- California is suing major drug manufacturers and pharmacy benefits managers for allegedly leveraging their market power to overcharge patients for insulin, according to a release from California Attorney General Rob Bonta.
- The state filed suit Thursday against drug manufacturers Eli Lilly, Novo Nordisk, and Sanofi, along with major PBMs CVS Caremark, Cigna’s Express Scripts and UnitedHealth Group’s OptumRx.
- The lawsuit alleges that the drugmakers and PBMs worked together to drive up the price of insulin through illegal and deceptive business practices in violation of California's Unfair Competition Law.
The suit filed Thursday alleges that drugmakers and PBMs play a key role in raising insulin prices, with drug manufacturers artificially increasing list prices and PBMs receiving a percentage of the drug list price, known as a rebate.
”This rebating strategy incentivizes the Manufacturer Defendants to raise their list prices high and higher,” the lawsuit states.
PBMs negotiate rebates with manufacturers on behalf of a health insurance plan, serving as middlemen between drugmakers, health plans and pharmacies.
The lawsuit alleges that inflated list prices and PBM practices have made insulin unaffordable for many diabetic patients, particularly those who are uninsured or underinsured or have high deductible health plans or coverage gaps, according to the release.
PMBs named in the lawsuit have pushed back on claims about their role in rising insulin prices.
“Pharmaceutical companies alone set the list price for their products,” CVS Caremark said in a statement to Healthcare Dive. “Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products and we would welcome such action.”
“Pharmacy benefit managers are the only participants in the prescription drug supply chain whose role is to reduce drug costs,” Optum Rx told Healthcare Dive.
CVS Caremark said it plans to “vigorously defend against this complaint,” while OptumRX said it “welcomes the opportunity to show the California Office of the Attorney General, just as it has with other States Attorneys General, how we work every day to provide people with access to affordable drugs, including insulin.”
In a statement to Healthcare Dive, Eli Lilly said it is disappointed by the California Attorney General's accusations, adding that anyone is eligible to purchase a monthly prescription of Lilly insulin for $35 or less, whether they are uninsured or use commercial insurance.
PBMs are facing rising criticism for their role in increasing the price of prescription drugs in the U.S. Last year, the Federal Trade Commission launched an investigation into PBMs and required the six largest PBMs in the country — CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics and MedImpact Healthcare Systems — to turn over detailed information on their business practices.
Shortly after, the FTC voted unanimously to adopt a policy statement to more closely analyze fees and rebates paid to PBMs in exchange for coverage for their drugs from payers.