Dive Brief:
Texas Attorney General Ken Paxton is suing the nation’s largest pharmacy benefit managers and major pharmaceutical manufacturers, alleging the companies conspired to raise insulin prices.
The suit names PBMs Express Scripts, CVS Caremark and Optum Rx as well as pharmaceutical companies Eli Lilly, Novo Nordisk and Sanofi. Paxton claims pharma companies raised the prices of the diabetes drugs and then paid an undisclosed portion back to PBMs to be included on their formularies, or lists of covered drugs.
The litigation in Texas comes after the Federal Trade Commission sued the three major PBMs late last month, alleging they artificially inflated the price of insulin.
Dive Insight:
The latest lawsuit, which comes as the middlemen in the drug supply chain face growing criticism over their role in high drug costs, alleges the companies used their market size to conspire with pharmaceutical manufacturers and hike insulin costs. Cigna-owned Express Scripts, CVS’ Caremark and UnitedHealth Group’s Optum Rx control about 80% of the PBM market in the U.S., and are also owned or affiliated with major health insurers.
The life-saving insulin medications were priced at $20 when released in the late 1990s and now range between $300 and $700, according to the filing.
The suit alleged manufacturers “artificially and willingly” increased their prices for insulin to be listed on the PBMs’ formularies, or tiered lists of which medications are available and at what out-of-pocket cost to insured patients.
They then paid a portion of that price back to PBMs in the form of administrative fees, discounts or rebates, according to the lawsuit. Drugs with the highest list prices and payments from manufacturers were granted preferred status on their formularies, excluding lower-cost treatments.
“Big Pharma insulin manufacturers and PBMs worked together to take advantage of diabetes patients and drive prices as high as they could,” Paxton said in a statement. “These companies acted illegally and unethically to enrich themselves, and we will hold them accountable.”
CVS Caremark and Express Scripts didn’t respond to requests for comment by press time. A spokesperson for Optum Rx called the suit “baseless.”
“For many years, Optum Rx has aggressively and successfully negotiated with drug manufacturers and taken additional actions to lower prescription insulin costs for our health plan customers and their members, who now pay an average of less than $18 per month for insulin,” the spokesperson said in a statement to Healthcare Dive. “PBMs, like Optum Rx, are the key counterweight to pharmaceutical companies’ otherwise unchecked monopoly power to set and raise drug prices.”
Spokespeople for Novo Nordisk and Eli Lilly called the lawsuit “meritless” and “baseless,” respectively. A representative for Sanofi said the company has “always complied with the law” and is “committed to helping patients access the medicine they need at the lowest possible price.”
Lawmakers and regulators have recently increased their scrutiny of PBMs, arguing the drug middlemen’s business practices contribute to rising medication costs and reduce consumer choice. PBMs say they largely pass rebate savings onto their clients, and save customers money by negotiating drug prices.
The suit in Texas follows other lawsuits against PBMs concerning insulin prices by states and local governments — as well as federal regulators. The FTC’s long-awaited suit alleged CVS Caremark, Express Scripts and Optum Rx steered patients toward expensive insulin products to bring in larger rebates from pharma companies.
The agency also noted it was “deeply troubled” by the role drug manufacturers like Eli Lilly, Novo Nordisk, and Sanofi play in increasing insulin costs.
