Drugmakers targeted in class-action suit over insulin prices

The suit claims drug manufacturers paid bribes and kickbacks to PBMs in exchange for favorable placement in drug formularies.

According to the suit, those manufacturers have aggressively increased their prices for Insulin far beyond the prices they would have charged if there were no kickback scheme. (Photo: Shutterstock)

A group of drug manufacturers and pharmacy benefit managers are accused in a class action suit of artificially inflating prices for analog insulin.

The suit claims drug manufacturers Eli Lilly and Co., Novo Nordisk and Sanofi Aventis U.S. maintain or increase their sales by paying bribes and kickbacks to pharmacy benefit managers CVS, Express Scripts, Medco Health Solutions, United Health and OptumRX in the form of rebates, fees, discounts or other payments or financial incentives in exchange for inclusion or favorable placement of the manufacturers’ respective Insulin products on the defendant’s formularies.

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According to the suit, those manufacturers have aggressively increased their prices for Insulin far beyond the prices they would have charged if there were no such scheme.

The suit was brought on behalf of direct purchasers of insulin by Rochester Drug Co-Operative, a drug distributor in Rochester, N.Y. The suit was filed March 31 in U.S. District Court in Newark, N.J. Analog insulin medications covered by the complaint are Humalog, Basaglar, Fiasp, Novolog, Levemir, Tresiba, Apidra, Lantus, and Toujeo.

The suit notes that CVS Caremark, Express Scripts and OptumRX collectively control 85 percent of the PBM market. Health plans have delegated to the PBMs control over negotiation of rebates with drug manufacturers and the structure and composition of formularies, which are a significant factor in influencing purchasing patterns for drugs, the suit asserts. With influence over which drugs will be covered by health insurers, and thus which drugs will be prescribed, PBMS are “natural targets for the defendant drug manufacturers’ bribes,” the suit claims.

In court papers, the plaintiffs cite a March 2019 Pew Research Center study that found rebates paid by drug manufacturers to PBMs increased from $10.2 billion in 2012 to $29.1 billion in 2016. Meanwhile, the plaintiff asserts, PBM revenues from rebates and fees virtually doubled– rom $11.6 billion in 2012 to $22.4 billion in 2016. That category of revenue grew sharply, the suit claims, because PBMs retained increased percentages of rebates for themselves and increasingly took their payments from manufacturers in the form of fees that are not shared with their health-plan clients.

PBMs historically acted in their health-plan clients’ interests by using their formulary power to favor lower-priced drugs, according to the suit, but in the last decade PBMs have been bribed to eliminate the price-disciplining effects of competition.

“This has created a perverse incentive for the defendant PBMs to give preferential formulary status to higher-priced drugs which come with higher payments to the PBMs, even if doing so is contrary to the health plan clients’ interest in favoring lower-priced drugs; and for drug manufacturers such as the defendant drug manufacturers to use high rebate and fee payments to purchase favorable formulary status from defendant PBMs, instead of trying to ensure favorable formulary status by lowering list prices or limiting list price increases,” the suit states.

Novo Nordisk spokesman Ken Inchausti said in a statement, “We plan to vigorously defend ourselves in this matter. At Novo Nordisk, we have a longstanding commitment to supporting patients’ access to our medicines.”

Sanofi spokesman Jon Florio said in a statement, “We strongly believe the allegations have no merit, and we will defend ourselves against these claims.

Drew Krejci, an OptumRx spokesman, said in a statement, “OptumRx is committed to providing affordable access to prescription drugs and ensuring the lowest costs for consumers and payers. We believe this case has no merit and will vigorously defend ourselves.”

The other defendants in the suit did not respond to requests for comment.

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