the Western District of Pennsylvania.
The defendants have also argued other grounds for dismissal in the motion to dismiss the complaint. This Memorandum and Order addresses those other arguments.
The complaint alleges that Stanton-Negley, a Pennsylvania corporation located in Pittsburgh, and Meyer Simon and Steven Simon, the owners and operators of Stanton-Negley, who are licenced pharmacists, have been operating a pharmacy and/or drug store for more that forty years. They participate in the Medicare and Medical Assistance Programs.
They provide products and drugs to recipients under these programs. The complaint asserts that the rights of the plaintiffs to equal protection and due process of law under the Fourteenth Amendment of the United States Constitution have been violated by the changes made by the Commonwealth of Pennsylvania in the mode of distribution of a certain category of pharmaceutical drugs. They seek injunctive relief pursuant to 42 U.S.C. § 1983.
The complaint alleges that the defendant Commonwealth Department of Public Welfare, Offices therein and officers thereof implemented a Specialty Pharmacy Drug Program. A Request for Proposals (RFP) No. 31-06 initiated the process of implementation of the program. Through the program, the complaint alleges, the defendants sought to limit, to two statewide, the number of contractors for speciality pharmacy services for Medical Assistance recipients, a limitation replacing a distribution system in which many pharmaceutical entities such as Stanton-Negley and pharmacists distributed the drugs.
The complaint describes "specialty pharmacy drugs" as medications that require a set of services to accomplish the correct use or administration of the medication that are not typically provided in a traditional outpatient pharmacy setting. The required services are generally biotechnical in nature, such as the administering of injections or the infusion of drugs that require special handling or that require special methods of injection or infusion. Speciality pharmacy drugs are generally high-cost drugs. Complex dosing regimens may be involved. Patient education, monitoring and clinical supports are frequently required.
RFP No. 31-06 is intended to identify and to procure two contractors for forty-two Pennsylvania counties. The remaining twenty-five counties, those being the twenty-five least populated Pennsylvania counties, will not be covered by the two newly selected providers. Pursuant to the new program, Medical Assistance recipients in the forty-two covered counties must obtain speciality drugs (Speciality Pharmacy Drug Program drugs) from one of the two providers.
The complaint alleges that Stanton-Negley has been providing specialty pharmacy drug needs to many western Pennsylvania Medical Assistance recipients on a pervasive basis and is competent, is speedy, and uses rapid delivery methods. It alleges that heretofore no accreditation has been required for it to perform the speciality drug supplying and servicing it has provided. The RFP 31-06 program, however, requires that a putative provider be accredited. To become accredited would be very costly for Stanton-Negley, and would take eight to fifteen months to accomplish. Stanton-Negley began the process to obtain an accreditation when it learned that accreditation would be needed for it to bid to become a provider under the new proposed program.
The complaint alleges that, although references to the proposed speciality drug program were made by the Governor in his budget address, and in the budget reviews of the Department of Public Welfare, the anticipated program was not the lead item discussed and the criteria to become a provider is a subject that was not discussed in detail. Providers presently involved in the program were not contacted. The relevant information was not fully released until October of 2006. There was not enough time allotted for Stanton-Negley or any other community pharmacy to submit a bid.
The complaint asserts that the accreditation requirement and the short "turn around time" were "atypical and questionable in nature." No accreditation of providers had previously been required. The complaint asserts that the RFP was directed at large providers and did not envision or intend to include existing providers. It asserts that the projected cost savings for the ...