(Lake County, IL) Today, the Lake County State’s Attorney’s Office announced it has filed a lawsuit against the nation’s largest insulin manufacturers and pharmacy benefit managers (PBMs) demonstrating that the defendants had illegally conspired to artificially increase insulin prices in violation of the Illinois’s Consumer Fraud and Deceptive Business Practices Act.
Over the past 25 years, the list price of certain insulins has greatly increased -- in some cases by more than 1000%. This increase has vastly outpaced the consumer price index or the relevant rise in costs associated with manufacturing and research.
The lawsuit argues that manufacturers Eli Lilly, Novo Nordisk, and Sanofi, and PBMs CVS Caremark, Express Scripts, and OptumRx, have leveraged their market power to increase profits at the expense of Lake County and the payors who need the lifesaving medication.
“Equal access to healthcare is a basic right. But the high cost of prescription drugs is hurting millions of people. These defendants have illegally conspired to unfairly increase their profits. Fair competition and enhanced technology should be driving prices down, but the defendants’ scheme raised prices on a drug that is necessary for millions. On behalf of our retirees and employees, and by extension the taxpayers of Lake County, we seek to recover costs that unfairly burdened Lake County as a result of this illegal pricing scheme. I am proud that our office is leading the way in this fight for basic decency and fairness in our markets,” stated Lake County State’s Attorney Eric Rinehart.
Approximately one million Illinois residents – 10% of the adult population has diabetes. In Lake County, 11% of the adult population has diabetes. The lawsuit focuses on the inflated costs that Lake County government has paid on behalf of its employees and a special program for some Medicare recipients.
The complaint describes how three manufacturers control over 90% of the global market for diabetes drugs. These same manufacturers, work in conjunction with three PBMs named in the suit, which administer pharmacy benefits for roughly 80% of prescription claims managed in the United States.
Because competition is extremely limited, manufacturers and PBMs can work together to aggressively increase the prices of the diabetes medication. The lawsuit argues that PBMs derive massive profits from manufacturer rebates. Because rebates are based on a percentage of the medication’s list price, manufacturers increase drug prices to provide more incentive to PBMs. Allegedly, PBMs have been selecting the medication based on the highest possible rebates, and not necessarily on the lowest price for the consumer. The manufacturer/PBM agreements resulted in the “Insulin Pricing Scheme” described in the complaint and violate federal RICO statutes as well as Illinois consumer protection law.
Rinehart added, “PBMs can capture as much as half of the consumer price on each insulin prescription although they do not contribute anything to the manufacturing, innovation, production of the drug.”
As a result, the artificially increased prices of insulin have had a negative effect on Lake County’s overall budget and impacts the County’s ability provide essential services to its community members.
Through the lawsuit, the Lake County State’s Attorney’s Office seeks restitution and economic damages associated with the price increases, punitive damages to deter others, and attorney costs that are permitted under federal and state law.
Lake County Board Chair Sandy Hart stated, “The Lake County Board has been striving to control the costs of its health insurance plans for its employees. Lawsuits like these tell companies that they must follow the rules and allow competition to benefit everyone. Along with State’s Attorney Rinehart, we will never stop fighting for basic economic fairness for everyone in Lake County.”
