Eleven people living with diabetes, with the support of the law firm Hagens Berman, have filed a class action lawsuit in Massachusetts against Eli Lilly, Novo Nordisk, and Sanofi over the high cost of insulin.
The ‘big three’ pharmaceutical companies dominate more than 90% of the insulin market. They have raised the prices of Lantus, Levemir, Novolog and Humalog by more than 160% in the last five years, according to the law firm.
The lawsuit alleges that Eli Lilly, Novo Nordisk and Sanofi have unjustly inflated their prices, while keeping the prices offered to pharmacy benefit managers (PBMs) constant or even decreasing them.
More about the Issue
It is normal practice for drug makers to offer lower prices to PBMs, the major players in the U.S. healthcare system. Hagens Berman believe that, in the case of Lantus, Levemir, Novolog and Humalog, the difference between the list price and the price offered to pharmacy benefit managers is so vast that it is fraudulent. Pharmacy benefit managers are likely profiting enormously from these price discrepancies.
The lawsuit highlights the cost of insulin and notes that since 2012, the companies “raised their prices in lock step.” It explains, “Where clinical benefit has not changed, it cannot be used to justify a 169% price increase.”
Hagens Berman believes that Eli Lilly, Novo Nordisk and Sanofi “are competing on a hidden index: spread.” They explain that PBMs have control over which companies and which brands of insulin people living with diabetes purchase. They say, “To secure a position on the PBMs’ formularies, these companies have artificially inflated their list price.”
In other words, a big discount to a PBM from a specific insulin producer like Eli Lilly, for example, means that the PBM will create a system where patients can only purchase insulin made by Eli Lilly. It is a win-win for PBMs and pharmaceutical companies – but at the expense of the health of people with diabetes.
Patients Pay the Ultimate Price
The diabetes advocacy group T1International has spoken to people with type 1 diabetes who have been forced to take out loans in order to afford their medical care. Others have allowed themselves to slip into diabetic ketoacidosis (DKA) in hopes of receiving insulin from emergency rooms.
T1International’s 2016 Diabetes Insulin and Supply Survey revealed some harrowing information. “There are many times I can’t afford my meds so I go without, even knowing it will kill me,” said one respondent.
A common theme from the survey was the fact that the costs associated with diabetes can drain a person’s monthly income and push them into poverty. “I pay roughly $5000 for three months of diabetes supplies. With deductibles, co-insurances, co-pays, premiums, etc. it is over half of my yearly income,” another respondent explained.
The legal complaint filed by the patients and the firm cites similar stories. It describes patients who have been unable to afford their insulin and therefore have resorted to under-dosing or taking it less often than needed. Others have starved themselves to reduce insulin dosages, used expired insulin, and have avoided visiting their doctor regularly.
“The stress of this financial burden is all consuming,” the complaint reads. “…many plaintiffs describe a constant state of anxiety brought on by their inability to afford the rising insulin prices.’’
People with Diabetes Fight Back
T1International has been involved with the legal team leading this case by connecting them with people living with type 1 diabetes who wish to share their story and speak out against high prices. Patients have shared their painful experiences, and several are now plaintiffs in the case.
Steve Berman, lead counsel on the lawsuit, told T1International: “These patients – plaintiffs in this lawsuit – have suffered physically, financially, and emotionally. But what most people do not know is that the pharmaceutical companies that have demanded higher and higher payments from patients each year actually offer much lower prices to other actors within the healthcare system, actors that control which medications patients take. Insulin makers have raised their prices so significantly just so that they can offer these other actors deeper discounts.
The aim of this lawsuit is to bring the insulin makers’ deceptive and unfair conduct to light and to force an end to such behavior. This lawsuit seeks to compensate people living with diabetes who have been deeply harmed by the drug companies’ price increases. We are glad to have support from T1International on this case.”
Unsurprisingly, the companies have denied the issues raised in the complaint and say they will fight to defend themselves. It is likely that they will continue to cite their recent measures, including Eli Lilly’s new discount program or Novo Nordisk’s commitment to only single-digit price increases. T1International recently responded to those measures, and Hagens Berman had similar things to say:
‘’Long overdue, these affordability measures still do not end or even address the insidious practice of competing for PBM business based on the spread between benchmark and net price. Nor do they make whole the patients who have spent thousands of dollars out of pocket on long-acting insulin for the past few years. Therefore, these measures fail to address the structural issues that have given rise to the price hikes that have hurt under-insured and uninsured diabetes patients for years.’’
This process will be a long one, and it could take years before we see any outcomes. There will be pushback from these companies to get the lawsuit thrown out, but Hagens Berman is prepared to fight, and T1International will fight with them.
You can read more here.
I am so relieved that the effort to bring attention to this issue is finally going to see a court. My husband and I both have good jobs and insurance, yet due to the costs of my life sustaining medical care, we are lucky to afford rent and food. I hate that a disease that I got as a young child and have worked hard daily to survive, has made it impossible for us to afford a ‘normal’ life. Vacations, concerts, heck even buying a home or moving to a larger place are impossible dreams due to the fact that… Read more »
Please note that this post is already outdated. Hagens Berman withdrew the Massachusetts case, and the insulin users’ class action has been re-filed in New Jersey by James Cecchi, who is also currently representing investors in Novo Nordisk, before the same judge, in a separate lawsuit alleging price-fixing. Hagens Berman has sent strong signals that they intend to consolidate these two cases, now identified by Hagens Berman as “related cases” in the court documents for the re-filing of the insulin users’ claim. The Type 1 Diabetes Defense Foundation has grounds to believe that (1) the re-filing of this flawed claim… Read more »
My son just turned 23. Thanks to OBAMACARE, he will be under my husband’s insurance until he’s 26. I hope that ridiculous guy who’s in the White House now doesn’t change things for my son and other young people living with conditions such as Type 1 D. I will print this article out and give it to my son so that he understand just how incredibly important it is that he finds a good and stable job with a big company that offers insurance. Unfortunately, 3 years is not a long time for him to find such a job since… Read more »
Obama Care has been horrible for my diabetic care. Step programs and insulin costs are being implemented as you speak. Most HC policies offered child coverage till 26 before Obama care. All mine did. Diabetics and epileptics have been exempt from pre-existing conditions prior to Obama Care. Another big lie from the former so called president, who also happened to renig on his promise to go on it.
Excellent article. Thanks for writing about this.