An “insidious” pricing war has left patients with huge, “devastating” bills for their needed insulins, according to a new class action lawsuit filed against Sanofi, Novo Nordisk and Eli Lilly.
The plaintiffs claim the companies joined in an “arms race” to raise list prices of their meds while the “real” price to pharmacy benefit managers remained constant or in some cases dipped. The companies did this, the suit claims, to negotiate with the growing “spread” between public and private prices and win favorable formulary positioning.
All of this was at the expense of patients, whose out-of-pocket expenses are based on a medicine’s list price, the suit says.
The result? Patients have been hit with “crushing” out-of-pocket costs, according to the lawsuit. Unable to afford the meds, patients have resorted to under-dosing, using expired insulin, avoiding doctors, starving themselves to control blood sugar, taking out loans and slipping into Diabetic Ketoacidosis to get insulin from emergency rooms.
The companies said they are aware of the lawsuit and deny wrongdoing. Novo said it has "a longstanding commitment to supporting patients’ access to our medicines."
The lawsuit alleges that price increases over the past several years have taken pushed insulins that previously cost $25 per prescription up to $450. The increases, taken in “lock step,” were “astounding and inexplicable,” according to the class action.
Further, the manufacturers have said that “their price hikes are unrelated to any jump in production or research and development costs,” according to the suit.
The plaintiffs' lawyers say the companies' actions amount to a violation of the Racketeer Influenced and Corrupt Organizations Act, originally conceived to target organized crime but since cited in many corporate lawsuits. They also claim the pricing moves violate consumer protection laws in numerous states.
Sanofi, Novo Nordisk and Lilly take issue with the charges, however.
Lilly in a statement said it “conducts business in a manner that ensures compliance with all applicable laws, and we adhere to the highest ethical standards. We are aware that a lawsuit has been filed against several insulin manufacturers.” The company had no further comment.
For its part, Sanofi “strongly” believes the “allegations have no merit, and will defend against these claims."
Novo Nordisk said it’s “aware of the complaint and its characterization of the pharmaceutical supply chain.”
“We disagree with the allegations made against the company, and are prepared to vigorously defend the company in this matter,” according to its statement. “At Novo Nordisk, we have a longstanding commitment to supporting patients’ access to our medicines. Since this is an ongoing litigation, we can’t comment further.”
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While not naming PBMs as defendants, the lawsuit says business for those companies is “booming.” The leading three PBMs—Express Scripts, CVS Health, and OptumRx—control 80% of the market and haul in more than $200 billion a year, according to the lawsuit.
The Pharmaceutical Care Management Association, which represents PBMs, quickly put out a statement that the suit “inexplicably attacks prescription drug rebates, long used to reduce costs in public programs like Medicaid and in the commercial market.”
No health plans are required to contract with a PBM, the statement says, but “almost all choose to because they reduce costs and improve the quality of benefits.”
Filed by Hagens Berman Sobol Shapiro LLP, the new suit comes weeks after the filing of a separate class action against Novo Nordisk for alleged “collusive price fixing.” Previously, in a blog post about the pharma supply chain, Novo's head of North America operations Jakob Riis wrote that the Danish pharma "monitored market conditions to ensure our prices were competitive with other medicines as part of our business model."
Related: Amid insulin market scrutiny, Novo faces class action alleging 'collusive price fixing'
“We’ve simply tried maintaining a profit margin that has been dropping significantly since health policy changed in the U.S.,” he wrote.
The insulin market also has the attention of lawmakers Sen. Bernie Sanders and Rep. Elijah Cummings, who have asked the Department of Justice and the Federal Trade Commission to look into whether the companies colluded on price increases.
Last fall, as attention mounted on escalating insulin prices, drugmakers said it was PBMs keeping the loot, not themselves.