Texas Attorney General Ken Paxton. Photo: Diego M. Radzinschi/ALM
Following the Federal Trade Commission's complaint against pharmacy benefit managers (PBMs) over the price of insulin two few weeks ago, Texas Attorney General Ken Paxton announced on Thursday that it the latest state to sue PBMs, as well as the largest insulin manufacturers over a "conspiracy" to increase the cost of insulin.
Other states, including California and Oklahoma, have filed similar lawsuits, as well as Philadelphia district attorney Larry Krasner, who sued on behalf of the 1.1 million Pennsylvanians who have diabetes, like himself.
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Paxton is suing drug manufacturers Eli Lilly, Novo Nordisk and Sanofi, as well as PBMs – Optum Rx, Express Scripts and CVS Caremark.
"Through this conspiracy, the manufacturers artificially and willingly raised the prices of insulin then paid a significant, undisclosed portion back to the PBMs as a quid pro quo for inclusion in the PBMs' standard offerings," according to a statement. "The PBMs then granted preferred status to the manufacturer whose drug has the highest list price while excluding lower priced drugs. These synthetic insulin drugs, which today cost the manufacturers less than $2 to produce and were originally priced at $20 when released in the late 1990s, now range between $300 and $700. In the last decade alone, the manufacturers who are defendants in the lawsuit have increased the prices of their insulins up to 1,000%."
This "insulin pricing scheme" is at the root of the lawsuit, according to the complaint. The scheme violates the Texas Deceptive Trade Practices Act, constitutes unjust enrichment, and represents an unlawful civil conspiracy, said Paxton. "This is a disturbing conspiracy by which pharmaceutical companies were intentionally and artificially inflating the price of insulin," he said. "Big Pharma insulin manufacturers and PBMs worked together to take advantage of diabetes patients and drive prices as high as they could. These companies acted illegally and unethically to enrich themselves, and we will hold them accountable."
While the PBMs allege they perform their services on behalf of their clients and patients to lower drug prices, increase access to affordable drugs, and promote diabetic health, "these representations are false. Rather, the PBM Defendants have worked in coordination with the Manufacturer Defendants to distort the market for diabetic treatments to their benefit at the expense of Texas diabetics and payors," according to the complaint.
Related: Why does insulin cost so much? Big Pharma isn't the only player driving prices
As a direct result of the PBMs and drug manufacturers, "Texas diabetics have suffered damages …," according to the complaint, and deprived money "from Texas diabetics who were 65 years of age or older."
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
