California Attorney General Sues Drug Manufacturers Over Inflated Insulin Prices

California Attorney General Rob Bonta on Thursday sued six major companies that dominate the U.S. insulin market, escalating the state’s crackdown on the lucrative industry for artificially inflating prices and reducing the availability of an essential diabetes drug.

The 47-page civil lawsuit alleges that the three pharmaceutical companies that control the insulin market – Eli Lilly and Co., Sanofi and Novo Nordisk – are violating California law by unfairly and illegally inflating the cost of the drug. It also targets three distribution intermediaries known as pharmacy benefit managers: CVS Caremark, Express Scripts, and OptumRx.

“We’re going to level the playing field and make this life-saving drug more accessible to everyone who needs it, ending Big Pharma’s big profit scheme,” Bonta said at a press conference after filing the lawsuit in the state. court in Los Angeles. “These six companies are involved in aggressively raising the list price of insulin at the expense of patients.”

In the lawsuit, Bonta argued that prices had skyrocketed and that some patients were forced to limit their medications or stop buying insulin altogether. The Attorney General said a vial of insulin, which diabetics rely on to control their blood sugar, cost $25 a couple of decades ago and now costs about $300.

A 2021 US Senate investigation found that the price of Novo Nordisk’s long-acting insulin pen jumped 52% from 2014 to 2019, while the price of Sanofi’s quick-acting insulin pen rose by about 70%. From 2013 to 2017, the number of Eli Lilly quick action pens increased by 64%. The investigation revealed the complicity of drug makers and pharmacy managers in the increase, saying they perpetuated artificially high prices for insulin.

“California diabetics who need insulin to survive and are forced to pay the full cost of insulin, such as uninsured users and consumers with high deductible insurance plans, pay thousands of dollars a year for insulin,” the complaint says.

Eli Lilly spokeswoman Daphne Dorsey said the company is “disappointed by the California Attorney General’s false allegations,” saying the average monthly out-of-pocket cost of insulin has fallen 44% over the past five years and the drug is available to everyone. “for $35 or less.”

OptumRx, a division of UnitedHealthcare, said it welcomed the opportunity to show California “how we work every day to give people access to affordable medicines, including insulin.” And company spokesman Isaac Sorensen said the company has eliminated out-of-pocket spending on insulin.

The other companies involved in the lawsuit, and the trade associations that represent them, did not immediately respond to requests for comment or declined to comment on the lawsuit. Instead, they either blamed each other for the price increase or talked about their efforts to cut costs. Costs for consumers vary greatly depending on insurance coverage and the severity of the illness.

California is following other states, including Arkansas, Kansas and Illinois, in pursuing insulin companies and pharmaceutical intermediaries, but Bonta said California is taking an aggressive approach, accusing companies of violating state unfair competition law, which could result in serious civil sanctions and could potentially result in millions of dollars in restitution for Californians.

If the state wins the case in court, the cost of insulin could be “significantly reduced” as companies will no longer be allowed to raise prices, Bont said.

Bonta joins other Democratic leaders in fighting the pharmaceutical industry. Gov. Gavin Newsom has launched an ambitious plan to create its own brand of insulin in the nation’s most populous state to lower prices for the estimated 3.2 million diabetic Californians who rely on the drug.

“Big Pharma continues to put profits before people by driving up drug prices and limiting access to this life-saving drug,” Newsom spokesman Brandon Richards told KHN. “That’s why California is moving towards making our own affordable insulin.”

California is going to make its own insulin. It’s simple. People don’t have to go into debt to get life-saving medicines. pic.twitter.com/yB4mpGjtQO

— Gavin Newsom (@GavinNewsom) July 7, 2022

By launching an aggressive attack on the pharmaceutical industry, California is also getting into a popular political fight. Many Americans resent the cost of drugs, while manufacturers blame pharmacy middlemen and health insurance companies. Meanwhile, intermediaries are blaming drug manufacturers.

Edwin Park, a California research professor at Georgetown University’s Center for Children and Families, said California’s push to enter the generic drug market, as well as sue the pharmaceutical industry, could ultimately lead to lower drug costs for patients.

“This could put downward pressure on list prices,” Park said, referring to the drug’s fixed price. “And that can lead to lower personal spending.”

There isn’t much transparency in how drug prices are set in the US, Park said. Manufacturers are mainly responsible for high drug prices because they set list prices. A growing body of research also indicates that pharmaceutical intermediaries are a major contributor to high drug costs for patients. To drive down prices, experts say it’s critical to target the entire supply chain.

“The price list has definitely gone up,” said Dr. Neeraj Sood, a professor of health policy, medicine, and business at the University of Southern California who has studied the causes of high insulin costs. “But over time, most of the money goes to intermediaries, not manufacturers.”

This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Health Foundation.

KHN (Kaiser Health News) is a national news service that produces in-depth journalism on health issues. Together with Policy Analysis and Polling, KHN is one of the three main operating programs of the KFF (Kaiser Family Foundation). KFF is a charitable, non-profit organization providing health information to the nation.

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