Patients file lawsuit over insulin price fixing against Novo Nordisk, Sanofi, Lilly, CVS, Express Scripts, and OptumRx – March 23, 2017

Executive Highlights

  • A lawsuit was filed recently in a federal court in New Jersey against the world’s three major insulin manufacturers (Novo Nordisk, Sanofi, Lilly) and three of the country’s largest pharmacy benefit managers (CVS Caremark, Express Scripts, and OptumRx). These six organizations are accused of colluding to fix insulin prices and drive up the cost of insulin for patients with diabetes.
  • A similar lawsuit was filed in a federal court in Massachusetts this past January. The issue of increasing insulin costs is clearly not disappearing, even though margins associated with insulin have been declining for some time. Although consumer groups continue to call for greater pricing transparency, there has been some transparency that hasn’t been recognized already (see Novo Nordisk's position statement on affordability and Lilly's transparency report). We’d love to see this essential medicine be made even more affordable and we do not think the PBMs are doing their part in making that happen.

A new lawsuit alleges that major drug manufacturers and major pharmacy benefit managers (PBMs) have conspired to fix insulin prices in the US. The 315-page, 69-count document was filed last week in a federal court in New Jersey. Defendants include insulin companies Novo Nordisk, Sanofi, and Lilly alongside PBMs CVS Caremark, Express Scripts, and OptumRx (a subsidiary of UnitedHealth Group). Plaintiffs include two mothers of children with type 1 diabetes, a patient with type 1 diabetes herself, and a patient with type 2 diabetes, as well as the Type 1 Diabetes Defense Foundation. The four individual plaintiffs are all insured through their employer, through Medicare Part D, or via a health plan purchased on the Affordable Care Act (ACA) exchange. The lawsuit points out list price increases for basal and rapid-acting insulins from all three pharmaceutical companies, and highlights a parallel spike in rebates collected by the PBMs, ultimately accusing these manufacturers and PBMs of colluding to cause a rise in insulin cost for patients. The suit doesn’t mention that PBM increases may have prompted increases by the manufacturers nor does it address insulin margins. A similar lawsuit was filed against Novo Nordisk, Sanofi, and Lilly in a Massachusetts federal court in January – this one alleged that the three manufacturers conspired to drive up insulin cost. These lawsuits follow growing public/political outcry over insulin prices; from our view, the outcry reflects patients paying a higher percentage of the prices (higher co-pays, higher deductibles). This past November, Senator Bernie Sanders even called for a Department of Justice investigation into matching price hikes from Novo Nordisk, Sanofi, Lilly, and Merck since 2009 – there’s been no word from Sanders or elsewhere on any follow up, after the initial social media flurry. In our view, it’s highly unlikely that these companies formally colluded to fix insulin prices – instead, we think that the incentives of our healthcare system have been misaligned for some time and our fragmented health payer system created the middle-man level of PBMs with aggressive rebate negotiation tactics that have progressively driven insulin list prices up. These allegations aside, however, it is unfortunate that the issue has progressed this far, and we hope to see even more movement on understanding patient challenges. Insulin is an essential, lifesaving medicine, so making it affordable is a vital priority for the diabetes field and for the healthcare system more generally. At the same time, we continue to want to see a thriving commercial market – without this, there will be absolutely no innovation. We’ve seen some positive momentum in this direction from insulin manufacturers though little to none from PBMs who basically have stayed incredibly quiet on this front.

  • While patients call for more pricing transparency from manufacturers and PBMs, we’d like to see any transparency from PBMs in particular. To their credit, a range of companies like Novo Nordisk and Lilly have shown the impact of  issued position statements on affordability and have also released annual reports that show transparency reports that highlight savings/discount programs to offset increases in list price. One such program is a collaboration between Lilly and Express Scripts to offer insulin at a direct discount of up to 40% for individuals with high-deductible health insurance or with no health insurance. Novo Nordisk is also offering low-cost human insulin at Walmart and CVS locations – we’re very happy about the recent expansion to CVS since there are 12x more CVS locations than Wal-Marts (67,000 v. 5200). All that said, there is so much more that needs to be done in terms of transparency – we need to elucidate how and why PBMs have gotten away with increasing insulin prices so enormously in order to identify ways to control cost for patients. Emphasizing this point at CMHC 2016, Drs. Irl Hirsch and Jay Skyler called for greater transparency from PBMs surrounding prescription drug pricing. In our view, for PBMs to be open and cooperative to address this issue, there should be much more demand. We applaud everyone who has made strides toward transparency thus far, and we hope to see much more of this from other leaders in healthcare going forward. It’s also important that patients, providers, and the public are made aware of these efforts through concerted outreach and education.
  • Given that diabetes disproportionately affects the poor, we must lower out-of-pocket costs for these individuals. We’d love to see amplified efforts to make insulin and other diabetes therapies affordable for this population – many savings programs restrict eligibility to those with commercial insurance instead of extending the reach of discounts to the most vulnerable patients. It’s clear that current programs aren’t working for everyone and we would like to see insulin manufacturers and payers think creatively about bridging these gaps in access for patients. Healthcare in the US faces an uncertain future with ACA repeal on the table and there’s a very real possibility that the number of these extremely vulnerable patients will increase in the near future – estimates ranged from 6 to 24 million for how many people would lose health insurance if the ACA is repealed or if the Republicans’ proposed plan is passed (as of this afternoon, this looks unlikely). In every estimate, the single largest group of people losing insurance would be new Medicaid beneficiaries (those who received government health coverage due to very low income). Given still immense continued uncertainty on the policy front, we look to manufacturers, payers, and other stakeholders to lead toward further improvements for people with diabetes.

-- by Payal Marathe, Helen Gao, and Kelly Close