Insulin giants are facing unprecedented scrutiny for their pricing, thanks to a growing gap between their retail stickers and prices after behind-the-scenes discounts and rebates. And now they'll have to face class-action claims about those very practices.
The plaintiffs originally sued Sanofi, Novo Nordisk and Eli Lilly in 2017, arguing that the drugmakers engaged in an “arms race” to boost list prices. New Jersey federal judge Brian Martinotti waved through their claims that the companies violated state consumer protection laws, which means they'll have to fight those allegations in court. And though Martinotti tossed out the lawsuit's racketeering claims, the judge gave the plaintiffs a chance to refile them.
The lawsuit reflects a broader debate in the industry—and in Washington—over the spread between list prices, which determine patients' out-of-pocket costs, and net prices after the rebates and discounts drugmakers grant to win deals with payers.
Insulin list prices have grown 150% in recent years, the lawsuit claims, pushing up those out-of-pocket costs even as drugmakers paid out larger and larger rebates to stay on PBM formularies. Patients are often stuck with huge bills, the suit says, sometimes up to $900 per month, and some take extreme measures because they can't afford their insulin. The lawsuit highlighted examples where patients took lower doses than they needed, starved themselves to control blood sugar and even slipped into diabetic ketoacidosis to obtain insulin samples from hospital emergency rooms.
In their original complaint, the plaintiffs claimed the companies violated state consumer protections laws and the federal Racketeer Influenced and Corrupt Organizations Act.
In response, the companies argued that the plaintiffs “seek to criminalize a fundamental aspect of the pharmaceutical industry" and failed to “identify any fraudulent, unfair or unconscionable conduct.”
A Novo spokesman said on Tuesday the company is pleased with the "dismissal of the RICO claims and numerous state law claims, and will continue to defend the company against any remaining claims." The company has a "longstanding commitment to supporting patients’ access to our medicines," he added. A representative for Sanofi said the allegations are meritless, but that the company can't comment further on ongoing litigation. An Eli Lilly spokesman said the company will continue to defend itself, but can't comment further at this stage.
Dozens of patients sued on behalf of insulin patients who must pay a share of prescription list prices for insulin, specifically pointing to those with no insurance, those in high-deductible health plans and those in Medicare’s Part D donut hole, among others. Steve Berman, co-lead counsel in the case, said in a statement the ruling "clears the way for us to begin obtaining discovery from the manufacturers and PBMs so we can shine the light on exactly what has driven insulin prices sky high."
The lawsuit comes as drug pricing continues to command nationwide attention. In a recent move specific to insulin pricing, FDA Commissioner Scott Gottlieb said his agency would push for more competition by allowing copycats to be regulated as biosimilars rather than generics. After the announcement, Eli Lilly said it might pursue secondary versions of its own drugs, according to the Center for Biosimilars.