Mass. files suit accusing insulin makers of price-gouging
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Massachusetts is the latest state going after insulin makers and the intermediaries officials accuse of price gouging.
Why it matters: Diabetes patients are often paying hundreds of dollars a month or more for life-saving medicine when the costs of production remain largely unchanged, Attorney General Andrea Campbell's lawsuit says.
- Those price increases can cause diabetics to forego insulin shots or find workarounds that endanger them, the lawsuit argues.
Driving the news: Campbell's office filed a lawsuit this week in Suffolk Superior Court against drugmakers and the middlemen, known as pharmacy benefit managers, accusing them of defrauding diabetes patients through an insulin pricing scheme.
- The lawsuit names drugmakers Eli Lilly, Novo Nordisk and Sanofi, as well as PBMs Optum Rx, Express Scripts, CVS Caremark and affiliated companies.
The other side: CVS Caremark told Axios that drugmakers "alone are responsible" for setting their products' prices. The company also said its ReducedRx program offers insulin for $25.
- Sanofi said the average net price of its insulins has declined but that savings negotiated by PBMs and insurers through rebates "are not consistently passed through to patients."
- Other companies named in the suit did not respond to Axios' requests for comment.
By the numbers: One 2018 study suggests making a year's supply of insulin costs anywhere from $48-$134 per person.
- Massachusetts has some 500,000 diabetes patients and 1.8 million pre-diabetic patients, many of whom rely on insulin and are paying hundreds monthly for the list prices, the lawsuit says.
The big picture: New York and Minnesota have successfully gotten drugmakers to cap their prices to $35 a month in legal settlements.
- The Federal Trade Commission in September sued three major PBMs and affiliated companies, accusing them of engaging in anticompetitive and unfair rebating practices that inflate insulin prices.
- Express Scripts previously sued the FTC over a July report purporting to show how PBMs manipulate the market at the expense of patients.
Between the lines: Massachusetts recently enacted a law that caps name-brand drugs for certain illnesses, including diabetes, at $25 a month, among other changes.
- But Campbell's lawsuit targets what she described as the source of the problem: the pricing agreements secretly agreed upon by drugmakers and PBMs.
How it works: Per the lawsuit, PBMs charge drugmakers money for preferred placement on the list of drugs they cover.
- Drugmakers raise prices to offset the payments to PBMs and boost their own profits, despite production costs remaining low, per the lawsuit.
- They ultimately passed on the higher prices to the patients, even as PBMs claimed they were saving customers money, Campbell says.
Zoom in: The suit accuses the drugmakers and PBMs of meeting privately to discuss their pricing. Drugmakers announced nearly identical price increases within days or weeks of those meetings, it says.
- Campbell also accused PBMs of shutting out more affordable insulin brands by excluding them from listings unless they paid the PBMs and set insulin prices that mirrored their competitors.
While drugmakers and PBMs pointed the finger at one another at congressional hearings in 2019 and 2023, the lawsuit says they worked with one another to set prices and refused to share their pricing structures with patients and government agencies.