complaint walgreen murphy 03 8 11

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

FINKELSTEIN & KRINSK LLP Jeffrey R. Krinsk (SBN 109234)Mark L. Knutson (SBN 131770)William R. Restis (SBN 246823)501 West Broadway, Suite 1250San Diego, CA 92101-3593Tel: 619/238-1333Fax: 619/238-5425

Attorneys for Plaintiff and the Putative Class

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN DIEGO

Todd Murphy as Guardian Ad Litem for BrianneMurphy and Kendal Murphy, Individually, andon Behalf of All Others Similarly Situated,

Plaintiff,

v.

WALGREEN CORPORATION; and DOES 1through 20, inclusive,

Defendant.

))))))))))) )))))))))

Case No.

CLASS ACTION COMPLAINT FOR:

(1) Violation of CAL. BUS. & PROF CODE

§§ 17200 For “Unlawful” Practices

(2) Violation of CAL. BUS. & PROF CODE

§§ 17200 For “Unfair” Practices (3) Violation of CAL. BUS. & PROF CODE

§§ 17200 For “Deceptive” Practices

(4) Violation of CAL. CIV. CODE §§1770(a)(14)

(4) Conversion

(5) Unjust Enrichment

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

MURPHY v. WALGREEN CO.

As described in ¶ 35 below, the Class pled herein is defined as: “All California residents, who 1

from March 8, 2007 to the present, filled at least one prescription at a Walgreen pharmacy inCalifornia, and who did not give authorization to Walgreen to sell the contents of theirprescription(s) to a Drug Marketing Company (“DMC”) for the purpose of pharmaceutical companymarketing.”

Walgreen’s sale of Plaintiff and the Class’ prescription information to DMCs is prohibited by 2

regulations of the California Board of Pharmacy, as “unprofessional conduct.” Thus, Defendant’sconduct constitutes an “illegal business practice” pursuant to California’s Unfair Competition Law.See, 16 CAL. CODE REGS. § 1764; CAL. BUS. & PROF. CODE §§ 4156, 4301(o).

DMCs collect vast amounts of identifying data about individual prescribers, aggregating and 3

sorting the data into reports and data presentations used to market proprietary drugs. IMS Health Inc.v. Mills (“Mills”), 616 F.3d 7 (1st Cir. 2010).

CLASS ACTION COMPLAINT PAGE 2

I. INTRODUCTION

1. Todd Murphy (“Plaintiff”) brings this action as guardian ad litem for his minor

children Brianne Murphy and Kendal Murphy (the “Children”), and all similarly situated California

resident members of the Class alleged herein against defendant Walgreen Company (“Walgreen” or

“Defendant”). By his undersigned attorneys, Plaintiff alleges as to himself and his own actions based

upon his personal knowledge. All other allegations are based upon information and belief pursuant

to an investigation of counsel. Plaintiff is informed and believes that substantial additional

evidentiary support is available given a reasonable opportunity for discovery.

2. On behalf of the California Class, Plaintiff seeks to end Defendant’s previously1

undisclosed practice of selling the contents of patients’ prescriptions for commercial gain in violation

of California law. Without Plaintiff or the Class’ knowledge or consent, Walgreen sells certain of2

the contents of patients’ prescriptions to a data mining company such as IMS Health Inc., and/or

Verispan, Inc. (“DMCs”) pursuant to pre-existing, long-term contracts. The DMC then re-sells this3

prescription information to pharmaceutical companies that use it to enhance the marketing of certain

expensive, proprietary pharmaceutical drugs.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



3. The pharmaceutical companies that purchase Plaintiff and the Class’ prescription

information from DMCs, as plead herein, use the information to create customized physician /

prescriber profiles that track the prescribing habits of Plaintiff and the Class’ physician(s) including

“first movers” and “high volume prescribers.” Prescriber profile(s) are invaluable to pharmaceutical

company sales representatives – called “detailers” – who use the information to gain a sales

advantage so as to convince physicians to prescribe “their” proprietary drugs. At no time are

Plaintiff or other members of the Class made aware of the unauthorized sale of those portions of their

prescription contents for use in pharmaceutical company detailing. Nor are Plaintiff and the Class

paid a portion of what the DMC pays Walgreen for Plaintiff and the Class’ prescription information.

4. Walgreen’s undisclosed practice of selling selective prescription information harms

Plaintiff, the Class, and California patients generally because it provides the critical link by which

large pharmaceutical companies are able to track which physicians sell which drugs, to whom, in

what quantities, in real time. The result is high-pressure pharmaceutical company marketing directly

to Plaintiff and the Class’ physician(s) of proprietary, high-margin drugs while equally effective,

inexpensive alternatives exist. This interferes with the doctor-patient relationship and negatively

alters the prescribing habits of care givers licensed in this state.

5. Aside from disregarding ethical constraints imposed upon the practice of pharmacy,

Walgreen’s practice of selling prescription information for physician profiling imposes significant

financial burdens on Plaintiff, the Class, and the state of California. Lower priced generics cannot

effectively “counter detail” as the cost of doing so would erode the generics’ price benefits.

Detailing flourishes because it profitably increases the sale of brand name drugs, which

unambiguously attests to the effectiveness of this pharmaceutical company marketing process.

Detailers are armed with the contents of aggregated prescription information of Plaintiff and the

Class in the form of prescriber profiles that, on whole, greatly increase prescriptions for high-priced,

name brand prescription drugs in circumstances where generic or lower priced alternatives are just

as effective.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



6. Plaintiff and the Class entrusted Walgreen with their prescriptions for the purpose of

having the prescriptions filled. The information contained in a patient’s prescription is a valuable

asset that can be, and is, sold by Walgreen. It belongs, and/or its control belongs, to Plaintiff and the

Class as a result of California regulatory, ethical and fiduciary obligations that attend to Walgreen’s

pharmacist license. Because Walgreen does not seek or obtain patient consent, Walgreen is able to

sell Plaintiff and the Class’ prescription contents to DMCs for use in large pharmaceutical company

marketing activities, keeping 100% of the proceeds.

II. JURISDICTION AND VENUE

7. This Court has jurisdiction over this action pursuant to Article 6, § 10 of the

California Constitution, California Business and Professions Code § 17203, Civil Code § 1780(d)

and Code of Civil Procedure §§ 382 and 410.10. The amount of Plaintiff and the Class’ damages,

restitution, equitable relief, punitive damages and attorney fees awarded pursuant to this action is

below the $5,000,000 jurisdictional requirement for the original jurisdiction of this action in the

United States District Court pursuant to 28 U.S.C. § 1332, or the removal of this action to the United

States District Court pursuant to 28 U.S.C. § 1441.

8. This Court has jurisdiction over Defendant because it is registered to conduct, and

does conduct, substantial business within California and, in particular, San Diego County.

Walgreen sells and reveals selective content of prescriptions belonging to Plaintiff and the Class

provided to Walgreen pharmacies in California. Walgreen actively participates in substantial

business activities throughout California and this County while intentionally availing itself of the

advantages of doing business in this State and County.

9. Plaintiff is a citizen of the State of California and has experienced loss, cost, injury,

damage and/or expense while in California as a direct and proximate result of Defendant’s practices

as complained of herein.

10. During the three year period preceding the filing of this action, no other class action

is known to have been filed asserting the same or similar factual allegations against Defendant on

behalf of the same or similar persons.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



11. Venue is proper in this Court pursuant to Code of Civil Procedure § 395 because a

substantial or significant portion of the wrongful conduct complained of herein has occurred and

continues to occur within this County. Defendant Walgreen operates retail pharmacies within this

County, and otherwise conducts business and continuing operations within this County. Similarly,

Defendant’s improper business practices and wrongful acts occurred, and continue to occur in San

Diego County, with the adverse effects and consequences to Plaintiff continuing to the present.

12. Venue is proper in this district because: (a) Walgreen resides, transacts business, is

found or has agents in this district (and California); and/or (b) Walgreen maintains operating

pharmacy units and transacts business while having minimum contacts within this judicial district.

III. PARTIES

13. Plaintiff Todd Russell was, and remains, a resident of California, living in Santee, San

Diego County, California. In or about May 2009, Plaintiff paid money to Walgreen to fill

prescription(s) of his minor child Brianne Murphy at a licensed Walgreen retail pharmacy at 34503

Yucaipa Boulevard, Yucaipa, California, 92399 that was owned and operated by Defendant.

14. In or about August 2009, and again in or about September 2010, Plaintiff paid money

to Walgreen to fill prescription(s) of his minor child Kendal Murphy at a licensed Walgreen retail

pharmacy at 9305 Mission Gorge Road, Santee, California, 92071, that was owned and operated by

Defendant.

15. Walgreen sold the contents of Plaintiff’s prescription information without Plaintiff’s

knowledge, authorization or consent. Plaintiff would not have authorized Walgreen’s practices or

activities had Walgreen sought Plaintiff’s consent/permission. Nor would Plaintiff used, and paid

for, Walgreen’s pharmacy services had he known that Walgreen would sell the contents of his

prescriptions to DMCs. This is because Plaintiff provided his prescriptions to Walgreen relying on

Walgreen using his prescription information in a manner conforming to all legal and regulatory

obligations imposed on Walgreen that pertain to Plaintiff’s prescription information. At the time

Plaintiff filled his first prescription at Walgreen, Plaintiff was provided, and read, a copy of

Walgreen’s “Notice of Privacy Practices,” which informed Plaintiff that “[Walgreen] will obtain

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28


Although Defendant, an out-of-state pharmacy corporation, is permitted by California regulation 4

to own retail pharmacies in the state of California, Walgreen is not remotely permitted to managethe professional practice of pharmacy in its Walgreen retail pharmacies. The responsibility forproperly operating each individual pharmacy, and compliance with applicable laws and regulationsmust be vested in a designated “Pharmacist in Charge” for each pharmacy. 16 CAL. CODE REGS. §1709.1(b). Walgreen’s actions to seize control of patient prescription records maintained atCalifornia pharmacies for marketing is prohibited and is a misdemeanor. CAL. BUS. & PROF. CODE

§ 4113(a) and (b); CAL. BUS. & PROF. CODE § 4330(b).


your written authorization before using or disclosing your PHI [Protected Health Information] for

purposes other than those provided for above (or as otherwise permitted or required by law).”

Plaintiff was required to sign an acknowledgment of receipt of Walgreen’s Notice of Privacy

Practices. Walgreen’s Notice of Privacy Practices reinforced Plaintiff’s belief that Walgreen would

obtain his authorization prior to selling or releasing the contents of Plaintiff’s prescriptions. As a

direct and proximate result of Walgreen’s violations of California’s Board of Pharmacy Regulations

as described herein, and Walgreen’s misrepresentations in its Notice of Privacy Practices that it

would obtain Plaintiff’s authorization, Plaintiff lost the money paid to Walgreen to fill his

prescriptions, which Plaintiff would not have paid for had he known of Walgreen’s conduct

complained-of herein. In addition, Plaintiff lost money and/or the property right or privilege attached

to the Children’s prescription information because Walgreen expropriated and diverted payments

and business opportunity from Plaintiff while maintaining a continuing, lucrative business by selling

certain of the contents of Plaintiff’s prescriptions.

16. Defendant Walgreen Company is an Illinois corporation headquartered in Deerfield,

Illinois. As of January 2011, Walgreen owned and operated approximately 7,608 Walgreen retail

pharmacies across in the United States and Puerto Rico, with 604 Defendant-owned drugstores

operating in California. Walgreen also owns and operates 2 mail order service facilities engaging4

in the sale of prescription drugs throughout this State.

17. The true names and capacities of defendants sued herein under Cal. Code Civ. Proc.

§ 474 as “Does 1 through 20", inclusive, are presently unknown to Plaintiff who therefore sues these

defendants by such fictitious names. Plaintiff will seek to amend this complaint and include these

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



Doe defendants’ true names and capacities when they are ascertained. Each of the fictitiously named

defendants is responsible in some manner for the conduct alleged herein and for the injuries suffered

by Plaintiff.

18. At all times relevant to this complaint and the causes of action alleged herein, each

and every defendant was an agent and/or employee of each and every other defendant. In doing the

things alleged in the causes of action stated herein, each defendant was acting within the course and

scope of this agency or employment and was acting with the consent, permission and authorization

of each remaining defendants. All actions of each defendant as alleged in the causes of action stated

herein were ratified and approved by every other defendant or their officers or managing agents so

as to be attributable to Walgreen.

IV. DESCRIPTION OF THE ACTION

A. WALGREEN’S MISAPPROPRIATION OF PRESCRIPTION

INFORMATION

19. Plaintiff, inter alia, seeks to end Walgreen’s practice of selling prescription

information to DMCs for marketing purposes. Plaintiff and the Class’ prescription information is

misappropriated and converted to Defendant’s commercial purposes as described herein. Plaintiff

seeks to save the inflated drug costs he pays, directly or indirectly, as a consequence of Walgreen’s

practices, which include, not by way of limitation, the higher cost of branded medication prescribed

as a result of the success of the detailing process. The spiraling cost of brand-name prescription

drugs is of great, immediate concern to Plaintiff and the welfare of Class members, and jeopardizes

the solvency of the California government. Plaintiff hereby principally seeks equitable remedies

pursuant to California’s Unfair Competition Law (the “UCL;” CAL. BUS. & PROF. CODE §§ 17200,

et seq.) and injunctive relief as is available to Plaintiff and the Class by this action.

20. For the single purpose of filling prescriptions at a Walgreen pharmacy, Plaintiff and

the Class share the contents of their prescriptions with Walgreen pharmacists. Unbeknownst to

Plaintiff and the Class, this information is inputted into Walgreen’s “Intercom Plus” computer

system in the form of a “Patient Prescription Profile.” The Intercom Plus system is limited to the

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



operation and management of Walgreen’s retail pharmacy stores for the primary purpose of

dispensing and processing prescriptions. Subsequently however, Walgreen uploads a duplicate copy

of Plaintiff and the Class’ Patient Prescription Profile to Walgreen’s separate Decision Support

System (“DSS”) in Deerfield, Illinois. The DSS system is a sophisticated proprietary computer

system not used by Walgreen to fill prescriptions, store patient histories in accordance with

California law and regulation, or process prescription insurance claims. At Walgreen’s headquarters

in Deerfield, Illinois, Defendant, inter alia, assembles certain portions of Plaintiff and the Class’

prescription to sell to DMCs in accordance with long term contracts negotiated for that purpose.

Walgreen undertakes these actions purely for commercial gain, which are in no way related to the

health care and/or treatment of Plaintiff and the Class.

21. When Plaintiff and the Class first brought their prescriptions to a Walgreen pharmacy,

Walgreen provided Plaintiff and each Class member a copy of Walgreen’s Notice of Privacy

Practices, which represents that “[Walgreen] will obtain your written authorization before using or

disclosing your PHI [Protected Health Information] for purposes other than those provided for above

(or as otherwise permitted or required by law).” Each Class member is required to sign a form

acknowledging receipt of Walgreen’s Notice of Privacy Practices.

22. The prescription information of Plaintiff and the Class used by Defendant and sold

to DMCs includes, inter alia, Plaintiff and the Class’ drug name(s) and its national drug code

(“NDC”), the prescription number, fill number, the date the prescription was written and filled, the

number of prescribed refills, quantity of drug dispensed and dosage prescribed, the prescriber

identification number and Drug Enforcement Administration (“DEA”) registration number, the

prescriber’s address, patient payment type (including insurance, reimbursement, and co-payment

information), drug pricing, patient sex, age group, state and (at least) the first three digits of his/her

zip code. A DMC buys the content of Plaintiff and the Class’ prescription information from

Walgreen as described above though no personally identifiable information is disclosed. This is not

a lawsuit alleging Defendant’s direct disclosure of information in violation of privacy rights.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



23. Plaintiff and the Class’ prescription information is a valuable asset that belongs to

Plaintiff and each individual Class member. Walgreen’s internal accounting procedures concur with

this assessment and place a liquidated value on each prescription record. Although Walgreen does

not publish this value, in a parallel example, Walgreen’s fiscal year 2010 SEC Form 10-K, dated

October 26, 2010, discloses that Defendant recognizes “purchased prescription files” as “intangible

assets” valued at $749,000,000.

24. Walgreen deprives Plaintiff and the Class of the commercial value of their

prescription information, misappropriates the business opportunity of participating in this commerce,

and subjects Plaintiff and the Class to the negative drug costs and health care resulting from

Defendant’s conduct. Walgreen promotes its control of Plaintiff’s prescription information and the

availability of such data to DMCs.

B. THE DETAILING PROCESS AND ITS HARMFUL EFFECTS

25. There are approximately 1.4 million licensed health care providers authorized to write

prescriptions in the United States. Over three billion prescriptions were written in 2010 by doctors

and other licensed health care professionals for well over 8,000 pharmaceutical products. Spending

in the United States for prescription drugs was $234.1 billion in 2008, nearly six times the $40.3

billion spent in 1990.

26. To increase market share and gain competitive edge, pharmaceutical companies

employ the practice of detailing, directly influencing physicians through face-to-face visits by

pharmaceutical company sales people. Upon accessing a physician’s office, detailers armed with

Plaintiff and the Class’ prescription contents are capable of mounting an impressively sophisticated

and intense marketing campaign to influence the prescribing habits and practices of Plaintiff and the

Class’ physicians.

27. Detailers work at creating an interdependent relationship with the physician whereby,

in many instances detailer visits become a regular occurrence. The average primary care physician

interacts with no fewer than twenty-eight detailers each week and the average specialist interacts

with fourteen. The prescription information obtained from Plaintiff and the Class enables detailers

to zero in on those physicians prescribing large quantities of a given drug for a particular condition

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28


A 2005 Report by Rep. Henry Waxman to the Democratic Members of the Committee on 5

Government Reform stated that promotional work targeting physicians totaled $5.7 billion in 2003.The Kaiser Family Foundation reported that drug manufacturers spent $7.8 billion in 2004 onadvertising directed toward physicians. CLASS ACTION COMPLAINT PAGE 10

or, for example, those doctors identified as “early adopters” receptive to prescribing drugs just

coming to market.

28. The detailing process is time-consuming and expensive, not suited to marketing

lower-priced bioequivalent generics. Only the higher profit margins of branded drugs are amenable

to the custom sales attention of detailing. Detailing is exclusive to brand-name drug manufacturers

who annually spend over $8 billion on this practice.5

29. Detailing is indisputably a valuable tool for promoting prescriptions for brand name

drugs, particularly new ones, and the one-on-one interactions detailers have with physicians is of

great benefit to pharmaceutical companies. Detailing substantially increases physicians’ rate of

prescribing targeted brand-name drugs, which is significantly more successful when assisted by the

aid of physician-specific prescribing histories. Authoritative evidence indicates pharmaceutical

companies use detailing to principally promote brand-name drugs that cost significantly more than

what otherwise would be prescribed absent the wrongful sale of Plaintiff and the Class’ prescription

information to DMCs.

30. The impact to Plaintiff and the Class and public health is not correspondingly

beneficial. The negative impact on Plaintiff and the Class, and government budgets resulting from

Walgreen’s practice, has been repeatedly asserted in testimony of health care advocates and

legislative assessments. These negative efforts include increases in prescription drug costs for

patients (as well as employers and California’s Medi-Cal Program), impeding prescriptions for

generics and/or less costly alternatives, and interference with the physician-patient relationship.

There are essentially no benefits to Plaintiff and the Class flowing from Walgreen’ practices, and

the pharmaceutical industry’s rationalization that detailing is justified as an educational aid to the

physician has been roundly rebuked.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



31. Walgreen’s practice has increasingly been recognized by state regulators and

legislators attempting to control healthcare costs as a central component of spiraling costs for

prescription drugs. Detailing regiments cost state medicaid programs (such as Medi-Cal) tens of

millions of taxpayer dollars. For example, IMS Health, a DMC, announced that U.S. prescription

sales for 2009 climbed by 5.1% to $300.3 billion, outpacing 2008's increase of 1.8%. These sales

were the result of filling a historically unprecedented 3.9 billion prescriptions!

32. A former detailer, speaking from personal experience, testified before government

regulators about the leverage prescribing histories afford detailers (including specifically targeting

physicians that prescribe large quantities of generic drugs) and allow detailers to “punish” physicians

by, inter alia, suspending free samples until proprietary drug prescriptions resume to a certain level.

33. Using prescriber-identifiable information to pressure the prescriber is not unusual;

a nurse practitioner critical of the practice described the problem as follows:

For several months, a drug rep has been bringing coffee to our office on Tuesdaymornings. We have never asked her to continue doing this since we have a coffeepot, and we routinely make coffee for our staff and patients. But she does it anyway,which is very nice of her. She calls this “Two for Tuesday”. The problem is thatevery week she also says to me, “If you don’t write 2 more prescriptions for mybrand today, I’m not going to be able to continue bringing coffee.” I prescribe herdrug when it is right for my patients. There are many times when it is not right. Wefeel pressure from her to prescribe her product even though we have never asked forcoffee. This may sound like a small thing, but I feel that since she knows exactlyhow many prescriptions I write each week for her drug versus the competition, sheis expecting a quid pro quo.

Hearing on H.B. 1346 Before S. Comm. on Exec. Departments & Administration 15 Sess. Gen. Ct.th

1,8 (N.H. 2006) (statement of DHHS representative Gregory Moore).

34. Similarly, a January 2006 article in the New York Times highlighted the problem by

quoting a pharmaceutical company district manager in an e-mail to detailers:

Our goal is 50 more scripts per week for each territory . . . If you are not achievingthis goal, ask yourself if those doctors that you have such great relationships with arebeing fair to you. Hold them accountable for all the time, samples, lunches, dinners,programs and past preceptorships that you have provided or paid for and get thebusiness!! You can do it!!

Gardiner Harris & Robert Pear, Drug Maker’s Efforts to Compete in Lucrative Insulin Market Are

Under Scrutiny, N.Y. Times. Jan. 28, 2006.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



IV. CLASS ALLEGATIONS

35. Plaintiff brings this action on behalf of the Children and all similarly situated

California Class members, defined as:

All California residents, who from March 8, 2007 to the present, filled at least oneprescription at a Walgreen pharmacy in California, and who did not giveauthorization to Walgreen to sell the contents of their prescription(s) to a DrugMarketing Company (“DMC”) for the purpose of pharmaceutical companymarketing.

36. Excluded from the Class is the Defendant, its predecessors, parents, subsidiaries, and

affiliated entities, any entity in which any of them has a controlling interest, any employees, officers

or directors of any of them, and any of their legal representatives, heirs, successors and assignees.

37. This action may properly be maintained as a class action pursuant to CAL. CODE CIV.

PROC. § 382 and CAL. CIV. CODE § 1781.

38. The members of the Class are so numerous that joinder of individual claims is

impracticable. Plaintiff is informed and believes, and on that basis alleges, that there are at least

thousands of members of the proposed Class because every California resident that filled a

prescription at a California Walgreen pharmacy is a member of the Class. The precise number of

Class members and their addresses are presently unknown to Plaintiff, but should be easily

obtainable from Walgreen through its files and/or computer records, and Class members can be

notified of the pendency of this action by published and/or mailed notice without difficulty or

complication. The disposition of the Class members’ claims in this class action will substantially

benefit both the parties and the Court.

39. Common questions of law and fact exist as to all members of the Class. These

common legal and factual questions predominate over questions affecting only individual Class

members, and include, but are not limited to the following:

(a) Whether Walgreen uniformly failed to seek authorization from Class members to sell

the contents of their prescription information to DMCs;

(b) Whether Walgreen sold the contents of all prescriptions filled in California to DMCs

as pled herein;

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28


Civil Code § 1770(a)(14) provides that it is unlawful to “Represent[] that a transaction confers or 6

involves rights, remedies, or obligations which it does not have or involve, or which are prohibitedby law.” CLASS ACTION COMPLAINT PAGE 13

(c) Whether all iterations of Walgreen’s Notice of Privacy Practices (if any) uniformly

represented that “[Walgreen] will obtain your written authorization before using or disclosing your

PHI [Protected Health Information] for purposes other than those provided for above (or as otherwise

permitted or required by law)” (they did);

(d) Whether all Class members were required by Walgreen to sign an acknowledgment

of receipt of Notice of Privacy Practices prior to picking up prescriptions from Walgreen pharmacies

in California;

(e) Whether Walgreen’s uniform practice of selling patient prescription contents to

DMCs as alleged herein violates California pharmacy regulations;

(f) Whether Walgreen’s Notice of Privacy Practices’ uniform representation that

“[Walgreen] will obtain your written authorization before using or disclosing your PHI [Protected

Health Information] for purposes other than those provided for above (or as otherwise permitted or

required by law)” is false and/or misleading in light of Walgreen’s uniform practice of selling

Plaintiff and the Class’ prescription contents to DMCs as alleged herein;

(g) Whether Walgreen’s uniform practices constitute unlawful, unfair and/or deceptive

business practices pursuant to the UCL;

(h) Whether Walgreen’s false and/or misleading representations in its Notice of Privacy

Practices that “[Walgreen] will obtain your written authorization before using or disclosing your

PHI [Protected Health Information] for purposes other than those provided for above (or as otherwise

permitted or required by law)” violates the Consumers Legal Remedies Act, CAL. CIV. CODE §

1770(a)(14); 6

(i) Whether Walgreen converted the contents of Plaintiff and the Class’ prescription

information for its commercial benefit;

(j) Whether Walgreen was unjustly enriched as a result of its wrongful practices as

alleged herein;

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



(k) Whether Class members are entitled to the equitable remedies available under the

UCL and CLRA, and, if so, the remedy thus available to Walgreen’ patients;

(l) Whether Plaintiff and the Class are entitled to declaratory, injunctive and/or other

equitable relief, and the amount of such relief.

40. Plaintiff’s claims are typical of the claims of other members of the Class as Plaintiff

and each member of the Class have been subjected to the same wrongful conduct and the relief

Plaintiff seeks is common to each member of the Class.

41. Plaintiff is an adequate representative of the Class because (a) his interests do not

conflict with the interests of the individual members of the Class he seeks to represent; (b) he has

retained counsel who are competent and experienced in complex class action litigation; and (c) he

intends to vigorously prosecute this action. The interests of the members of the Class will be fairly

and adequately protected by Plaintiff and his counsel.

42. Absent a class action, each Class member will not receive the equitable relief and/or

other benefit to which he/she is entitled.

43. The class action device is superior to other available means for the fair and equitable

adjudication of the claims of Plaintiff and the Class. The remedy for each of the Class members may

be of insufficient magnitude to warrant the filing of individual suits. Moreover, the issues raised by

Walgreen conduct may be too complex to be efficiently and cost effectively resolved through

individual litigation. Hence, the class action is the best method for Walgreen’ patients (as described

by the Class definition) to act on common claims for adjudication in a single proceeding.

FIRST CAUSE OF ACTION

Violation of the UCL By Walgreen’s Unlawful Business Practices

44. Plaintiff incorporates by reference and realleges the above paragraphs, as though set

forth at length herein.

45. California Business and Professions Code § 17200, et seq. prohibits acts of unfair

competition which includes “unlawful . . .business act[s] or practice[s].” Walgreen’s continuing

practice of violating the California pharmacy regulations described below, constitute unlawful

business acts or practices in violation of the UCL.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28


No person, including DMCs, are authorized by law to receive the contents of Plaintiff’s 7

prescription information. CLASS ACTION COMPLAINT PAGE 15

46. Plaintiff and each member of the Class provided their prescription information to a

Walgreen pharmacy in California for the sole purpose of having their prescriptions filled and

processed. From a date uncertain but within the statute of limitations hereof, Walgreen placed

Plaintiff and the Class’ prescription information on a specialized computer system, broke down its

content to components, and sold the resulting informationto pharmaceutical companies for marketing

drugs through detailing, all without Plaintiff and the Class’ knowledge or consent.

47. Plaintiff and the Class’ prescription information is a valuable asset and an opportunity

for Plaintiff and the Class’ to be paid, as acknowledged by Walgreen internal accounting, and

reflected by the price paid for same by DMCs.

48. The prescription information sold and revealed by Walgreen include, inter alia,

Plaintiff and the Class’ prescription drug name and national drug code (“NDC”), prescription

number, fill number, date the prescription was written and filled, the number of refills, the quantity

of medication dispensed and indicated dosage, the prescriber identification number and DEA

registration number, the location of the prescriber, patient payment type (including insurance,

reimbursement, and co-payment information), drug pricing, patient sex, age group, patient state of

residence and first three digits of zip code. In doing the above Walgreen, reveals certain of the

contents of Plaintiff and the Class’ prescriptions and thus violates 16 CAL. CODE REGS. § 1764,

which provides that:

No pharmacist shall exhibit, discuss, or reveal the contents of any prescription,the therapeutic effect thereof, the nature, extent, or degree of illness suffered by anypatient or any medical information furnished by the prescriber with any person otherthan the patient or his or her authorized representative, the prescriber or otherlicensed practitioner then caring for the patient, another licensed pharmacist servingthe patient, or a person duly authorized by law to receive such information. 7

16 CAL. CODE REGS. § 1764.

49. Additionally, Walgreen’s sale of Plaintiff and the Class’ prescription information

constitutes “unprofessional conduct” pursuant to CAL. BUS. & PROF. CODE §§ 4156 and 4301(o)

because it violates 16 CAL. CODE REGS. § 1764. BUS. & PROF. CODE § 4301(o) provides that:

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



Unprofessional conduct shall include, but is not limited to, any of the following: ...(o) Violating or attempting to violate, directly or indirectly, or assisting in or abettingthe violation of or conspiring to violate any provision or term of this chapter or of theapplicable federal and state laws and regulations governing pharmacy, includingregulations established by the board or by any other state or federal regulatoryagency.

BUS. & PROF. CODE § 4156 provides that 16 CAL. CODE REGS. § 1764 applies to pharmacy

corporations like Walgreen as follows:

A pharmacy corporation shall not do, or fail to do, any act where doing or failing todo the act would constitute unprofessional conduct under any statute or regulation.In the conduct of its practice, a pharmacy corporation shall observe and be bound bythe laws and regulations that apply to a person licensed under this chapter.

50. California law requires that each Walgreen retail pharmacy be overseen by a

“Pharmacist in Charge,” (“PIC”) registered with the Board of Pharmacy. The PIC is responsible for

ensuring that the pharmacy operations are in compliance with federal and state laws and regulations

regarding the practice of pharmacy. Each Walgreen pharmacy maintains a designated PIC but are

provided insufficient authority to prohibit Walgreen’s practice of revealing and selling Plaintiff and

the Class’ prescription information maintained on the Intercom Plus system to the separate Decision

Support System in Deerfield Illinois to be sold to DMCs. Walgreen’s operational process prevents

the “vest[ing] [of] the pharmacist-in-charge with adequate authority to ensure compliance with the

laws governing [its] operation.” 16 CAL. CODE REGS. § 1709.1(b). CAL. BUS. & PROF. CODE §

4113(a) and (b) similarly provide that a pharmacy’s compliance with all laws and regulations relating

to pharmacy practice is the responsibility of the PIC. It is a misdemeanor for Walgreen to engage

in “any act that would subvert or tend to subvert the efforts of the [PIC] to comply with the laws

governing the operation of the pharmacy.” BUS. & PROF. CODE § 4330(b).

51. To facilitate the dispensing of prescriptions from multiple locations, California Board

of Pharmacy regulations permit chain pharmacies like Walgreen to maintain “common electronic

files” such as the Intercom Plus system. 16 CAL. CODE REGS. § 1717.1(a). The pharmacy

regulations however, limit the permissible purpose of such transfers to “dispensing purposes”.

Walgreen’s creation of a separate prescription database via the DSS system (or otherwise) fails to

satisfy the requirement of being a “common electronic file” as it is not used for “dispensing”

prescriptions and can not be accessed by the Pharmacist in Charge.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



52. Furthermore, Walgreen’s conduct as complained of herein violates CAL. CIV. CODE

§ 1770(a)(14) in that Walgreen’s Notice of Privacy Practices misrepresents that Walgreen will seek

Plaintiff and the Class’ authorization prior to using or disclosing the contents of Plaintiff’s

prescriptions as required by California law.

53. As a direct and proximate result of Defendant’s sale of Plaintiff and the Class’

prescription contents in violation of California law and regulations as outlined above, Plaintiff and

the Class have suffered injury in fact, lost money and/or property by paying money to Walgreen to

fill their prescriptions, and have been deprived of the commercial value and business opportunity

inherent in the contents of Plaintiff and the Class’ prescriptions.

SECOND CAUSE OF ACTION

Violation of the UCL By Walgreen’s Unfair Business Acts and Practices



55. From a date uncertain but within the applicable statute of limitations hereof, Walgreen

committed acts of unfair competition prohibited by the UCL by engaging practices constituting

“unfair business acts or practices”.

56. Walgreen’s “unfair” business practices entail the activities of Walgreen as described

hereinabove which, absent any or sufficient countervailing value, misappropriate the value of

Plaintiff and the Class’ prescription records, diminish Plaintiff and the Class’ economic opportunity,

limit their business initiatives, and/or neutralize other alternatives (like payment) that Plaintiff and

the Class could otherwise realize from controlling their prescription content.

57. Walgreen’s business practices include both the wrongful practices described

hereinabove, and exploited the position of trust and confidence imposed on Walgreen as a licensed

and regulated pharmacy corporation which Walgreen actively reinforces in its marketing (i.e. “The

Pharmacy America Trusts”).

58. Plaintiff and the Class’ (and society in general) are harmed by Walgreen’s sale of

Plaintiff and the Class’ prescription data to DMCs for use by pharmaceutical company detailing.

Doing so interferes with the doctor-patient relationship, suborns the prescribing practices of

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



prescribers, and increases prescription costs and health care in general. Offsetting benefits to

Plaintiff and the Class, or others, if any, are insufficient to legally justify Walgreen’s practices.

59. Walgreen’s conduct elaborated herein offends established public policy contained in

the rules and regulations adopted by the California Board of Pharmacy, as well as the Code of Ethics

for the American Pharmacists Association which require Walgreen, inter alia, to “be committed to

[patient] welfare, and to maintain their trust” and “avoid ... actions that compromise dedication to

the best interests of patients.”

60. The practices of Walgreen complained of herein have previously been extensively

considered and resulted in comprehensive criticism, including the following by the First Circuit

Court of Appeal:

Detailing works: that it succeeds in inducing physicians to prescribe larger quantitiesof brand-name drugs seems clear (even if the exact magnitude of the effect is not)The fact that the pharmaceutical industry spends over $4,000,000,000 annually ondetailing bears loud witness to its efficacy.

* * *

(Dr. Jerome Avorn, a professor at Harvard Medical School specializing inpharmacoepidemiology and pharmacoeconomics, described studies showing thatdetailing substantially increase physicians’ rates of prescribing brand-name drugs.)The account echoed testimony of the president and president-elect of the NewHampshire Medical Society.

* * *

Dr. Avorn drew analogies to opine that detailers armed with prescribing historiesenjoyed a significant marketing advantage. Resulting in greater leverage, increasedsales of brand-name drugs, and higher drug costs - all with no corresponding benefitto patients. (emphasis supplied)

* * *

. . . the state did present unrebutted testimony to the effect that detailing tendeddramatically to increase the prescription of brand-name drugs (and, thus, the cost ofprescription drugs) without conferring any corresponding public health benefit.(emphasis supplied)

* * *

I note that targeted detailing is used not only to promote patented, brand-name drugsover generic medicines, but also to encourage prescribers to choose a particularbrand-name over a patented competitor. The latter situation is not the State’s primaryconcern because the cost difference between brand-name drugs is less likely to besubstantial. The State particularly wants to prevent pharmaceutical sales

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



representatives from unduly influencing physicians and other health careprofessionals to select more expensive barns-name drugs over considerably cheapergeneric options that provide essentially the same benefits.

IMS Health Inc., v. Ayotte 550 F.3d 42, 56-57 (1st Cir. 2008), cert denied, __ U.S. __, 129 S.Ct.

2864 (2009) (internal citations omitted).

61. As a direct and proximate result of Defendant’s unfair business practices related to

the sale of Plaintiff and the Class’ prescriptions as outlined above, Plaintiff and the Class have

suffered injury in fact, lost money and/or property by paying money to Walgreen to fill their

prescriptions, and been deprived of the commercial value and business opportunity inherent in the

contents of Plaintiff and the Class’ prescriptions.

THIRD CAUSE OF ACTION

Violation of the UCL By Walgreen’ Deceptive Business Acts and Practices



63. When Plaintiff and the Class first bring their prescriptions to a Walgreen pharmacy,

Walgreen provides to Plaintiff and each member of the Class a copy of Walgreen’s Notice of Privacy

Practices, which represents that “[Walgreen] will obtain your written authorization before using or

disclosing your PHI [Protected Health Information] for purposes other than those provided for above

(or as otherwise permitted or required by law).” Plaintiff and each member of the Class are required

to sign a form acknowledging receipt of Walgreen’s Notice of Privacy Practices.

64. The contents of Plaintiff and the Class’ prescriptions are protected health information

within the meaning of Walgreen’s Notice of Privacy Practices because such information is protected

from disclosure by 16 CAL. CODE REGS. § 1764.

65. Walgreen’s statement that it will “obtain your written authorization” prior to using

or disclosing protected health information where required by law, is false and/or misleading because

Walgreen failed to seek or obtain Plaintiff and the Class’ authorization as required by 16 CAL. CODE

REGS. § 1764.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



66. Plaintiff acted reasonably in relying on Walgreen’s Notice of Privacy Practices to

believe that Walgreen would seek Plaintiff and the Class’ authorization prior to disclosing the

contents of Plaintiff and the Class’ prescriptions to DMCs.

67. Walgreen’s sale of the contents of Plaintiff and the Class’ prescriptions is material

to Plaintiff and the Class and any reasonable consumer’s decision to use Walgreen’s pharmacies to

fill prescriptions.

68. Plaintiff and the Class are deceived and are likely to continue to be misled or deceived

by Defendant’s Notice of Privacy Practices.

69. As a direct and proximate result of Defendant’s false and misleading statements in

its Notice of Privacy Practices, Plaintiff and the Class’ has suffered injury in fact, lost money and/or

property by paying money to Walgreen to fill their prescriptions, and have been deprived of the

commercial value and business opportunity inherent in the contents of Plaintiff and the Class’

prescriptions.

FOURTH CAUSE OF ACTION

Violation of the CLRA



71. Plaintiff and the Class are “consumers” within the meaning of CAL. CIV. CODE

§1761(d).

72. Defendant’s acts, conduct and practices, as alleged herein, are unlawful and in

violation of the Consumers Legal Remedies Act, CAL. CIV. CODE § 1770(a)(14), in that Walgreen’s

Notice of Privacy Practices represents that in a transaction involving filling prescriptions at a

Walgreen pharmacy in California, Walgreen will afford Plaintiff and the Class the protections of

California law pertaining to the use and disclosure of prescription information, when in fact

Walgreen disregards such protections.

73. As a direct and proximate result of Defendant’s violations of the CLRA as described

herein, Plaintiff and the Class have suffered damage to be proved at the trial of this matter.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



FIFTH CAUSE OF ACTION

Conversion



75. At all relevant times Plaintiff and the Class owned and/or maintained an exclusive

right of possession to the commercial value derived from the content of their prescriptions.

76. Walgreen nonetheless, and without Plaintiff and the Class’ knowledge, permission

or consent, misappropriated and converted Plaintiff and the Class’ prescription information in a

manner not permitted or allowed, for Walgreen’s commercial gain, through the unauthorized sale

of same to DMCs for pharmaceutical company detailing.

77. As a direct and proximate result, Plaintiff and the Class lost the commercial value of

their prescription content, and suffered the destruction of its value by Walgreen’s practices

complained of herein which included the exercise of control and ownership over Plaintiff and the

Class’ assets solely for Walgreen’s financial benefit.

SIXTH CAUSE OF ACTION

Unjust Enrichment



79. In selling and disclosing the contents of Plaintiff and the Class’ prescriptions to

DMCs, Walgreen has obtained monies from Plaintiff and the Class from filling prescriptions and has

similarly received monies from DMCs resulting from the sale of the contents of Plaintiff and the

Class’ prescriptions.

80. Walgreen is prohibited by California pharmacy regulations, as well as the Canon of

Ethics of the American Pharmacists Association from selling the contents of Plaintiff and the Class’

prescriptions. Thus, the monies received and remunerated Walgreen resulting from filling Plaintiff

and the Class’ prescriptions, and from Walgreen’s sale of Plaintiff and the Class’ prescription

information is unjust, and at the expense of Plaintiff and the Class’ legal rights and reliance on

Walgreen’s express representations to the contrary.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



V. PRAYER FOR RELIEF

WHEREFORE, Plaintiff, on behalf of the Class pled herein, prays for judgment against

Defendant, and each doe defendant jointly and severally, as follows:

(a) That this action be certified as a class action pursuant to California Code of

Civil Procedure § 382 and/or California Civil Code § 1781, that Plaintiff be designated Class

Representative, and/or Plaintiff’s counsel be designated Class Counsel;

(b) Pursuant to Business and Professional Code section 17203 and/or Civil Code

§ 1780, that all defendants, their employees, agents, representatives, successors, assigns, and all

persons who act in concert with them, be permanently enjoined from committing the practices above

described without suitable notice and subsequent authorization of the patient;

(c) For an accounting between Plaintiff and the Class and Defendant;

(d) That Defendant pay restitution, damages and / or disgorgement as proven for

Walgreen’s conversion of Plaintiff’s prescription, and/or for restitution of monies paid Walgreen for

filling prescriptions, and/or profits to be disgorged as unjust enrichment, and/or for the amount found

to be due from defendant to plaintiff as a result of the accounting and interest on that amount from

and after filing suit;

(e) That Plaintiff recover his costs of suit;

(f) For reasonable attorney’s fees pursuant to Code of Civil Procedure section

1021.5, California Code § 1780(e) or other applicable law; and

(g) For such other or further relief as is permitted, just and proper.

Dated: March 8, 2011 Respectfully, submitted,

FINKELSTEIN & KRINSK LLP

By:__________________________Jeffrey R. Krinsk

Mark L. KnutsonWilliam R. Restis501 West Broadway, Suite 1250San Diego, California 92101-3579Attorneys for Plaintiff

complaint walgreen murphy 03 8 11

Documents