State of Rhode Island v. CaremarkPCS Health, LLC et al

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
STATE OF RHODE ISLAND,
Plaintiff,
v.
CAREMARKPCS HEALTH, LLC, et
al.,
Defendants.
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C.A. No. 25-cv-306-MRD-PAS
MEMORANDUM AND ORDER
Melissa R. DuBose, United States District Judge.
The State brought the instant Deceptive Trade Practices Act (“DTPA”) action
against three Pharmacy Benefits Managers—OptumRx, Inc. (“OptumRx”), Express
Scripts Inc. (“Express”), & CaremarkPCS Health LLC (“Caremark”) — (“PBM
Defendants”), and their associated Group Purchasing Organizations — Zinc Health
Services, LLC (“Zinc”), Ascent Health Services, LLC (“Ascent”), and Emisar Pharma
Services LLC (“Emisar”) — (“GPO Defendants”) on May 27, 2025.1 ECF No. 1. Before
the Court is Defendants’ Motion to Dismiss for Lack of Subject Matter Jurisdiction
Pursuant to Rule 12(b)(1) and for Failure to State a Claim Pursuant to Rule 12(b)(6).
ECF No. 40. For the following reasons, the motion is DENIED.
1 PBM Defendants and GPO Defendants will be referred to herein collectively
as “Defendants.”
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I. 	BACKGROUND
A. Factual Background
This 	case 	represents 	the 	State’s 	attempt 	at 	fighting 	back 	against 	the
“skyrocketing cost” of prescription drugs in Rhode Island due to the Defendants’
alleged activities in the pharmaceutical market.
	See generally ECF No. 1-1. 	The
State complains that Defendants target Rhode Islanders through a predatory and
fraudulent scheme of inflating drug prices for their own gain at the expense of both
consumers and local pharmacies.
	Id. 	The Defendants in this case are three of the
country’s largest pharmacy benefits managers—PBMs—and their associated group
purchasing organizations—GPOs.2	
Id. “When PBMs first entered the market, they
primarily 	provided 	electronic 	claims 	processing 	services 	to 	efficiently 	and
economically process a high volume of relatively small dollar claims.”
Id. ¶ 32. Now,
as alleged by the State, PBMs work as middlemen between health benefits plans
(health insurance companies) and drug consumers, as well as between prescription
drug manufacturers and health benefits plans, pharmacies, and drug consumers.
Id.
at 20–21. As the State sees it, “PBMs are involved in and benefit at almost every step
in [the] complex system [of prescription drug distribution]—often profiting through
methods that are secret and unknown to consumers or even their own clients.”
	Id.
¶ 32. 	Regarding GPO Defendants, the State alleges that, “[b]eginning in 2019, the
PBM Defendants began utilizing the GPO Defendants to conduct negotiations with
2 GPO Defendant Zinc negotiates on behalf of PBM Defendant Caremark; GPO
Defendant Ascent negotiates on behalf of PBM Defendant Express Scripts; and GPO
Defendant Emisar negotiates on behalf of PBM Defendant OptumRx.
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manufacturers 	and 	collect 	and 	distribute 	rebates 	and 	other 	fees 	from
manufacturers[.]”
Id. ¶ 6. Given the intentionally self-contained nature of the PBM
and GPO relationship, as well as that between all Defendants, drug manufacturers,
wholesalers, partnered chain pharmacies, and health benefits plans, Defendants are
alleged to benefit from little to no competition and unfettered power to control the
pharmaceutical market for their own gain.
See generally id.
The State’s complaint provides, in great detail, the alleged scheme Defendants
use to maximize profits and mask their negative impact on the pharmaceutical
market.
	Id. Here is a vastly simplified version. The State alleges that Defendants’
role 	as 	an 	intermediary 	between 	all 	the 	parties 	involved 	in 	pharmaceutical
distribution enables them to sneakily raise both consumer prices and their own
profits through an almost untraceable system of rebates, kickbacks, and fees.
Id. at
11, 13, 19, 65, 72, 78. In part, this is achieved by Defendants favoring more expensive
designer drugs at the expense of more affordable, and sometimes safer, options.
	Id.
at 11, 69. To do this
, Defendants use formularies, or their chosen list of drugs covered
by their health benefits plans.3
Id. at 14, 21-22. To get added to a PBM’s formulary,
drug manufacturers are incentivized to offer rebates both to PBMs and the GPOs who
negotiate on their behalf.
	Id. at 22, 37-38. In addition to these rebates, Defendants
charge miscellaneous fees for formulary placement.
	Id. at 38, 40. 	To offset these
costs, drug manufacturers are compelled to increase their list prices.
	Id. at 42, 48,
3 The complaint further explains: “[a] health benefit plan will not typically
reimburse any part of the cost for a drug that is not included in the PBM-designed
formulary.” ECF No. 1-1 ¶ 34. A health benefit plan is health insurance.
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51. This affects not only the consumers who have health insurance and thus,
depending on their provider, are beholden to their insurance company’s associated
PBMs’ list of formularies, but also consumers without insurance who must pay for
that same drug out-of-pocket.
	Id. at 48, 50, 53. Even beyond this framework, the
State alleges Defendants engage in other deceptive and covert practices to benefit
themselves at the expense of consumers.
	Id. at 11, 23, 58. 	Because Defendants’
activities are alleged to be highly opaque, it is impossible to deduce the extent of their
systems or the specifics of their operations.
See generally Id.
B. Procedural Background
On May 27, 2025, the State filed its complaint in the Rhode Island Superior
Court for Providence County. 	On June 27, 2025, the Defendants removed this case
to this Court.
See generally id. In its complaint, the State brings three counts against
Defendants, all under the Rhode Island DTPA. ECF No. 1-1 at 84–92. These counts
include: Violation of R.I. Gen. Laws § 6-13.1-2 Deceptive Acts and Practices (“Count
I”); Violation of R.I. Gen. Laws § 6-13.1-2 Unfair Acts and Practices (“Count II”); and
Violation of R.I. Gen. Laws § 6-13.1-2 Unfair Methods of Competition (“Count III”).
Pending before the Court is the Defendants’ collective motion to dismiss the
complaint in its entirety. 	ECF No. 40. 	The motion is fully briefed and the Court
heard argument on February 12, 2026. 	As such, the motion is ripe and ready for
disposition.
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II. 	LEGAL STANDARD
A. Rule 12(b)(1)
“When a court is confronted with motions to dismiss under both [Federal] Rules
[of Civil Procedure] 12(b)(1) and 12(b)(6), it ordinarily ought to decide the former
before broaching the latter.”
Deniz v. Mun. of Guaynabo, 285 F.3d 142, 149 (1st Cir.
2002) (citations omitted). 	Rule 12(b)(1) governs dismissal for lack of subject matter
jurisdiction. When considering a Rule 12(b)(1) motion, the Court “must construe the
complaint liberally, treating all well-pleaded facts as true and drawing all reasonable
inferences in favor of the plaintiffs.”
Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir.
1998). If a defendant challenges the court’s subject matter jurisdiction, the plaintiff
bears the burden of proving jurisdiction.
Johansen v. United States, 506 F.3d 65, 68
(1st Cir. 2007). 	“[I]t is black-letter law that jurisdiction must be apparent from the
face of the plaintiffs’ pleading.”
PCS 2000 LP v. Romulus Telecomms., Inc., 148 F.3d
32, 35 (1st Cir. 1998).
B. Rule 12(b)(6)
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6),
the complaint must state a plausible claim.
Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). A plaintiff’s “factual allegations must be enough to raise a right to relief
above the speculative level” and assert a cause of action with “enough facts to state a
claim to relief that is plausible on its face.”
	Id. at 555, 570. In considering a motion
to dismiss, the court must draw all reasonable inferences in the plaintiff’s favor and
determine whether the complaint, when taken in the light most favorable to the
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plaintiff, sets forth sufficient facts to support the claim for relief.
	Clorox Co. P.R. v.
Proctor & Gamble Com. Co., 228 F.3d 24, 30 (1st Cir. 2000);
LaChapelle v. Berkshire
Life Ins. Co., 142 F.3d 507, 508 (1st Cir. 1998).
III. 	DISCUSSION
This DTPA action is shrouded in a cloud of secrecy. 	The State alleges that
Defendants “are involved in and benefit at almost every step in [the] complex system
[of prescription drug manufacturing, sales, and distribution]—often profiting through
methods that are secret and unknown to consumers or even their own clients.” ECF
No. 1-1 ¶ 32. 	As explained
supra, Defendants are alleged to use their “opaque
contractual 	relationships” 	with 	various 	actors 	in 	the 	prescription 	drug 	chain,
including each other, to maximize profit while disadvantaging “many independent
pharmacies and the consumers they serve.”
Id. ¶ 190. 	The fact that Defendants
leverage their clandestine relationships is well documented beyond just this case and
has been alleged in numerous lawsuits across the country.
	See, e.g.,
Anne Arundel
Cnty., Md. v. Express Scripts, Inc., No. CV MJM-24-90, 2025 WL 254807, at *1 (D.
Md. Jan. 21, 2025) (explaining that the defendants in the case, which include
OptumRx, Caremark, and Express Scripts, “exert substantial, but opaque, influence
over the prescription-drug supply chain”);
In re Insulin Pricing Litig., No. 2:23-md-
03080 (BRM)(LDW), 2025 WL 2551738, at *11 (D.N.J. Sept. 5, 2025) (acknowledging
both parties’ statements about the complexity of the payment flows, including PBM’s
admission that a “flood of litigation” is underway and that “their own internal coding
and record-keeping” is indecipherable);
Rutledge v. Pharm. Care Mgmt. Ass’n, 592
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U.S. 80, 83 (2020) (stating, “[PBMs] are a little-known but important part of the
process by which many Americans get their prescription drugs.”);
	In re Nat’l
Prescription Opiate Litig., No. 19-OP-45853, 2024 WL 4912429, at *20 (N.D. Ohio
Aug. 22, 2024) (discussing allegations that PBM Defendants OptumRx and Express
Scripts intended to conceal from the public what the PBMs were actually doing with
respect to prescription opioids). As alleged by the State, the incomprehensible system
in which Defendants operate is the very mechanism that enables the scheme which
forms the basis for the State’s claims. That all said, without the benefit of discovery,
the Court accepts that the State has engaged in a good faith effort to allege plausible
claims under the DTPA. 	As the Court considers these claims, along with the
threshold issues governing its subject matter jurisdiction, it remains mindful of the
challenges posed by Defendants’ alleged use of secrecy to evade the reach of the law.
After considering the parties’ papers and arguments, as well as the early stage of this
litigation, the Court concludes that this case is of the kind that is best resolved after
discovery, after all secrets are revealed, and everyone involved has the benefit of
transparency.
The Court also acknowledges, at the outset, that this case presents many novel
issues. There is little guiding Rhode Island case law in which courts have analyzed
similar claims under the DTPA, especially after the 2021 amendment relevant to this
case, and even fewer brought by the State’s Attorney General. 	Thus, many of the
issues now before this Court are issues of first impression for the Circuit.
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With that established, Defendants move to dismiss this action on the grounds
that the Court lacks subject matter jurisdiction and that the State has failed to state
a claim under the DTPA.
	See generally ECF No. 40. 	Defendants argue that this
Court lacks subject matter jurisdiction because: (1) the DTPA’s safe harbor provision
bars the action, (2) this action is time-barred, and (3) because the State has failed to
establish the requisite vendor-consumer relationship under the DTPA.
Id. at 2.
Defendants then assert that the State has failed to state a plausible claim for each of
the counts asserted in its complaint.
	Id. The Court will address each issue in turn,
disposing first of the jurisdictional challenges and then reviewing the State’s claims
on the merits.
A. Jurisdictional Challenges
1. 	The DTPA’s Safe Harbor Provision
The parties dispute whether the DTPA’s safe harbor provision, R.I. Gen. Laws
§ 6-13.1-4, bars this Court from hearing this action. The DTPA’s safe harbor provision
limits the legislation’s reach to “actions or transactions permitted under laws
administered by the department of business regulation or other regulatory body or
officer acting under statutory authority of this state or the United States.” R.I. Gen.
Laws § 6-13.1-4(a). 	As of July 7, 2021, the DTPA provides that when an action is
brought by the Attorney General, the safe harbor provision only applies if “(1) [t]he
person’s business activities are subject to regulation by a state or federal agency; and
(2) [t]he activity or conduct is in compliance with orders, including insurance
bulletins, or rules of, or a statute administered by, a federal or state government
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agency.4 	R.I. Gen. Laws § 6-13.1-4(b)(1–2). 	“Person” is defined in the DTPA as:
“natural persons, corporations, trusts, partnerships, incorporated or unincorporated
associations, and any other legal entity.” R.I. Gen. Laws § 6-13.1-1(3).
Defendants aver that the DTPA’s safe harbor provision bars this action because
their rebate 	negotiation 	and pharmacy 	practices 	are 	subject 	to 	oversight 	and
regulation by federal and state law, Congress, and government contracts.5
See ECF
No. 40 at 16–23. 	The State refutes this, asserting “Defendants [] fail to identify (as
they must) any regulation permitting the practices that the State alleges are
unlawful.” ECF No. 50 at 14.
Having considered the rules and laws discussed by the parties in conjunction
with the State’s allegations, the Court finds it would be premature to decide this issue
4 Defendants argue that because the State allegations date back to 2012, an
old iteration of the DTPA’s safe harbor provisions should be applied here instead of
the legislation as amended on July 7, 2021. 	ECF No. 55 at 11-12. 	Under the old
version of the safe harbor provision, a defendant need only “demonstrate that the
general activities complained of are subject to
monitoring or regulation by a state or
federal government agency.”
	Lynch v. Conley, 853 A.2d 1212, 1214 (R.I. 2004)
(emphasis added). 	Because the Court denies Defendants’ request that this Court
dismiss this action due to the DTPA safe harbor provision for lack of adequate
information, the Court finds it unnecessary to determine whether the new iteration
of the safe harbor provision applies retroactively at this time. 	With the benefit of
discovery, a more conclusive timeline of events will inevitably be revealed and the
Court will be in a better position to make a determination on the issue of retroactivity.
5 	Defendants 	cite 	the 	following 	statutes, 	regulations, 	and 	contractual
relationships as barring this action under the DTPA’s safe harbor provision: 	42
U.S.C. 	§ 	1395w-3a(c)(6)(B); 	42 	U.S.C. 	§ 	1396r-8(a)(1); 	42 	U.S.C. 	§ 	1396r-
8(k)(1)(B)(i)(IV); 42 U.S.C. § 1320b-23; 85 Fed. Reg. 76666 (Nov. 30, 2020) & 88 Fed.
Reg. 90125-01 (Dec. 29, 2023); the Department of Defense’s contract with Express
Scripts 	via 	TRICARE 	Health 	Plans; 	Federal 	Employees 	Health 	Benefits 	Act
(“FEHBA”); R.I. Gen. Laws § 27-18-33.2; R.I. Gen. Laws § 27-19-26.2; R.I. Gen. Laws
§ 27-20-23.2; R.I. Gen. Laws § 27-20.1-15.1; and R.I. Gen. Laws § 27-41-38.2.
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without more information. 	The DTPA’s safe harbor provision only applies if the
complained-of activities or conduct conforms with any governing state and/or federal
enactments. 	While Defendants have identified legislation and regulations that
contemplate the practices the Plaintiffs allege Defendants have used, such as rebate
negotiations and formulary development as well as statutes that establish reporting
and transparency requirements for PBMs, it is unclear to the Court whether
Defendants are in compliance with the rules and laws on which they rely. Therefore,
the Court cannot deduce exactly what Defendants’ business flow entails beyond the
allegations that it involves manipulation of the rebate and formulary system to raise
drug prices in an allegedly fraudulent manner as well as a preference for designer
drugs, 	all 	maintained 	through 	a 	lack 	of 	transparency 	and 	allegedly 	false
representations. 	ECF No. 1-1 ¶¶ 1, 5, 67, 139. 	Said another way, none of the
regulations or laws cited by Defendants directly contemplate the alleged tactics used
by Defendants to perpetuate their scheme. Also relevant is that many of these tactics
are yet to be revealed due to the covert nature of Defendants’ operations. 	As such,
the Court agrees with the State’s position that “[w]hile the[] regulations [cited by
Defendants] allow [them] to utilize certain tools like drug rebates, formularies, and
pharmacy networks, they do not give Defendants
carte blanche to engage in deceptive
and unfair practices in using those tools to the detriment of consumers and health
plans.” ECF No. 50 at 15. Thus, until the Court has a better handle on Defendants’
practices, it cannot conclusively determine whether the DTPA’s safe harbor provision
applies.
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Because subject matter jurisdiction may be raised at any time during the
litigation,
Kontrick v. Ryan, 540 U.S. 443, 455 (2004), and because of courts’ general
preference to resolve matters on the merits,
Keane v. HSBC Bank USA for Ellington
Tr., Series 2007-2, 874 F.3d 763, 765 (1st Cir. 2017), no party will be prejudiced by
reserving a decision on this issue until after the close of discovery.
	Cf. Adler v. Her
Campus Media, LLC, 411 F. Supp. 3d 121 (D. Mass. 2019) (denying a motion to
dismiss where the facts alleged were insufficient to determine the validity of the
asserted affirmative defenses, which included a safe harbor provision challenge).
Accordingly, Defendants’ motion to dismiss is denied on this basis.
2. 	Statute of Limitations
The Defendants argue that DTPA claims are subject to Rhode Island’s general
10-year statute of limitations for civil actions, as defined in R.I. Gen. Laws § 9-1-
13(a), and that “[b]ecause the State filed its Complaint on May 27, 2025, the statute
of limitations bars claims that accrued prior to May 27, 2015.” 	ECF No. 40 at 26
(citing R.I. Gen. Laws § 9-1-13(a)). The State disagrees, arguing that under the plain
language of the DTPA, there is no statute of limitations for a claim brought by the
Attorney General. 	ECF No. 50 at 21. 	The DTPA provides that “[
w]
henever the
Attorney General has reason to believe that any person is using, has used, or is about
to use any method, act, or practice declared to be unlawful by § 6-13.1-2 … the
Attorney General may bring an action[.]” 	R.I. Gen. Laws § 6-13.1-5(a) (emphasis
added). 	The State interprets this language to mean that it is not subject to any
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statute of limitations for actions it brings under the statute. 	ECF No. 50 at 21–22.
This Court agrees.
Rhode Island law supports an approach of adopting the plain and ordinary
language of a statute when it is not ambiguous.
	State v. Poulin, 66 A.3d 419, 423
(R.I. 2013). 	In such cases when the Court “examine[s] an unambiguous statute, there
is no room for statutory construction and [the Court] must apply the statute as
written.”
	Olamuyiwa v. Zebra Atlantek, Inc., 45 A.3d 527, 534 (R.I. 2012) (quoting
In re Harrison, 992 A.2d 990, 994 (R.I. 2010)). 	Here, the DTPA unambiguously
provides that the Attorney General may bring an action “whenever” he or she believes
an entity is violating or has violated the statute. 	R.I. Gen. Laws § 6-13.1-5(a).
“Whenever” is an enabling word that signals the legislature’s intent not to subject the
Attorney General to a statute of limitations. As supported by the Merriam-Webster
Dictionary, “at whatever time” is the plain meaning of the word “whenever.”
Whenever, Merriam-Webster, https://perma.cc/KF4A-3P2R. 	Furthermore, the term
“whenever” ordinarily indicates a lack of restriction, or in this context, a lack of a
time-bar limitation. 	To read a statute of limitations into the DTPA’s Attorney
General provision, even one generally applied to other civil actions contemplating
different kinds of claims, would render the term meaningless.6 	As such, the Court
agrees that the Attorney General’s claims against Defendants are not time-barred
6 The State argues that, even if its claims were subject to a general statute of
limitations, their claims would survive under the doctrines of
nullum tempus and
equitable tolling. ECF No. 50 at 21–22. 	Because the Court has determined the
Attorney General is not subject to any statute of limitations for DTPA claims, the
Court will not opine on the applicability of these doctrines.
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under the plain language of the DTPA. 	Defendants’ motion to dismiss is denied on
this basis.
3. 	Vendor-Consumer Relationship
The parties disagree about whether the Attorney General is required to allege
a vendor-consumer relationship when bringing an action under the DTPA.
See ECF
No. 40 at 23–25; ECF No. 50 at 17–21. 	Defendants aver that “[t]o invoke the
protection of the DTPA, ‘a plaintiff
must establish that he or she is a consumer.’” ECF
No. 40 at 23 (quoting
Kelly v. Cowesett Hillas Assocs., 768 A.2d 425, 431 (R.I. 2001))
(emphasis added). But, in making this argument, Defendants rely entirely on cases
decided before the DTPA was amended to consider actions brought by the Attorney
General.
Id. at 23. The State argues that Defendants’ position conflates the DTPA’s
standard for claims brought by a private citizen with that for claims brought by the
Attorney General. 	ECF No. 50 at 17. 	The State is correct. 	Defendants’ reading of
the DTPA disregards the provision of the statute that enables the Attorney General
to bring claims on behalf of the state if he or she has “reason to believe that any
person is using, has used, or is about to use any method, act, or practice declared to
be unlawful by § 6-13.1-2[.]” R.I. Gen. Laws § 6-13.1-5(a). 	Nothing in this section
requires a showing of a vendor-consumer relationship between the Attorney General
and the allegedly offending entity. While Defendants are right that the section of the
DTPA that contemplates lawsuits brought by private individuals requires the person
filing suit to be an individual “who purchases or leases goods or services
primarily for
personal, family, or household purposes,” this requirement does not extend to the
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Attorney General under the legislation’s plain language. R.I. Gen. Laws § 6-13.1-5.2
(emphasis added).
Furthermore, despite Defendants’ contention otherwise, the DTPA does not
require a direct relationship between consumers and the alleged bad actors in either
a private action or one brought by the State. As the State argues, there is nothing in
the statute to suggest a privity requirement “as long as there is a connection between
the deceptive trade practice and the harm to the plaintiff.”
	Chen v. Subaru of Am.,
58 A.3d 910, 911 (R.I. 2012). 	Indeed, the DTPA broadly defines “trade” and
“commerce” to include: “the advertising, offering for sale, sale, or
distribution of any
services and any property, tangible, or intangible, real, personal, or mixed, and any
other article, commodity, or thing of value wherever situate, and include any trade or
commerce
directly or indirectly affecting the people of this state.” R.I. Gen. Laws § 6-
13.1-1(5) (emphasis added). 	Here, the State has alleged that Defendants have
engaged in trade and commerce practices through their involvement in every step of
the prescription drug chain and that this involvement has directly and indirectly
affected the people of Rhode Island, for example, as prescription drug consumers and
members of health benefits plans. 	This considered, the State has met its burden.
Accordingly, Defendants’ motion to dismiss on this basis is denied.
B. Sufficiency of Plaintiff’s Stated Claims
1. 	Count I: Deceptive Acts
In Count I of its complaint, the State alleges Defendants violated the DTPA by
unlawfully engaging in “deceptive acts.” 	ECF No. 1-1 ¶¶ 217–27. 	To allege a
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“deceptive acts” claim under the DTPA, a plaintiff must show “(1) a representation,
omission, or practice, that (2) is likely to mislead consumers acting reasonably under
the circumstances, and (3) the representation, omission, or practice is material.”
Long v. Dell, Inc., 93 A.3d 988, 1003 (R.I. 2014) (quoting
F.T.C. v. Verity Int’l, Ltd.,
443 F.3d 48, 63 (2d Cir. 2006)). 	In developing this test, the Rhode Island Supreme
Court 	adopted 	the 	standard 	from 	the 	Federal 	Trade 	Commission’s 	(“FTC”)
interpretation of § 5(a) of the Federal Trade Commission Act.
	Id. Here, Defendants
claim the State has failed to meet its burden as to each of these elements.
a. 	Representation, Omission, or Practice Likely to Mislead Consumers
The parties first dispute whether the State has sufficiently alleged that
Defendants made or engaged in a representation, omission, or practice likely to
mislead consumers.7 	“For conduct to be deceptive it must, among other things, be
likely to mislead a reasonable consumer.”
Laccinole v. Assad, C.A. No. 14-404 S, 2016
WL 868511, at *8 (D.R.I. Mar. 7, 2016). 	Here, the State alleges that PBM
Defendants8 make specific representations that they work to lower drug costs for
consumers, when in fact, they raise drug prices for their own gain. ECF No. 50 at 11.
As identified by the parties, the specific statements at issue include:
7 For clarity’s sake and consistent with the parties’ briefing, discussion of the
first two elements has been combined.
8 Defendants assert that the State has “abandoned its claims in Count I as to
the GPO Defendants entirely.” 	ECF No. 55 at 23. 	The complaint is devoid of
allegations supporting GPO Defendants’ involvement in the State’s deceptive acts
claim. 	Accordingly, Defendants’ motion is GRANTED as it relates to Count I and
GPO 	Defendants. 	Count 	I, 	to 	the 	extent 	it 	has 	been 	asserted against 	GPO
Defendants, is dismissed.
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• 	Caremark’s statement on the CVS Health website: “PBMs [] negotiate with
manufacturers to secure [drugs] at a lower cost for their plan sponsors and
their members.” ECF No. 1-1 ¶ 69(a).
• 	Caremark’s statement on the CVS Health website: “PBMs help ensure that
beneficiaries have access to the prescriptions they need to stay healthy, at a
price they can afford.”
Id. ¶ 69(c).
• 	Caremark’s statement on the CVS Caremark website: “Your health is [CVS
Caremark’s] priority. As a pharmacy benefit manager (PBM), we manage
prescription plans to help make them more cost-effective—so you can get what
you need when you need it.”
Id. ¶ 69(f).
• 	Express Scripts’ statement on Evernorth Health Services website: “PBMs help
get the lowest net cost for their clients and consumers.”
Id. ¶ 70(a).
• 	Express Scripts’ statement on its Twitter account: “Express Scripts negotiates
with drug manufacturers to increase competition and lower costs for patients.”
Id. ¶ 70(d).
• 	Express Scripts’ statement on the Express Scripts website: “You can depend
on Express Scripts for care that fits your specific needs.”
Id. ¶ 70(f).
• 	OptumRx’s statement on the OptumRx website: “Rebates are a longstanding
tool used by PBMs to negotiate with drug manufacturers to achieve lower
prescription drug costs for clients.”
Id. ¶ 73(a).
• 	OptumRx’s statement on the OptumRx website: “PBMs … help consumers and
customers access the most effective medicines at the most affordable costs.”
Id.
¶ 73(e).
• 	OptumRx’s statement on the OptumRx website: “[PBM benefit programs] save
money and help promote better health outcomes.”
Id. ¶ 73(d).
• 	Caremark’s statement on the CVS Health website: “[P]eople are more likely to
take their prescribed medications when they know they can afford them – and
that can lead to better health outcomes.”
Id. ¶ 154.
• 	Express Scripts’ statement on the Express Scripts website: “As your pharmacy
benefit manager (‘PBM’), Express Scripts helps you stress less and save more.
We take care of you, so you can focus on what really matters.”
Id. ¶ 155.
• 	OptumRx’s statement on the OptumRx website: “Optum Rx routinely delivers
a far lower price. And lower prices matter.”
Id. ¶ 156.
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As Defendants see it, these allegations are too broad to meet the demands of
the DTPA. 	Quoting a First Circuit Lanham Act case, Defendants argue “‘a general
claim of superiority over [comparable products] that is so vague and indeterminate
that it will be understood as a mere expression of opinion’ is non-actionable as a
matter of law.” ECF No. 40 at 29–30 (quoting
Azurity Pharms., Inc. v. Edge Pharma,
LLC, 45 F.4th 479, 503 (1st Cir. 2022)). Next, pointing to a District of Massachusetts
case, Defendants elaborate that “[l]ikewise, ‘general statements about big-picture
concepts such as trust, security, reputation, and safety are non-actionable.’”
Id. at 30
(quoting
Costa v. FCA US LLC, 542 F. Supp. 3d 83, 101 (D. Mass. 2021). Defendants
continue that the statements are non-actionable because they are general statements
implicating their reputation and are opinion based. Thus, it is their position that the
State’s claim must fail.
Relying on the same First Circuit Lanham Act case as Defendants, the State
responds that “[r]epresentations are non-actionable puffery only when they are: (1)
‘grossly exaggerated advertising claims that no reasonable buyer would believe was
true’; or (2) ‘a general claim of superiority over a comparative product that is so vague
and indeterminate that it will be understood as a mere expression of opinion.’” ECF
No. 50 at 24 (quoting
Azurity, 45 F.4th at 503). 	The State therefore maintains its
deceptive acts allegations are sufficient because, when viewed collectively, they
“outline[] representations by the PBM Defendants that are ‘specific and measurable
claims and claims that may be literally true or false,’ and thus are not puffery.”
	Id.
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at 24–25 (quoting
F.T.C. v. Direct Mktg. Concepts, Inc., 624 F.3d 1, 11–12 (1st Cir.
2010)).
Applying the operative test identified by the parties, this Court concludes that
the State has met its burden here. 	The State alleges that PBM Defendants have
published statements claiming that their involvement in the pharmaceutical network
lowers drug prices for consumers, whereas in reality, PBM Defendants work to
increase drug prices and promote more expensive designer drugs for their own gain.
ECF No. 1-1 ¶¶ 69–73; ECF No. 50 at 25. 	Thus, the State plausibly alleges PBM
Defendants’ statements are misleading. 	The statements detailed in the complaint
are not so grossly exaggerated that no reasonable consumer would believe them.
See
Azurity, 45 F.4th at 503. ECF No. 1-1 ¶¶ 69–73. For example, a reasonable customer
may believe PBM Defendants’ statement that PBMs help customers access medicines
at affordable costs. 	ECF No. 1-1 ¶ 73(e). 	Also, the alleged statements, overall, are
not so vague that they would be impossible to fact-check.
Id. To illustrate, one could
do research to find out if “PBMs help get the lowest net cost for their clients and
consumers.”
	Id. ¶ 70(a). 	Consequently, the alleged statements do not amount to
puffery, but rather, actionable representations that are likely to mislead consumers.
The State has met its pleading burden as to the first two factors of the deceptive acts
test.
b. 	Materiality
“[A] representation is material if it ‘involves information that is important to
consumers and, hence, likely to affect their choice of, or conduct regarding, a
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product.’”
Long, 93 A.3d at 1003 (quoting
F.T.C. v. Patriot Alcohol Testers, Inc., 798
F. Supp. 851, 855 (D. Mass. 1992)). Here, Defendants argue the statements detailed
supra are immaterial because no reasonable consumer would deem them “important”
in the context of prescription drug purchasing. ECF No. 40 at 30–31. In Defendants’
own words, “[t]he State alleges no facts suggesting that any consumer’s decision
about whether to purchase a pharmaceutical product plausibly could be affected by
the PBMs’ statements about the complex pharmacy benefit management services
they provide to their clients.”
Id. at 31. 	The State responds that under the plain
language of the DTPA, consumers need not directly purchase goods or services from
a company for the company’s acts or practices to be considered material, and the
allegedly offending company does not need to have a direct relationship for that
company to violate the DTPA. 	ECF No. 50 at 26. 	Instead, the State cautions that
the 	Court 	should 	be 	mindful 	that 	“[t]he 	FTC 	considers 	certain 	categories 	of
information 	presumptively 	material, 	including 	express 	claims 	and 	claims 	or
omissions that ‘significantly involve health, safety, or other areas with which the
reasonable consumer would be concerned.’”
	Id. (citing FTC Policy Statement on
Deception at 5
appended to In re Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 (F.T.C.
1984) & R.I. Gen. Law § 6-13.1-3). 	The State claims that “[a]ll the acts or practices
that the State alleges are deceptive (many of which are express representations) and
involve the pricing of drugs or the safety or efficacy of drugs … are therefore of obvious
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importance to consumers, which Defendants know.”
	Id. at 26–27 (citing ECF No. 1-
1 ¶¶ 154–57, 223–24).
Additionally, the State makes a strong point that nothing in the DTPA’s plain
language suggests there needs to be a direct consumer-vendor relationship for their
deceptive acts claim to survive.
See R.I. Gen. Laws § 6-13.1-2. The State appeals to
the Supreme Court of Rhode Island DTPA case
Chen v. Subaru of America to support
the proposition that the DTPA does not require “privity of contract between the
consumer and the alleged deceptive trade practice violator, as long as there is a
connection between the deceptive trade practice and the harm to the plaintiff.”9 58
A.3d at 911. Indeed, PBM Defendants do play a role in drug pricing that does directly
affect consumers (i.e. the price they pay for drugs). 	However, the question remains
whether there is a link between PBM Defendants advertising they lower prices while
instead raising them and the harm consumers face by those raised prices, given the
disagreement about whether consumers are compelled to act because of PBM
Defendants’ advertisements.
This 	issue 	presents 	a 	knotty 	problem, 	as 	both 	sides 	advance 	plausible
arguments, and guiding precedent appears to be limited. 	On the one hand, even if
PBM Defendants make misleading representations which convince consumers that
PBM Defendants lower prices, it is unclear what decisions these consumers would
9 Notably, the Rhode Island Supreme Court was simply quoting language from
the Superior Court and never actually opined on this issue.
	Chen v. Subaru of Am.,
58 A.3d 910, 911 (R.I. 2012).
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make 	differently 	in 	reliance 	on 	those 	representations. 	However, 	the
misrepresentations alleged by the State undoubtedly involve health and safety,
rendering them presumptively material per the FTC.
See Matter of Cliffdale Assocs.,
Inc., 103 F.T.C. 110, 1984 WL 565319, at 49. Presently, the Court is cognizant of the
early stage of this litigation and finds the State’s position more convincing. For the
purposes of a motion to dismiss, the allegation that consumers make decisions based
on the information provided by PBM Defendants is enough. The State’s allegations
go beyond this, and the Court is satisfied with its pleading as it relates to materiality.
See Rodriguez-Reyes v. Molina-Rodriguez, 711 F.3d 49, 54 (1st Cir. 2013) (“Although
a plaintiff must plead enough facts to make entitlement to relief plausible … [they]
need not plead facts sufficient to establish a prima facie case.”).
As with many of the issues in this case, the Court will be in a better position
to assess materiality and the State’s deceptive acts claim overall with the benefit of
a developed record.
	See Brennan v. Carvel Corp., 929 F.2d 801, 813 (1st Cir. 1991)
(stating “whether a party has committed an unfair or deceptive act, within the
meaning of [Massachusetts consumer protection laws], is a question of fact”).
Defendants’ motion to dismiss Count I of this action is therefore denied.
2. 	Count II: Unfair Acts and Practices
Count II of the State’s complaint contains an allegation that Defendants
unlawfully engaged in unfair practices and acts. ECF No. 1-1 ¶¶ 228–34. The State
alleges that Defendants did so by “engaging in a scheme to artificially inflate [] prices
for brand-name prescription drugs to extract higher fees.” 	ECF No. 1-1 ¶ 232. 	In
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conducting this scheme, Defendants allegedly use rebate and formulary negotiations.
See generally id. 	To determine that an act is unlawfully “unfair,” the Rhode Island
Supreme Court has outlined the following inquiry:
(1) Whether the practice, without necessarily having been previously
considered unlawful, offends public policy as it has been established by
statutes, the common law, or otherwise—whether, in other words, it is
within at least the penumbra of some common law, statutory, or other
established concept of unfairness; (2) whether it is immoral, unethical,
oppressive, or unscrupulous; (3) whether it causes substantial injury to
consumers (or competitors or other businessmen).
Ames v. Oceanside Welding and Towing Co., 767 A.2d 677, 681 (R.I. 2001) (citing
F.T.C. v. Sperry & Hutchinson Co., 405 U.S. 233, 244–45 n.5 (1972)) (the so-called
Sperry factors). 	Here, Defendants argue that the State’s claim must fail because it
has failed to meet its burden as to each of the
Sperry factors. ECF No. 40 at 32–39.
The Court will address each in turn.
a. 	Violation of public policy
The 	Court 	first 	considers 	whether 	the 	State 	has 	sufficiently 	pled 	that
Defendants’ alleged unfair acts “offend[] public policy as it has been established by
statutes, the common law, or otherwise-whether, in other words, it is within at least
the penumbra of some common law, statutory, or other established concept of
unfairness[.]”
	Ames, 767 A.2d at 681. 	According to Defendants, “[p]ublic policy
considerations may not serve as a primary basis for an unfairness determination, and
here, they provide no basis at all.” ECF No. 40 at 33. The State disagrees, arguing
“Rhode Island has an established public policy of making affordable and effective
medications accessible to consumers and preventing PBMs from driving up drug
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costs.” ECF No. 50 at 30. In making this argument, the State cites several allegations
from its complaint which detail how Defendants’ actions violate public policy and
established law, ECF No. 1-1 ¶¶ 78–141, 162–67, as well as the DTPA’s express
prohibition against “making false or misleading statements of fact concerning the
reasons for, existence of, or amount of price reductions.” 	ECF No. 50 at 30–31; R.I.
Gen. Laws § 6-13.1-1(6)(xi).
The State has met its burden as to the public policy
Sperry factor. This issue
presents a question of fact. While there is little caselaw (as the Court has previously
mentioned) 	interpreting 	Rhode 	Island’s 	DTPA, 	when 	reviewing 	similar 	claims
brought under Massachusetts’ consumer protection laws, the First Circuit has
recognized that “the finder of fact determines ‘what constitutes an unfair trade
practice,’ but its determination is nevertheless ‘subject to [a reviewing] court’s… legal
gate-keeping function.’”
	Tomasella v. Nestlé USA, Inc., 962 F.3d 60, 79–80 (1st Cir.
2020) (quoting
Mass. Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d
47, 69 (1st Cir. 2009)). Therefore, whether Rhode Island has a public policy against
Defendants’ behaviors would be better determined after discovery. For now, the State
has alleged more than enough to establish that Defendants’ behaviors violate Rhode
Island public policy. To cite a few examples:
• 	“Rhode Island has a public policy in favor of making affordable and effective
medications accessible to consumers and preventing PBMs from driving up
drug costs. This public policy is evidenced through multiple laws among other
things. For example, in 2023, Rhode Island passed legislation capping
consumers' out-of-pocket costs for specialty drugs at $150 per 30-day supply.
See R.I. Gen. Laws § 27-18-50.2.” ECF No. 1-1 ¶¶ 162–63.
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• 	“The Office of the Health Insurance Commissioner reiterated Rhode Island’s
policy 	in 	a 	recently 	released 	report 	analyzing 	pharmacy 	spending,
concluding: 	‘It 	is 	important 	for 	Rhode 	Islanders 	to 	get 	the 	care 	and
medications they need to live the healthiest lives possible, but at prices that
are not burdensome and a deterrent to access.’”
Id. ¶ 166 (citing Office of the
Health Insurance Commissioner, Chartbook: Rhode Island OHIC, at 23-27
(2025)).
• 	“In contravention of Rhode Island’s public policy, Defendants’ business
practices have the intent and/or effect of artificially increasing prescription
drugs costs for Defendants’ own financial gain, and this offends the policy of
the 	State 	of 	Rhode Island because, 	among 	other things, it: (1) 	raises
consumers’ out-of-pocket drug costs; (2) results in utilization of high cost
brand-name drugs over cheaper and equally effective alternatives; and (3)
blocks 	consumers 	from 	meaningfully 	accessing 	cheaper 	and, 	in 	some
instances, safer alternatives.”
Id. ¶ 167.
Accordingly, this Court finds the State has plausibly pled the first
Sperry factor.
b. 	Immoral, unethical, oppressive, or unscrupulous conduct
The Court next considers whether Defendants’ allegedly unfair acts are
properly classified as immoral, unethical, oppressive, or unscrupulous.
	Ames, 767
A.2d at 681. Again, the Rhode Island Supreme Court has suggested that this factor
poses a question of material fact that should be determined by a fact finder.
See Long,
93 A.3d at 1001. Generally, Defendants argue that the State has failed to satisfy this
second
Sperry factor because the complained of acts are “standard industry practice
in which employers, unions, government entities, and others participate in an effort
to lower the drug prices set by manufacturers.” 	ECF No. 40 at 35. 	Defendants
continue that the rebate and formulary negotiations at issue are actually an
“
obligation enshrined in federal policy,”
id., and that “[p]ractices the state and federal
governments 	engage 	in, 	and 	contract 	for 	cannot 	also 	be 	considered 	‘immoral,
unethical, oppressive, or unscrupulous’ under the same state’s law,” ECF No. 55 at
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30. 	According to the State, Defendants’ argument is “reliant on facts wholly outside
the complaint and cannot be considered on a motion to dismiss.” ECF No. 50 at 34.
The State also avers that “Defendants have not shown any so-called standard
industry practices by which they are allegedly abiding other than utilizing rebates,
formularies, and pharmacy networks.”
	Id. 	Nevertheless, the State maintains that,
considering the allegations in the complaint and the fact that Defendants have
rendered drug prices “a complete black box,” its allegations are sufficient to satisfy
the second
Sperry factor.
Id. at 35.
Crucial to the disposition of this factor (and the State’s entire case) is the
distinction between rebate and formulary negotiations generally and the unlawful
manner in which Defendants allegedly conduct these negotiations. 	It is clear from
the complaint that the latter is at issue here. 	While Defendants are correct that
negotiating 	rebates 	may 	not 	be 	immoral 	or 	unethical, 	the 	State 	alleges 	that
Defendants 	use 	deceptive 	and 	fraudulent 	means 	to 	effectuate 	their 	scheme.
Undoubtedly, the use of deception constitutes immoral and unscrupulous behavior.
The First Circuit has suggested that “trick[ing] consumers [and] tak[ing] advantage
of their assumptions for capital gain” is sufficiently immoral and unethical to satisfy
this prong.
See Tomasella, 962 F.3d at 82. That is essentially the crux of the State’s
entire case: that PBM Defendants use their inordinate bargaining power and
unchecked middleman position to manipulate rebate negotiations and implement
hidden fees negotiations to inflate drug prices for their own gain while consumers are
forced to pay higher prices to compensate for the difference, all the while being none
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the wiser. The State has plausibly pled allegations that speak to the second
Sperry
factor.
c. 	Substantial injury
Per the final
Sperry factor, the Court must decide whether the State has
alleged that Defendants’ unfair acts have caused substantial injury to consumers.
Ames, 767 A.2d at 681. 	When analyzing similar claims, courts in the First Circuit
have acknowledged that “substantial injury” typically involves monetary harm.
See,
e.g.,
F.T.C. v. Direct Mktg. Concepts, Inc., 569 F. Supp. 2d 285, 299 (D. Mass. 2008),
aff’d, 624 F.3d 1 (1st Cir. 2010). Further, that “an injury may be deemed substantial
‘if it does a small harm to a large number of people, or if it raises a significant risk of
concrete harm.’”
	Id. 	(quoting Letter from Federal Trade Commission to Senators
Ford and Danforth (Dec. 17, 1980),
appended to In the Matter of Int’l Harvester Co.,
104 F.T.C. 949 (1984)).
Here, as articulated by the State, the complaint contains allegations that
“Defendants give preferential treatment on their formularies to expensive, brand-
name drugs with the highest rebates and other fees over drugs that may be safer,
more effective, or cost less to health plans or consumers to line their own pockets (not
reduce costs for clients or consumers).” 	ECF No. 50 at 35–36 (citing ECF No. 1-1
¶¶ 82–109, 133–141). 	The State also alleges that Defendants’ unfair acts have
harmed “thousands of Rhode Island residents.” ECF No. 1-1 ¶ 104. These allegations
are sufficient to meet the demands of the third
Sperry factor. 	Taken together, the
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State has plausibly alleged all the
Sperry factors and have therefore sufficiently
stated a claim in Count II.
3. 	Count III: Unfair Methods of Competition
Count III of the State’s complaint is an unfair methods of competition (“UMC”)
claim. 	ECF No. 1-1 ¶¶ 235–248. 	The Federal Trade Commission provides that “a
method of competition is unfair if it goes beyond competition on the merits.”
	Id. ¶
239 (citing Federal Trade Commission,
Policy Statement Regarding the Scope of
Unfair Methods of Competition Under Section 5 of the Federal Trade Commission
Act, at 8-9 (Nov. 10, 2022), [https://perma.cc/ZYN9-YSLH]) (referred to herein as
“2022 UMC Statement”). The State alleges that PBM Defendants engaged in unfair
methods of competition by “giving preferential treatment to drugs with the highest
rebates when there are multiple drugs in a therapeutic class.”
	Id. ¶ 242. The State
continues, “[f]or at least the last five years, if not longer, the PBM Defendants have
used their significant leverage to force independent pharmacies to accept unfair
contract 	terms 	that 	materially 	disadvantage 	independent 	pharmacies 	and
consumers.”
Id. ¶ 245.
Rhode 	Island 	courts 	have 	recognized 	that 	“in 	enacting 	the 	DTPA, 	the
Legislature intended to declare unlawful a broad variety of activities that are unfair
or deceptive, as well as to provide a remedy to consumers who have sustained
financial losses as a result of such activities.”
Park v. Ford Motor Co., 844 A.2d 687,
692 (R.I. 2004). The statute has been interpreted by the Rhode Island Supreme Court
to remedy any type of loss, “no matter how large or small, as a result of an unlawful
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trade practice[.]”
Id. at 693. 	R.I. Gen. Laws § 6-13.1-1(6) enumerates twenty-one
“[u]nfair methods of competition and unfair or deceptive acts or practices.” The State
argues that Defendants’ formulary and rebate practices implicate several of these
enumerated prohibited practices, including the catch-all provision. ECF No. 50 at 42.
Specifically, the State cites the following enumerated practices:
• 	R.I. Gen. Laws § 6-13.1-1(6)(v): “Representing that goods or services have
sponsorship, 	approval, 	characteristics, 	ingredients, 	uses, 	benefits, 	or
quantities that they do not have or that a person has a sponsorship, approval,
status, affiliation, or connection that he or she does not have.”
• 	R.I. Gen. Laws § 6-13.1-1(6)(xi) “Making false or misleading statements of fact
concerning the reasons for, existence of, or amounts of price reductions.”
• 	R.I. Gen. Laws § 6-13.1-1(6)(xii) “Engaging in any other conduct that similarly
creates a likelihood of confusion or of misunderstanding.”
• 	R.I. Gen. Laws § 6-13.1-1(6)(xiv) “Using any other methods, acts, or practices
that mislead or deceive members of the public in a material respect.”
Id.
In addition to these specifically enumerated practices, the DTPA has a catch-
all provision, R.I. Gen. Laws § 6-13.1-1(6)(xiii), which adds “[e]ngaging in any act or
practice that is unfair or deceptive to the consumer,” to this list. 	As both parties
suggest, if the Court were to find the complained of behavior meets the requirements
for either of the State’s other two counts, particularly its unfair acts claim under the
Sperry 	factors, 	then 	the 	State’s 	allegations 	fit 	into 	this 	catch-all 	provision.
Defendants provide that “the closest option [for which enumerated practice the
State’s claim may fit into] is Section 6-13.1-1(6)(xiii)’[s] catch-all, which prohibits
‘engaging in any act or practice that is unfair or deceptive to the consumer.’” 	ECF
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No. 40 at 40. For its part, the State asserts that its allegations fit squarely into the
catch-all provision because it has met its burden to allege Defendants’ activities
“violate the [
Sperry] standard.” ECF No. 50 at 40.
Reviewing the State’s claims under the lens of both the enumerated practices
listed by the DTPA and its catchall provision, it is clear that it has met its burden to
allege an UMC claim. 	The Complaint contains allegations that directly meet the
definitions of the enumerate practices identified by the State (R.I. Gen. Laws § 6-
13.1-1(6)(v), R.I. Gen. Laws § 6-13.1-1(6)(xi), R.I. Gen. Laws § 6-13.1-1(6)(xii), and
R.I. Gen. Laws § 6-13.1-1(6)(xiv)). 	Furthermore, this Court has already concluded
the State’s allegations meet the demands of the Sperry factors.
	See supra. 	On this
alone, the Court is satisfied that the State has stated a plausible UMC claim and thus
denies Defendants’ motion as to Count III.
As a final point, the Defendants also argue that “[i]f the Court finds that the
State has adequately pleaded any DTPA claim (it should not), it should limit any
claims to the particular prescription drugs about which the State makes specific
factual allegations.” 	ECF No. 40 at 50. 	Citing
Bell Atlantic Corp. v. Twombly, the
State counters that this assertion is “wholly without support.” ECF No. 50 at 52. The
State explains that its claims are not drug specific but rather focus on Defendants’
broader practices.
	Id. at 52–53. 	This issue gets at the scope of this case and the
characterization of the State’s claims. The State’s claims are not focused on the drugs
themselves, but rather Defendants’ wider practices and activities. While some of the
allegations used by the State to support their claims may reference specific drugs,
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this case is broader than that. Considering both
Twombly and the State’s theory of
its case, the Court will not, at this time, make any drug-specific determinations
IV. 	CONCLUSION
The Defendants’ motion to dismiss is DENIED, except as to GPO Defendants,
who for the reasons stated in footnote 8, are DISMISSED from Count I.
IT IS SO ORDERED.
_________________________________
Melissa R. DuBose
United States District Judge
03/26/2026
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