Insulin-Pricing Lawsuit Adds to Growing Pressure on PBMs

by Tim Casey

 

The state of California filed a lawsuit this month against three major PBMs, CVS Caremark, Express Scripts and Optum Rx, and three pharmaceutical companies, Eli Lilly and Co., Novo Nordisk and Sanofi S.A, accusing them of inflating the cost of insulin and violating the state’s Unfair Competition Law.    Lawsuit could spark other states to follow  David Kaufman, an attorney with Laurus Law Group LLC, tells AIS Health that the case in California could be significant and add to the growing pressure to make the PBM industry more transparent.     “California is generally a leader in a lot of these kinds of matters, so I would think that other states would probably take a look at it,” David Kaufman, an attorney with Laurus Law Group LLC, tells AIS Health. “If they think it’s something that could be beneficial to their citizens, I think they might also want to have a similar case,” Kaufman says.    The lawsuit alleges the pharmaceutical companies “aggressively raise the list price of insulin in lockstep with each other to artificial levels,” while the rebates PBMs receive from drug manufacturers in exchange for “favorable placement” on formularies “incentivizes the [drug manufacturers] to raise their list prices high and higher.”   PBMs and pharma companies respond   Phillip Blando, a CVS Health executive director of corporate communications, told AIS Health in an email statement that PBMs do not play a role in determining list prices.   “Pharmaceutical companies alone set the list price for their products,” Blando writes in the statement. “Allegations that we play any role in determining the prices charged by manufacturers are false. We plan to vigorously defend against this complaint.”   Allison Schneider, a Novo Nordisk spokesperson, meanwhile, writes that the company could not comment on the ongoing litigation, but she notes that “the U.S. healthcare system is very complex with players across the entire supply chain influencing market dynamics.” She claims that the net prices for insulin have declined over the past five years “due in large part to the significant rebates and discounts manufacturers pay to ensure access for patients.”  Insulin remains hot topic at state, federal level   California last year announced that it would address the high costs by manufacturing its own generic insulin, while nonprofit CivicaScript said it would sell the drug at or just above the manufacturing cost. CivicaScript plans to produce three biosimilar insulins by 2024 and sell them at no more than $30 per vial and no more than $55 for a box of five-pen cartridges.    James Gelfand, president of the ERISA Industry Committee (ERIC), tells AIS Health that there have been multiple insulin products on the market for decades and even biosimilar insulins, meaning the competition should in theory lead to lower prices. But, he adds, “over time, the prices aren’t going down. They’re going up. Something is broken, and nobody seems to be able to explain what exactly is going on that is causing insulin to cost so much money.”   The Inflation Reduction Act that passed last year includes a provision that caps out-of-pocket insulin costs at $35 per month for Medicare beneficiaries starting in 2023. However, that cap does not apply to uninsured people or people with other types of insurance.

 

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