HOUSTON (Covering Katy News) - Harris County Attorney Vince Ryan has sued three insulin manufacturers and four pharmaceutical benefit managers, accusing them of an insulin pricing scheme.
The lawsuit accuses these entities of engaging in a price-fixing conspiracy to raise the price of insulin and other diabetic treatments. This alleged scheme is costing Harris County millions of dollars for health care for both its employees and their dependents and for inmates in the county jail.
“We are bringing this lawsuit to hold these billion-dollar companies responsible for conspiring to drive up the prices of their lifesaving insulin,” said County Attorney Ryan.
The lawsuit, filed recently in the State District Court, names the three largest manufacturers of insulin—Eli Lilly, Novo Nordisk and Sanofi—and the largest pharmaceutical benefit managers (PBMs)—Aetna Rx, CVS Caremark, Express Scripts and OptumRx—as part of a price-fixing scheme that has resulted in record profits for these companies.
Harris County’s claims include violations of the Texas antitrust statute, fraud, and civil conspiracy. The County Attorney’s Office is seeking to recover the money that the county has paid as a result of the price-fixing conspiracy between the insulin manufacturers and the pharmaceutical benefit managers.
The lawsuit explains that as a result of the skyrocketing insulin prices caused by the alleged price-fixing scheme, Harris County now spends more money on insulin and diabetes medications than for medications related to any other disease. In 2015 alone, the amount that Harris County spent on diabetes medications increased over 60% from the previous year. Since 2013, Harris County has spent more than $27.5 million on diabetes drugs implicated in the lawsuit.
The lawsuit claims that as a direct result of this alleged conspiracy, Harris County has been overcharged millions of dollars for the insulin and other diabetes medications that its employees and their family members need to survive.
“This scheme has resulted in record profits for these insulin manufacturers and PBMs,” County Attorney Ryan explained. “But it has also made insulin unaffordable for many who rely on this life-saving drug. It has created an immense financial burden for employers and governmental entities.”
Over the last fifteen years, the lawsuit alleges that these insulin manufacturers have in lockstep raised the reported prices of insulin in an astounding manner. Insulin sold for $20 per vial in the late 1990s. That very same insulin—which currently costs only $5 to produce—now sells for between $300 and $700.
The lawsuit outlines the price-fixing scheme like this: PBMs control which medications are included on an insurance company’s list of approved medications. The suit claims these insulin manufacturers conspired with these PBMs to set the price of their insulin artificially high but to then secretly rebate a significant portion of that price back to the PBMs. In exchange for the secret payments they receive, the PBMs give those pharmaceutical manufacturers preferred placement on PBM national formularies. That preferred status on formularies led directly to more sales of insulin and more profits for the insulin manufacturers and PBMs, all at the expenses of payers such as Harris County.
“The discoverers sold the original patent for $1 to ensure that the medication would remain affordable,” said County Attorney Ryan. “Today, insulin has become the poster child for pharmaceutical price gouging.”