FILE-A 2023 photo shows a vial of Eli Lilly's Humalog insulin in New York.
Pablo Salinas / AP
Oregon’s attorney general filed a lawsuit Wednesday against three insulin manufacturers and the nation’s largest pharmacy benefit managers, or PBMs, alleging they worked together to inflate the price of insulin.
In a 173-page complaint, the state alleges that the pharmaceutical companies deliberately overcharged for their products, and then paid substantial rebates and fees to the PBMs. As part of the alleged scheme, PBMs kept lower-cost drugs off their approved list of prescription drugs.
“The higher the list price, the larger the rebate — and the greater the profit for both sides,” a press release from the attorney general’s office claims.
The lawsuit alleges that insulin costs only around $2 to manufacture and was priced at $20 in the United States in the late 1990s. But over the last 15 years, those prices rose to between $300 and $700, even though the medications themselves hadn’t changed.
The lawsuit alleges that PBMs began excluding some types of insulin from their formularies in 2011, which catalyzed the price increases.
And over time, rebates paid to PBMs started to make up a bigger and bigger share of total the price of insulin, meaning more of the price manufacturers were charging for the drug was getting paid back to the PBMs.
The state alleges the companies violated Oregon’s Unlawful Trade Practices Act, and is seeking $900 million in damages.
The lawsuit, filed in Multnomah County Circuit Court, names three insulin manufacturers — Novo Nordisk, Sanofi, and Eli Lilly — and three pharmacy benefit managers — Express Scripts, CVS Caremark and Optum.
Optum RX, through a spokesperson, called the suit a baseless action that demonstrates a misunderstanding of how drug pricing works.
The company said it aggressively negotiates prices and its customers’ members pay, on average, less than $18 a month for insulin.
“PBMs, like Optum Rx, are the key counterweight to pharmaceutical companies’ otherwise unchecked monopoly power to set and raise drug prices,” said Optum RX spokesperson Elizabeth Hoff.
CVS Caremark also called the suit baseless and, through a spokesperson, refuted the allegations it influences the prices set by drug manufacturers.
“Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products and we would welcome such an action,” said CVS Caremark spokesperson Shelley Bendit.
A Novo Nordisk spokesperson said the company believes the allegations against it are meritless.
An Eli Lilly spokesperson said the company has led the way in making insulin more affordable, and suggested the lawsuit was a waste of state resources.
“Similar cases by other plaintiffs have either been dismissed, dropped or settled for no money after years of costly litigation,” said Lilly Spokesman Michael Jamison.
“Lilly is confident in the strength of our legal position, and we are proud of our strong record of insulin affordability solutions that have made a real impact for Oregonians.”
Sanofi, through a spokesman, said that its pricing practices have always complied with the law, while pointing the finger at PBMs.
The spokesman said the company is committed to helping patients get its medicines at the lowest possible price, but that isn’t always possible in a market controlled by the PBMs. The savings health insurance companies and PBMs negotiate aren’t consistently passed through to patients as lower copays or coinsurance.
“As a result, patients’ out-of-pocket costs continue to rise while the average net price of our insulins declines,” he said.
Oregon’s filing follows a flurry of lawsuits filed by hundreds of local governments, unions, school districts and states, alleging they were bilked by the companies and overpaid for these drugs.
Most of those suits have been moved to federal court and consolidated into a single case in U.S. District Court in the District of New Jersey.
Michigan has, like Oregon, filed a lawsuit in state court alleging violations of the state’s consumer protection act. The companies in that case successfully argued that the state’s law does not apply to their sale of insulin. Michigan has appealed that judgement to the state’s supreme court.
Oregon Attorney General Dan Rayfield said the lawsuit is the first in a series of cases his office is pursuing related to drug prices.
FILE-Insulin products are displayed in front of David Ricks, chairman and chief executive officer of Eli Lilly and Company, during the Senate Health, Education, Labor, and Pensions Committee hearing on Capitol Hill in Washington, Wednesday, May 10, 2023, to examine the need to make insulin affordable for all Americans.
Carolyn Kaster / AP
“We are working to bring the cost of prescription drugs down for working families, using the tools we have to hold these powerful companies accountable. Oregonians can expect more action in the near future,” Rayfield said in a prepared statement.
In 2022, the Inflation Reduction Act capped insulin copays at $35 for Americans on Medicare. In 2023, Eli Lilly announced it was cutting the list price of insulin and expanding a patient assistance program for uninsured and underinsured patients so they would pay no more than $35 a month. Novo Nordisk and Sanofi offer similar assistance programs.
