Firm Sues Pharmaceutical Companies Over Exorbitant Insulin Costs
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The Sam Bernstein Law Firm is representing several major Michigan municipalities in lawsuits against the world’s largest pharmaceutical manufacturers and pharmacy benefit managers (PBMs) for their illegal pricing activities and excessive charges for insulin medications.
The Federal lawsuits were filed by The Sam Bernstein Law Firm on behalf of Washtenaw County and Macomb County, and by The Miller Law Firm on behalf of Wayne County and Monroe County. The municipalities are seeking reimbursement of excessive payments made on behalf of their employees and retirees.
The first of their kind in Michigan, the lawsuits target pharmaceutical manufacturers Eli Lilly, Sanofi, and Novo Nordisk and pharmacy benefit managers (PBMs) Express Scripts, CVS Health, and OptumRx. The complaint alleges the defendants engaged in illegal collusion and price-setting to artificially inflate the cost of their insulin products.
HOW DID THE LAWSUITS COME ABOUT?
Insulin prices have risen exponentially over the past decade, far exceeding inflation rates. Because insulin is a vital medication for millions of people living with diabetes, this disproportionate cost increase sparked an investigation by the U. S. Senate Finance Committee.
The inquiry focused on the processes used by pharmaceutical manufacturers to determine the cost of insulin medication and the financial relationships and contracts between these companies and major pharmacy benefit managers (PBMs) such as CVS Health, Express Scripts and OptumRx. According to the Senate report, more than 200 million people were covered by these three PMBs as of 2019, almost two-thirds of the U.S. population.
Over the course of two years, investigators reviewed more than 100,000 pages of internal company documents obtained from the defendants. The resulting report revealed a complex web of illegal pricing policies designed to drive up insulin costs, including anti-competitive collusion as defined by the Federal RICO (Racketeer Influenced and Corrupt Organizations) Act.
WHAT IS THE BASIS OF THE LITIGATION?
The lawsuits provide details on the processes used by the drug manufacturers and PBMs that caused the municipalities and other payers to spend twice as much for insulin claims despite a marginal increase in use of the medications.
Here are some of the main points outlined in the complaints:
- The drug manufacturers have complete control over the prices (known as wholesale acquisition cost (WAC) of their medications.
- These companies increased prices to allow for larger rebates and incentives to the PBMs in order to receive preferred placement on their formularies.
- PBMs earn administrative fees based on the WAC price of a drug, discouraging them from lowering list prices.
- The three PBMs named in the lawsuit have enormous power to negotiate rebates compared to smaller companies.
- PBMs exerted pressure on the drug manufacturers to offer increased discounts and rebate programs in order to maintain preferred status formulary exclusion lists.
- Drug manufacturers and PBMs engaged in an intricate series of negotiations resulting in confidential contracts with minimal transparency and oversight.
- The drug manufacturers engaged in “shadow pricing,” mirroring their competitors’ price increases instead of undercutting them.
- While rebates for insulin have grown rapidly in the past 10 years compared to other medications, these programs have not reduced the cost of insulin products.
WHAT IS THE DESIRED OUTCOME OF THE LAWSUITS?
The plaintiffs and their attorneys intend to prevail in these lawsuits and achieve the following results:
- The defendants will reimburse the municipalities for the years of outrageous overcharges
- The drug manufacturers and PBMs will lower insulin prices and cease their shadowy price-setting activities
- Going forward, the defendants will provide transparency to their customers and the public
OUR ONGOING COMMITMENT TO FIGHTING INJUSTICE AND HOLDING GREEDY CORPORATIONS ACCOUNTABLE
The Sam Bernstein Law Firm is proud to play a role in these important cases and achieve justice for the victims of pharmaceutical companies who put profits before people.
“We look forward to holding these corporations accountable for their illegal actions and winning the compensation our clients deserve,” said Mark Bernstein, CEO and Managing Partner of The Sam Bernstein Law Firm. “These lawsuits exemplify our long-standing commitment to fight against companies that take advantage of our most vulnerable citizens.”
In the News and Media
Detroit Free Press
Four metro Detroit counties filed federal lawsuits Wednesday against some of the nation’s biggest pharmaceutical manufacturers and pharmacy benefit managers alleging illegal price fixing for insulin products.
