Facing lawsuits, Eli Lilly's sudden insulin price drop may not have legal impact
Observers say that while capping the cost of insulin at $35 a month benefits consumers, it doesn't strengthen Lilly's legal arguments since the company and others raised list prices by 150% over five years, alleges one lawsuit.
Eli Lilly and Co.’s announcement Wednesday that it plans to slash the list prices of its popular Humalog and Humulin insulin by 70% isn’t likely to free the company from an avalanche of litigation alleging it used its dominant market position to keep insulin prices high.
Among pending cases is one filed in 2017 against Lilly, Sanofi and Novo Nordisk alleging insulin-makers conspired with pharmacy benefit managers to increase the list price of their insulin products and then set a lower price for certain bulk drug distributors.
Related: Eli Lilly caps the cost of insulin at $35 a month, following California lawsuit
The suit in the U.S. District Court for the District of New Jersey alleges the companies raised the list prices by 150% over five years. That Lilly has slashed prices on two of its insulin products could be seen as vindicating to plaintiff attorneys, said a co-counsel in the case.
“This totally is consistent with our theory that list prices could have been and should have been materially lower and that the unfair and unconscionable insulin list prices were not caused by the PBMs as the drug companies claim,” said Steve Berman, managing partner of Hagens Berman. ”The list price change comes days before the class certification hearing and is a direct result of our efforts.”
Lilly, Sanofi and Novo Nordisk are also facing insulin lawsuits by several states, including one filed last month by California Attorney General Rob Bonta, similarly alleging that the drugmakers and PBMs leveraged their market power to overcharge patients.
The complaint under California’s Unfair Competition Law alleges the insulin-makers raised list prices to provide the largest rebates they can offer to PBMs, posing particular harm to patients who pay the list price such as those with high deductible health plans or with coverage gaps.
Indianapolis-based Lilly’s decision to cut insulin prices could be viewed as accomplishing the purpose of suits brought by states such as California that have stated their ultimate goal is to see insulin prices reduced, said Scott Gilchrist, an antitrust lawyer at Cohen & Malad.
However, in cases such as the class action in New Jersey the goal also is to pursue damages, and it is unlikely a company would try to slash prices as a way to affect a more positive outcome of such a case, Gilchrist added. If anything, a company trying to avoid antitrust damages would maintain that its pricing was fair and determined by the market.
If Lilly could reduce prices by 70%, “that is maybe not proof” but perhaps could be used as evidence that Lilly’s prices for insulin “have not been set by an efficient, competitive market,” Gilchrist said.
“A dominant company’s unilateral decision to lower their prices has no effect on antitrust liability in principle, except insofar as it might lower class action damages,” said Daniel Crane, a professor at the University of Michigan Law School.
“If a company has acquired or maintained monopoly power through anticompetitive means, they’re liable under the antitrust laws whether or not they’re exploiting their monopoly power by charging monopoly prices,” Crane added.
Lilly plans to reduce the prices of the two insulin products during the fourth quarter. It may not have a significant financial impact given that these are older products. Lilly soon plans to launch a new insulin, Rezvoglar, to compete with Sanofi’s Lantus insulin.