The companies that make prescription drugs and the pharmacy middlemen who buy them have rushed to blame each other for price inflation. But now they are accused of conspiring to raise the cost of insulin, a life-saving medicine for many diabetics.
Arkansas Attorney General Leslie Rutledge filed the charges in a lawsuit that was filed in state court Wednesday.
And while it’s been filed there, it could have implications in Ohio and nationally.
High insulin prices are a controversy across the country. And Ohio and 45 other states have already joined Rutledge in a lawsuit over a state’s ability to regulate pharmacy intermediaries which, in 2020, won an 8-0 victory by the U.S. Supreme Court.
“Thousands of Arkansas people rely on insulin every day to live their best life,” Rutledge said in a statement. “These drug and PBM manufacturers have inflated the price of insulin and other diabetes-related drugs to line their pockets. They have endangered the lives of thousands of Arkansans and Americans, who simply cannot afford to purchase this life-saving medicine. Today we begin the struggle to stop this scandalous insulin price inflation. ”
The lawsuit names drug makers Eli Lilly, Novo Nordisk and Sanofi as defendants. It also appoints brokers, or pharmacy benefits managers, CVS Caremark, OptumRx, and Express Scripts.
Of those companies and their trade associations, only Eli Lilly immediately responded to a request for comment.
“Lilly is disappointed with the inaccurate claims made by Arkansas Attorney General about Lilly’s insulins,” spokeswoman Molly McCully said in part.
The lawsuit points out that insulin has been around since the 1920s and in its synthetic form since the 1980s. But, instead of becoming cheaper, the cost increased nationwide by 1,527 percent between 1997 and 2018, the lawsuit says.
“It now ranges between $ 300 and $ 700,” Rutledge’s statement said. “While insulin costs hundreds of dollars to purchase at the pharmacy, it costs less than $ 2 to manufacture.”
The lawsuit centers on the secret system whereby manufacturers grant discounts to intermediaries, who decide which drugs are covered by insurance and which are cheaper for patients.
CVS, Optum, and Express Scripts manage pharmacy benefits for over 70% of covered Americans. So, if drug manufacturers want to sell their products to them, they have a strong incentive to do whatever it takes to make them benefit from benefit manager or PBM forms. In Congressional hearings, PBM executives and drug companies both argued that granting fat rebates and other rebates to PBMs is the primary way to do this.
The Arkansas lawsuit cites a 2019 Congressional hearing in which an Eli Lilly executive said that 70% of the $ 210 “list price” of the insulin drug Humalog is paid to PBMs in the form of discounts and rebates.
Critics of pharmaceutical companies and PBMs argue that pharmaceutical companies wildly inflate list prices to meet the growing rebate demands of PBMs, while protecting their own profit margins. The Arkansas lawsuit claims the scheme was hugely profitable for both industries, but by hiding it, the companies violated the state law on deceptive business practices.
“In fact, manufacturers ‘list prices have become so detached from producers’ net prices that they constitute false and illegal prices,” the Arkansas lawsuit says.
He also accuses the defendants of explicit collusion.
Despite publicly blaming each other for rising list prices, the lawsuit claims drug makers Sanofi, Novo Nordisk and Eli Lilly are acting as “presidential sponsors” of an annual convention of the PBM industry group, Pharmaceutical. Care Management Association. Those conferences facilitate private meetings between PBMs and drug manufacturers and have often been quickly followed by “lock-step” increases in insulin list prices, the lawsuit said.
And while some drug makers and PBMs have denied that discounts and discounts inflated list prices, research by a team from the University of Southern California found that every $ 1 increase in discounts correlates with a $ 1 increase. , 17 of the list prices.
The big PBMs may only pay a fraction of the list prices, but they hit consumers hard.
Uninsured people may have to pay the full cost, while tickets and deductibles can be a percentage of them. Additionally, PBMs work through levels of obscurity that often make it impossible for insurers and the government to know how much PBMs are pocketing from the discounts they extract on behalf of payers.
Of course, everyone pays when drugs become more expensive, in the form of co-payments, deductibles or coinsurance, or in the form of higher insurance premiums and taxes to fund government programs like Medicare and Medicaid.
But McCully, Lilly’s spokesperson, focused primarily on the expenses diabetic patients face at the pharmacy counter.
“These claims (from Arkansas) are particularly surprising given the multiple convenience solutions offered by Lilly, where anyone can purchase their monthly Lilly insulin prescription for $ 35 or less, regardless of the number of pens or vials, uninsured or use commercial insurance, Medicaid, or a participating Medicare Part D plan, ”he said in an email.
He said the company supports reforms “such as moving through discounts directly to people who use insulin and limiting out-of-pocket costs, to shift the US healthcare system from a series of patchwork solutions to systemic change that helps people access and afford your own insulin. ”
McCully cited other steps Lilly has taken to make her insulin accessible to consumers.
“Today, despite the increase in insurance deductibles, the average monthly direct cost for Lilly insulin is $ 21.80, a decrease of 44% over the past five years. This translates to $ 7-10 per vial and $ 2-3 per pen, “he said.” We also lowered the list price of our most commonly used insulin (Humalog) by 70%, bringing the list price down to that. 2008, introducing our unbranded equivalent and making it available to any health plan that wishes to put it on their formulary.
However, the non-branded version of Humalog – one of the insulin-specific drugs Arkansas is suing – still isn’t cheap. The list price is $ 82.41 for a single vial.
This story was originally published by the Ohio Capital Journal and has been republished here with permission.
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