By Miriam E Tucker
WebMD Health News
February 01, 2017
A group of diabetes patients have filed a class-action lawsuit in the United States against three insulin manufacturers, Eli Lilly, Novo Nordisk, and Sanofi, alleging that they conspired in an organized scheme to drive up prices.
The lawsuit, filed January 30, 2017, in the US District Court for the District of Massachusetts, says that the three companies have simultaneously raised the "benchmark" prices on their insulins by more than 150% in the past 5 years, with some plaintiffs now paying almost $900 a month for their insulin.
Also mentioned in the filing are detailed patient accounts of measures such as "underdosing" insulin, taking expired insulin, and even intentionally allowing themselves to develop diabetic ketoacidosis so as to obtain free insulin samples from hospital emergency rooms, according to a statement from Hagens Berman, the law firm representing the patients.
"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 Hagens Berman managing partner Steve Berman in the statement.
Doctors are experiencing the fallout from this too, as University of Washington endocrinologist Irl B Hirsch, MD, told Medscape Medical News last year: "I'm dealing with this on a daily basis. I have patients yelling at me as I'm walking into the examination room, even before I sit down ... Many of them have had diabetes for decades, and this is the first time that they can't afford their insulin."
Manufacturers Plan to Fight
All three manufacturers deny the charges, however.
"We are aware of the complaint and its characterization of the pharmaceutical supply chain. We disagree with the allegations made against the company and are prepared to vigorously defend the company in this matter," Ken Inchausti, director, corporate branding & reputation, Novo Nordisk, told Medscape Medical News.
"At Novo Nordisk, we have a longstanding commitment to supporting patients' access to our medicines. Since this is an ongoing litigation, we can't comment further," he added.
And Eli Lilly spokesperson Gregory Andrew Kueterman commented: "Lilly conducts business in a manner that ensures compliance with all applicable laws, and we adhere to the highest ethical standards. We are aware that a lawsuit has been filed against several insulin manufacturers. We have no further comment at this time."
Meanwhile Ashleigh Koss, head of media relations, North America, Sanofi US, said: "We strongly believe these allegations have no merit and will defend against these claims."
Focus on the Supply Chain
The lawsuit claims that the companies' actions have violated the Racketeer Influenced and Corrupt Organizations (RICO) Act and various state consumer-protection laws, due to their exploitation of the drug-pricing system.
Specifically, the suit faults the system by which the companies set two different prices for their insulin treatments: a publicly reported "benchmark" price and a lower, undisclosed real price — via "rebates" — that they offer to bulk drug distributors known as "pharmacy benefit managers" (PBMs).
The PBMs take a cut from the difference between the reported benchmark price and the undisclosed real price. The larger that difference, the greater the PBM's profits, and the greater the chance of that manufacturer's insulin making it into the insurer's preferred formulary.
Thus, "instead of competing for PBM business based on significant real price decreases, the drug manufacturers have decided to compete based on significant benchmark price increases," the law firm's statement claims.
As a result, patients who are uninsured, have high deductibles, or who are in Medicare Part D plans end up paying a large percentage of that benchmark price out of pocket.
"The lawsuit seeks to represent a nationwide class of consumers who have purchased analog insulin at recently skyrocketing prices to reclaim economic losses in an amount to be determined at trial and to put in place an injunction halting this behavior," according to the statement.
Claims of Malpractice; Potential Harm to Patients
In his interview in April 2016, Dr Hirsch cited a specific example of harm from this situation, where a PBM dictates that a patient buy insulin detemir (Levemir, Novo Nordisk) instead of insulin glargine (Lantus, Sanofi) or vice versa, under the assumption that they're identical.
But they're not, Dr Hirsch stressed. "The problem is that we've had many situations where these insulins were switched as if they are the same thing, unit per unit — and I wasn't even told about it. The patient was just given a new insulin and was told to use that instead ... so the PBM is acting as the physician in this case and making a change in basal insulin ... That is completely wrong and, in my opinion, that is malpractice."
Commenting for Close Concerns about the lawsuit, Dr Hirsch said, "I guess I shouldn't be surprised about this because we are at a breaking point ... My only hope is we can come up with a solution to make insulin available for all patients who need it.
"My preference is that we could come up with some sort of agreement with the insulin companies, the PBMs, and the payers to make that happen, at least with insulin. Since that is not going to happen, lawsuits and/or governmental intervention seem to be the next order of activity."
There are some indications that change is coming, however — with the US launch of the first "biosimilar" insulin product, Basaglar (Lilly), in December, coinciding with some insulin manufacturers pledging to restrain price increases and offer discounts to patients.
Time will tell whether this is too little too late, as observers also wait to see what stance the new US administration will take regarding pharmaceutical pricing.