Pennsylvania sues pharma and PBMs over insulin prices

Pennsylvania Attorney General Dave Sunday announced a lawsuit against several pharmaceutical companies and pharmacy benefit managers, alleging they colluded to manipulate insulin prices and artificially inflate them by more than 1,000%.

The Office of Attorney General’s Antitrust Section filed a complaint in the Commonwealth Court alleging violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law and unjust enrichment and civil conspiracy.

Defendants include pharmaceutical manufacturers Eli Lilly and Company, Novo Nordisk and Sanofi-Aventis US, as well as numerous PBMs, including Express Scripts, CVS Caremark and Optum RX.

“Millions of Pennsylvanians have diabetes or prediabetes, and they were all potentially harmed by this scheme to artificially inflate pricing to maximize company profits,” Sunday said in a news release.

The news release went on to say that about 1.3 million Pennsylvanians are living with diabetes, and an additional 3.5 million more have prediabetes. Diagnosed diabetes costs Pennsylvania an estimated $16.4 billion each year.

The lawsuit alleges that manufacturers and PBMs engaged in deceptive market practices that created abnormally high prices. The complaint seeks injunctive relief requiring structural changes to ensure the companies lower costs to fair market prices and provide patients with options.

The lawsuit claims that the PBMs have worked in coordination with the manufacturers “to distort the market for diabetic treatments to their benefit at the expense of Pennsylvania diabetics and payors.”

Diabetes drug prices rise dramatically

Starting in the mid-2000s, the lawsuit alleges that the manufacturers named dramatically raised the list prices of their diabetes drugs even as the cost to produce them decreased. The price of diabetes medications, which cost manufacturers less than $2 to produce and were originally priced at $20 when released in the late 1990s, skyrocketed to between $300 and $700, and sometimes even higher. However, the lawsuit also alleges, “nothing about these medications has changed over the past quarter century as to the drug itself; defendants’ $350 insulin is the same drug defendants originally sold for $20.”

What the attorney general called “the insulin pricing scheme” creates a “best of both worlds” scenario for the defendants, the lawsuit said

“Manufacturer defendants are able to make these undisclosed manufacturer payments to buy preferred formulary position — which significantly increases their revenue and protects their market share — without sacrificing their profits.”

In addition, the lawsuit alleges PBMs make more money from diabetic drugs with higher list prices and higher manufacturer payment amounts.

The attorney general seeks to prevent pharmaceutical companies and PBMs from engaging in activities that violate the UTPCPL and to require the defendants to pay civil penalties of $1,000 for each violation of the UTPCPL, increasing to $3,000 for each violation involving a victim age 60 or older.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.