The State of Texas sued multiple pharmaceutical companies, alleging they engaged in a “conspiracy” to significantly increase prices of insulin for customers.
Attorney General Ken Paxton filed the lawsuit on October 3 against pharmacy benefit managers (PBMs) and insulin manufacturers including CVS Health Corporation, Express Scripts, Eli Lilly and Company, UnitedHealth Group, and others for working “in coordination” to “distort the market for diabetic treatments to their benefit and at the expense of Texas diabetics and payors.”
The court documents accuse the manufacturers of conspiring together by first disproportionately raising the prices of insulin, and then coordinating with the PBMs in an underhand deal in order to earn “preferred status” in pharmacies by having the “highest list price,” therefore figuratively pushing lower-priced drugs to the back of the shelves.
A Congressional hearing was held by the House Oversight Committee in July, regarding the operation of PBMs and their position in determining the ever-increasing drug rates across the U.S. Bipartisan efforts have been deployed to determine the legality of PBMs’ activity since the Federal Trade Commission launched an investigation into them years ago with plans to sue.
“Defendants Eli Lilly, Novo Nordisk, and Sanofi (collectively ‘Manufacturer Defendants’ or ‘Manufacturers’) manufacture the vast majority of insulins and other diabetic medications available in Texas,” the lawsuit reads.
“Defendants CVS Caremark, Express Scripts, and OptumRx (‘PBM Defendants’ or ‘PBMs’) act as the gatekeepers to the pharmaceutical market… near complete control of the pricing, dispensing, and reimbursement systems for the at-issue diabetes medications for their covered lives.”
Paxton alleges that the insulin products cost manufacturers “less than $2 to produce” and used to be sold for the price of $20 in the 1990s. Insulin now costs anywhere between $300 to $700.
“In the last decade alone, the manufacturers who are defendants in the lawsuit have increased the prices of their insulins up to 1,000 percent,” he alleges.
The lawsuit claims the defendants violated the Texas Deceptive Trade Practices Act of 1973, which was established to protect consumers from “fraudulent, misleading, or deceptive” business tactics.
During the July hearing, PBMs blamed pharmaceutical manufacturers, claiming “60 percent of pharmaceutical products saw price increases from the manufacturers,” according to President of Express Scripts David Joyner, “and yet saved customers $64 billion in 2023.”
Texas is seeking “injunctive relief, restitution, disgorgement, damages, civil penalties, and attorneys’ fees to address and abate the harm” caused by the alleged pharmaceutical scheme.
“This complaint is baseless and should be dismissed,” Eli Lilly and Company said.
“Lilly has been working for years to reduce insulin out-of-pocket costs for people with diabetes, against the headwinds of a healthcare system that incentivizes others — including the State of Texas — to choose higher list-price medicines over lower-priced options.”
“Lilly was the first and still only company to cap what people pay at $35 per month for all of our insulin, we cut insulin prices by 70%, and the average monthly out-of-pocket cost for Lilly insulin is just $17.16.”
CVS also, “Pharmaceutical companies alone are responsible for the prices they set in the marketplace for the products they manufacture.”
“CVS Caremark has led the way in driving down the cost of insulin for all patients: insured, uninsured, and underinsured. Our members on average pay less than $25, far below list prices and far below the Biden Administration’s $35 cap. Further, we also provide access to $25 insulin to every American, whether insured or uninsured, through our ReducedRx program at every one of our 67,000 network pharmacies and more than 9,000 CVS pharmacies.”
“Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products and we would welcome such an action. Allegations that we play any role in determining the prices charged by manufacturers for their products are false, and we intend to vigorously defend against this baseless suit.”
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