In the latest flap over the high cost of drugs, diabetes patients filed a class-action lawsuit against insulin makers.
The lawsuit, filed in the U.S. District Court for the District of Massachusetts, claims that Sanofi, Novo Nordisk and Eli Lilly conspired to raise insulin prices. The manufacturers “have exploited the drug-pricing system in a way that ensures higher profits for drug manufacturers and other players, leaving those living with diabetes crippled by high insulin costs,” Hagens Berman, the law firm filing the complaint on behalf of plaintiffs, said in a statement.
Sanofi, Novo Nordisk and Eli Lilly have raised the “benchmark” prices on their drugs by more than 150%, according to the complaint. “Some plaintiffs now pay almost $900 dollars per month just to obtain the drugs they need,” the law firm stated.
Some patients have resorted to extreme measures to survive rising insulin prices, including starving themselves to control their blood sugars, under-dosing their insulin, and taking expired insulin, according to the complaint. “Other class members have intentionally allowed themselves to slip into diabetic ketoacidosis—a potentially fatal blood syndrome caused by lack of insulin in the body—so that they can obtain insulin samples from hospital emergency rooms,” the statement said.
“People living with diabetes are practically imprisoned under the price hikes, and sadly are resorting to extreme measures to afford the medication they need to live,” said Steve Berman, managing partner of Hagens Berman.
The manufacturers admit that their price hikes are unrelated to any jump in production or research and development costs, according to the complaint. “Insulin, in one form or another, has been available for more than a century, and it was formerly an affordable drug,” Berman said. “The only thing that has changed is the insatiable desire of Big Pharma to profit from sickness hand over fist.”
However, PBMs and drug distributors are also to blame, the complaint said, explaining a “behind-the-scenes quid pro quo arrangement”. “In this scheme, the defendant drug companies set two different prices for their insulin treatments: a publicly-reported, benchmark price and a lower, real price that they offer to certain bulk drug distributors,” the complaint said.
PBMs’ formularies allow health insurers to funnel patients towards one brand of drug over others, according to Hagens Berman. “Because the analog insulin products of the big three insulin manufacturers are largely interchangeable, these drugs companies fight for preferential placement on the PBMs’ formularies, offering PBMs ‘rebates’ off their benchmark prices, according to the complaint,” the statement said.
Then, as compensation for their role as negotiator, PBMs pocket a percentage of the difference between the reported benchmark price and the undisclosed real price they are able to secure. “This difference in prices is known as the “spread.” The larger the spread, the higher the PBMs’ profits,” the statement said.
“The drug manufacturer with the largest spread between benchmark and real price is more likely to secure a PBM’s preferred formulary position, and, as a result, the business of that PBM’s clients,” the complaint stated. “Where two or more drug manufacturers make largely interchangeable products, those companies would, in an ideal world, continuously drop their real prices to undercut the prices offered by their competitors.”
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