New Lawsuit Concerning Insulin Price-Fixing Filed in Federal Court

A lawsuit was filed in federal court in New Jersey in which 4 individual plaintiffs and the Type 1 Diabetes Defense Foundation are suing pharmacy benefit managers (PBMs) CVS, Express Scripts, and OptumRx, in addition to insulin makers Sanofi-Aventis, Novo Nordisk, and Eli Lilly, accusing them of colluding on prices of insulin.

On January 30, 2017, the first class-action lawsuit against insulin makers was filed in federal court in Massachusetts alleging that the same 3 pharmaceutical companies engaged in an organized scheme to drive up their insulin prices at the expense of patients who needed insulin to live. The list prices of insulin have risen steadily, often in concert, despite competition among the 3 companies marketing insulin. Humalog, launched 2 decades ago at a price of $21 per vial, has increased to $255 per vial.

The new lawsuit filed in New Jersey on March 17, 2017, targets the same 3 insulin makers as the first lawsuit, and adds the PBMs CVS, Express Scripts, and UnitedHealth’s OptumRx to the lawsuit, claiming they were part of the alleged price-fixing scheme.

The 69-count class action suit alleges violations of the Employee Retirement Income Security Act (ERISA), federal antitrust and racketeering statutes, and the laws of all 50 states and the District of Columbia, and alleges that the drug makers significantly raised their list prices on insulins, raising them in lockstep with one another and sharing additional revenues with the PBMs through rebates. The individuals filing the lawsuit receive health benefits through employer-sponsored health plans governed by ERISA, insurance plans purchased through the Affordable Care Act marketplaces, and Medicare Part D prescription drug plans.

“The skyrocketing cost of insulin cannot be explained away with typical drug company rationalizations for high costs,” the lawsuit states, adding that the increased list prices are the result of a scheme and enterprise among the 3 major manufacturers of insulin and the 3 largest PBMs that together control 80% of the benefit management industry, covering about 180 million people. The PBMs are alleged to have used their role as gatekeepers between health insurance plans and drug companies to steer plans towards certain drugs, including insulin treatments used by people with diabetes. The drug companies are alleged to then ratchet up the retail prices on those drugs and share the excess profits with PBMs through a rebate system the lawsuit calls a “massive slush fund,” a scheme that caused rapid and lockstep price increases of more than 150% in their insulin treatments.

A CVS spokesman said the allegations were without merit and built on a false premise. He countered that PBMs play no role in determining drug prices and said that CVS passes along more than 90% of the price discounts. Novo Nordisk disagrees with the lawsuit’s allegations and denied them, as did spokesmen for Express Scripts and Sanofi, which plan to defend themselves vigorously. OptumRx and Lilly have not yet responded to the lawsuit.

Attorneys from Critchley, Kinum & Denoia, LLC, in Roseland, NJ, and Keller Rohrback, LLP, in Seattle, are representing the plaintiffs in the case. The Type 1 Diabetes Defense Foundation is a nonprofit group that supports patients with type 1 diabetes.