State Attorneys General Blog

November 8, 2024November 12, 2024 by Christopher H. Casey

Kroger Agrees to Pay $1.37 Billion to State Attorneys General in Opioid Settlement

On Monday, November 4, supermarket chain Kroger finalized a settlement agreement with dozens of state attorneys general requiring the company to pay a total of $1.37 billion for its alleged role in failing to appropriately monitor the dispensing of opioids at its pharmacies. The settlement resolves the states’ allegations that Kroger ignored red flags showing suspicious narcotics prescriptions that fueled the opioid epidemic. The settlement involves 33 states and the District of Columbia, and multiple subdivisions and tribal nations.

The states that will receive the largest payments are Ohio, with 11.2% of the settlement amount; California, with 10.1%; and Texas, with 6.4%. The funds will go towards opioid prevention, treatment and recovery programs. The settlement also includes injunctive relief requiring Kroger’s pharmacies to monitor, report, and share data about suspicious activity related to opioid prescriptions.

North Carolina Attorney General Josh Stein led the settlement negotiations along with California Attorney General Rob Bonta and the attorneys general of Colorado, Illinois, Oregon, Tennessee and Virginia. Kroger, based in Ohio, initially announced the settlement in September 2023. A spokesperson for the company stated that the finalization of the settlement resolves “nearly all the outstanding opioid-related claims” against Kroger.

November 1, 2024November 1, 2024 by Katherine D. Brodie

Multistate Coalition of AGs Supports Federal Price Gouging Ban

On October 30, 2024, sixteen (16) Attorneys General wrote to House and Senate Republican and Democrat leadership in support of Congress taking action to establish a federal penalty for price gouging during times of economic crisis. Despite varying types of anti-price gouging laws in 40 states, the AGs note that the national scope of product supply chains requires a federal-state partnership to adequately protect consumers and small business from price hikes, hoarding and supply restrictions that can result from profiteering. The letter seeks to distinguish its support for temporary, targeted price gouging prohibitions from price caps or ceilings of the past that were not narrowly targeted and harmed businesses responding to market conditions to maintain profit margins. The type of federal prohibition the group supports would be directed toward excess profit making in times of crisis, as states across the nation experienced during the COVID-19 pandemic and after global oil and gas market disruptions.

The letter notes that states have “successfully held up-chain distributors and manufacturers accountable for the harm they caused both to consumers and small businesses,” but that “without a national prohibition in place, states face resource challenges and additional litigation uncertainty when pursuing upstream, out-of-state producers and sellers” and “those gaps incentivize businesses to push price gouging activity up the supply chain in order to complicate price gouging enforcement by individual states.” A federal price gouging ban would assist in eliminating such incentive, according to the AGs.

In short, the AGs believe that a federal price gouging prohibition that complements current state prohibitions would “allow federal enforcement agencies, such as the Federal Trade Commission, to identify and restrain unjustified and irrational price increases throughout the entire supply chain, unconstrained by the complications of State-by-State enforcement”.

The letter was signed by the attorneys general of New York, California, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Oregon, New Jersey, New Mexico, Pennsylvania and Vermont.

October 31, 2024October 31, 2024 by Karen Lehmann Alexander

Multistate Coalition of AGs Files Amicus Brief in Support of the Affordable Care Act’s Preventive Care Mandate

On October 21, 2024, a multistate coalition of 24 attorneys general filed an amicus brief before the U.S. Supreme Court in support of the Affordable Care Act’s preventive care mandate. The challenged mandate requires private insurers to cover an array of preventive services (such as cancer screening, tobacco cessation, contraception, and immunizations) at no cost to consumers.

The case, Xavier Becerra vs. Braidwood Management, Inc., et al., involves a challenge to the U.S. Preventive Services Task Force, which sits within the Public Health Service of the Department of Health and Human Services (HHS), and was instructed by Congress to issue recommendations for preventive medical services that, under the preventive services provision, health insurance issuers and group health plans must cover without imposing additional out-of-pocket expenses on patients.

In June 2024, the Fifth Circuit partially upheld a March 2023 ruling from a Texas district court and determined that the structure of the U.S. Preventive Services Task Force violates the Appointments Clause because its members are principal officers of the United States who must be (but are not) nominated by the President and confirmed by the Senate. On that basis, it affirmed an injunction prohibiting the federal government from enforcing the preventive services provision against respondents.

Currently, the Supreme Court is considering whether to hear the case. The attorneys’ general amicus brief urged the Supreme Court to grant certiorari and make clear that the Task Force’s structure is constitutional and that the preventive services provision can be enforced. The brief was filed by the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and Wisconsin.

A copy of the brief may be found here.

September 25, 2024September 25, 2024 by Karen Lehmann Alexander

Multistate Coalition of AGs Supports FDA’s Denial of Marketing Authorization for Flavored Vape Products

On September 3, 2024, a multistate coalition of 20 attorneys general filed an amicus brief before the U.S. Supreme Court in support of a decision by the U.S. Food and Drug Administration (FDA) to deny companies the ability to market and sell certain flavored e-cigarette products across state lines.

The amicus brief emphasized what the attorneys general described as the “serious health risks” of flavored e-cigarettes (particularly for youth), and argued that the FDA’s statutory authority over the introduction of new tobacco products into interstate commerce is a crucial complement to state and local regulation of flavored e-cigarettes. The attorneys general explained that while states have adopted a variety of measures to restrict sales of flavored e-cigarettes, these products continue to flow through interstate commerce, necessitating continued FDA oversight.

The case is Food and Drug Administration v. Wages and White Lion Investments, LLC, dba Triton Distribution, et al., and arises from a lawsuit filed by companies challenging the FDA’s denial of their applications to market and sell flavored e-cigarette products across state lines. In January 2024, the Fifth Circuit Court of Appeals ruled in favor of the applicants’ challenge. The attorneys general encourage the Supreme Court to reverse that decision.

The amicus brief was filed by the attorneys general for Arizona, California, Colorado, Connecticut, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington. A copy of the brief may be found here.

September 18, 2024September 18, 2024 by Katherine D. Brodie

State Attorneys General Advocate for Surgeon General’s Warning Labels on Social Media Platforms

On September 9, 42 state attorneys general joined a National Association of Attorneys General Letter to House and Senate leadership supporting legislation to establish a surgeon general’s warning label on algorithm-driven social medial platforms, stating that social media is associated with significant mental health harms for adolescents. According to the state AGs, such platforms represent a serious public mental health threat, closely linked to youth depression, anxiety and suicidal ideation.

The Letter follows previous efforts taken by state attorneys general— including Arkansas, Indiana, Iowa, Kansas, Nebraska, New Hampshire, and Utah—but advocates for federal intervention.

According to the AGs’ letter, a federally mandated surgeon general’s warning “would be a consequential step toward mitigating the risk of harm to youth.” The authors urge Congress to seriously consider this and other steps to protect youth in the face of emerging technologies, citing the Senate’s passage of the Kids Online Safety Act and Children and Teens’ Online Privacy Protection Act as evidencing bipartisan commitment to protecting youth online.

The following state attorneys general signed the Letter: Alabama, Arkansas, American Samoa, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, U.S. Virgin Islands, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming.

August 30, 2024 by Christopher H. Casey

Eight State Attorneys General Join DOJ Antitrust Lawsuit Against RealPage

On August 23, 2024, the Attorneys General of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, joined the DOJ Antitrust Division in suing RealPage, Inc., alleging an unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments.

The complaint alleges that landlords share with RealPage their nonpublic, competitively sensitive data, which RealPage then uses to generate rental pricing recommendations, suppressing competition among landlords to the detriment of renters throughout the country. The state attorneys general assert their independent authority under Section 16 of the Clayton Act to bring actions to obtain injunctive relief for violations of Sections 1 and 2 of the Sherman Act.

The attorneys general of the District of Columbia and Arizona previously sued RealPage for the same conduct, in November 2023 and February 2024, respectively. Those lawsuits—like a complaint filed by a proposed class of renters in October 2022—allege that RealPage’s conduct constitutes per se price-fixing. The allegations by the DOJ and the eight state attorneys general do not go that far, alleging instead information sharing and vertical agreements with landlords, claims that are typically decided under the rule of reason.

August 21, 2024 by Daniel R. Walworth

Massachusetts Attorney General Reaches $600 Million Settlement with Tobacco Companies

On August 12, 2024, the Massachusetts Attorney General’s Office, announced that it had reached a settlement for in excess of $600 million with tobacco manufacturers. The settlement resolves several years’ worth of disputes between the Attorney General’s Office and tobacco manufacturers concerning annual payments arising from a 1998 Master Settlement Agreement (MSA). That 1998 MSA required tobacco manufacturers to make annual payments to address the public health effects from smoking and the marketing of tobacco products. The $600 million settlement resolves disputes in arbitration about amounts withheld from those annual payments to states. In announcing the settlement, the AGO emphasized that it is “part of the AGO’s ongoing efforts to improve public health.”

August 7, 2024 by Karen Lehmann Alexander

California AG Says Further Consolidation in “Core” Markets Bad for Consumers

By Dillon Denio and Karen Alexander

The office of California Attorney General Rob Bonta recently suggested in an interview with the online publication MLex that his office believes that further consolidation in markets that are “core” to American life—including the financial sector and the agriculture, airline, and grocery industries—does not serve the economy, consumers, or competition well.

The comments align with the California Attorneys General’s Office’s recent opposition to mergers and joint ventures in the airline and grocery industries. In 2021, California joined the Department of Justice’s (DOJ) successful lawsuit to prevent American Airlines and JetBlue Airways from consolidating their operations in Boston and New York City. In early 2024, California, along with six other state attorneys general, joined the DOJ’s lawsuit to prevent the $3.8 billion acquisition by JetBlue of Spirit Airlines. And in 2024, California was among the several states that joined the Federal Trade Commission’s (FTC) lawsuit to block the proposed merger between grocery giants Kroger and Albertsons.

The Attorney General’s comments and recent actions show California’s continuing opposition to mergers in the financial sector and the agriculture, airline, and grocery industries. Businesses in these “core” markets looking to consolidate with competitors should be aware that California’s Attorney General’s Office may challenge the deal.

July 22, 2024 by Christopher H. Casey

Vermont Attorney General Sues Two of Largest PBMs for Driving Up Drug Prices

On July 17, 2024, the Vermont Attorney General, Charity R. Clark, filed a lawsuit in Vermont Superior Court against two of the largest pharmacy benefit managers (“PBMs”) in the country, CVS Caremark and Express Scripts. The suit alleges that these two PBMs—which, according to the complaint, together control approximately 95% of the commercial PBM market in Vermont—have violated the Vermont Consumer Protection Act by engaging in deceptive and unfair practices that have had the effect of driving up pharmaceutical prices for consumers and squeezing independent pharmacies.

PBMs act as intermediaries in the health care system—they manage prescription drug benefits, including by negotiating discounts, rebates and fees with drug manufacturers, creating drug formularies (lists of medications that are covered by insurance) and policies, and reimbursing pharmacies for drugs covered by prescription-drug plans.

The Vermont AG’s complaint alleges that because they control which drugs are placed on the formularies, CVS Caremark and Express Scripts are able to extract payments from the manufacturers in return for favorable placement, which the PBMs retain as profits instead of passing along to payors and patients. It alleges that these PBMs drive up drug prices by giving preference on their formularies to drugs with high list prices—and correspondingly high manufacturer payments—over lower priced drugs. The complaint also alleges that CVS Caremark and Express Scripts pay lower reimbursement rates to pharmacies that are not affiliated with them, resulting in harm to independent pharmacies.

The allegations in the Vermont complaint echo the Federal Trade Commission’s interim conclusions of its ongoing study of the PBM industry.

July 18, 2024 by Christopher H. Casey

Coalition of 11 State Attorneys General Call for Increased Efforts to Rein In Private Equity in Healthcare

On June 5, 2024, the Attorneys General of California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, Oregon, Pennsylvania, Rhode Island, Washington, and Washington D.C. submitted a 29-page comment letter in response to the Request for Information on Consolidation in Healthcare Markets issued jointly by the U.S. Department of Justice Antitrust Division (DOJ), the Federal Trade Commission (FTC), and U.S. Department of Health and Human Services (HHS). In the letter, the attorneys general expressed their concern about the adverse effects of consolidation in healthcare markets, particularly through transactions driven by private equity.

In particular, antitrust enforcers have focused on private equity “roll-ups”, consolidation of multiple smaller providers into a larger provider network. Over the last 14 years, healthcare consolidation propelled by private equity has steadily increased; between 2010 and 2020, the estimated private equity deal values in healthcare totaled about $750 billion. Many of those transactions involved the acquisition of physician practices, hospices, nursing homes, hospitals, and behavioral healthcare facilities. In their letter, the attorneys general stated, without empirical evidence, that this consolidation has led to increased prices, decreased access and quality of care, and harm to patients and communities.

The attorneys general urged the DOJ, FTC, and HHS to “explore all avenues to prevent conduct by private equity in healthcare that harms patients, healthcare workers, and taxpayers who often end up footing the bill.” They made several concrete recommendations, including (1) increased transparency of ownership and payments; (2) a ban on anticompetitive contracting in federal programs; and (3) joint enforcement against anticompetitive conduct and mergers. The letter shows that a significant number of states are ready to partner with federal authorities in reining in private equity’s influence in health care.