Big 3 Insulin Makers Sued Over Pricing; Racketeering Alleged

Eleven people with diabetes today filed a class action lawsuit against the world’s 3 largest makers of analog insulin—Novo Nordisk, Sanofi, and Eli Lilly. The suit accuses the 3 for driving up prices in “an organized scheme” that has harmed those who need insulin to stay alive.

The suit alleges that in the past 5 years, the 3 companies have raised their benchmark prices for insulin by more than 150%, but that these publicly reported prices differ from the “lower, real price that they offer to certain bulk distributors.” These include large pharmacy benefit managers (PBMs) ExpressScripts, CVS Health, and OptumRx.

Publication of these false, misleading prices constitutes violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act said lead attorney Steven Berman, in an interview with The American Journal of Managed Care.^® The RICO Act passed in the 1970s to prosecute leaders of organized crime.

"We strongly believe these allegations have no merit, and will defend against these claims," said Sanofi spokeswoman Ashleigh Koss in an email to The American Journal of Managed Care.^®

Novo Nordisk issued a similar statement in media reports, and Lilly said it adhered to high ethical standards.

The suit calls current pricing practices an “arms race” as drug makers list ever-increasing benchmark prices as part of a scheme to win favor with PBMs, who collect a percentage of the discount they pass on to their clients, mostly health insurers or large employers. The role of health insurers in the current set-up would be explored as a part of the case, Berman said. “Some may be getting part of the rebate and some may not,” he explained.

Patients, meanwhile, are caught in the middle. Berman said some plaintiffs are insured and some are not, but all report extreme measures to keep up with out-of-pocket costs for insulin. The lawsuit features patient accounts of self-starvation to control blood sugar, taking less than a recommended dose, or taking expired insulin. A statement from attorneys for the group says some plaintiffs pay almost $900 a month for insulin.

Berman, who is managing partner for Hagens Berman Sobol Shapiro, LLP, said the case is based on earlier settlements in average whole pricing (AWP) litigation with giants such as Abbott Laboratories and Watson Pharmaceuticals between 2006 and 2012. The case was filed in US District Court in Massachusetts, where Berman said judges are familiar with AWP litigation.

Plaintiffs, the complaint said, “explain that they now avoid the doctor because their inability to afford insulin has caused their blood sugars to spike. They know that their doctors will prescribe more insulin to treat this problem, and they simply cannot afford to take any more insulin.”

Berman did not say which advocacy groups referred the plaintiffs who have filed the lawsuit. Nine are listed by name and 2 are Jane Doe and John Doe. Berman said he expects all will testify at a trial if a settlement is not reached beforehand.

Insulin prices have drawn increased scrutiny over the past year, as physicians who treat those with diabetes report increasing incidents of diabetic ketoacidosis (DKA),which results from patients not being able to get insulin or enough of it. The lawsuit alleges that some plaintiffs have intentionally allowed themselves to slip into DKA, which can kill them, to obtain insulin samples from the emergency room.

The American Diabetes Association in November called Congress to investigate rising insulin prices, and US Senator Bernie Sanders, I-Vermont, and US Representative Elijah Cummings asked federal regulators to look into whether collusion has caused the rapid, lock-step rise in prices, which was explored in today’s complaint.

Since then, Novo Nordisk announced it would keep price increases in the single digits, and Lilly said it would grant a 40% discount off Humalog’s list price for patients who must pay the list price. Brian Henry, spokesman for ExpressScripts, has said that large PBMs are not at fault for insulin costs, and that 90% to 100% of the rebate is passed along to insurers. "Rebates don't raise drug prices, drug makers raise drug prices,” he told Seeking Alpha.

The cost of insulin has drawn attention from the World Health Organization, which made the plight of patients the focus of World Health Day in April 2016. Robert A. Gabbay, MD, PhD, FACP, chief medical officer for Joslin Diabetes Center, wrote about the difficult dynamics of insulin pricing in the September issue of Evidence-Based Diabetes Management.™

Financial stress from paying for insulin affects all parts of patients’ lives, the complaint said, locking them into unpleasant jobs to keep health coverage and causing them to incur debt. “Multiple patients estimated that they spend over 50% of their monthly income on insulin medications,” the complaint states.

The situation adds to stress levels, which evidence has shown make diabetes worse. “Many patients describe rearranging their lives around their insulin costs—keeping lights off and the heat low to avoid high electricity bills, moving back in with their parents, and even leaving school. One patient’s husband joined the US Navy, in part, so that she could get her insulin through the US Navy health plan.”