Plaintiffs report extreme measures to survive rapidly increasing
insulin prices, including intentionally allowing onset of diabetic
ketoacidosis to obtain hospital insulin samples
Company Website:
https://www.hbsslaw.com/cases/insulin-overpricing
BOSTON -- (Business Wire)
People living with diabetes have filed a groundbreaking class-action
lawsuit against the three makers of analog insulin drug products –
Sanofi, Novo Nordisk and Eli Lilly – for exponentially raising consumer
insulin prices in an organized scheme to drive up prices at the expense
of patients who need insulin drugs to live, according to Hagens Berman.
The lawsuit states that in the last five years alone, Sanofi, Novo
Nordisk and Eli Lilly have raised the sticker or “benchmark” prices on
their drugs by more than 150 percent. Some plaintiffs now pay almost
$900 dollars per month just to obtain the drugs they need, according to
the firm.
This first-of-its-kind lawsuit details several accounts from patients
resorting to extreme measures to survive rising insulin prices,
including starving themselves to control their blood sugars,
under-dosing their insulin, and taking expired insulin. 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.
“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, which represents the patients.
According to the lawsuit, filed Jan. 30, 2017, in the U.S. District
Court for the District of Massachusetts, the three companies 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. These acts, says the lawsuit,
constitute a RICO enterprise, and violate the Racketeer Influenced and
Corrupt Organizations Act and various state consumer protection laws.
The manufacturers of insulin even admit that their price hikes are
unrelated to any jump in production or research and development costs,
the suit explains.
Insulin Sticker Shock
The complaint states that this once affordable drug is now out of reach
for many patients due to a behind-the-scenes quid pro quo
arrangement: “increased benchmark prices are the result of a scheme and
enterprise among each defendant and several bulk drug distributors. 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 most important of these bulk drug distributors are entities known as
pharmacy benefit managers (PBMs). These entities serve as middlemen
between health insurers and drug manufacturers, negotiating medicine
prices with drug companies on behalf of health insurers. The PBMs also
design drug formularies for their health insurer clients, ranking drugs
based on efficacy and cost, the suit states. These formularies allow
health insurers to funnel patients towards one brand of drug over
others. 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 lawsuit explains that 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 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
suit states. “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.” But because of this two-faced public and private
system, drug companies instead choose to hike their publicly reported,
benchmark prices, while maintaining constant (or only slightly lowering)
the real prices they offer to PBMs, the suit states. Instead of
competing for PBM business based on significant real price decreases,
the drug manufacturers have decided to compete based on significant
benchmark priceincreases.
The lawsuit calls this trend of one-sided price increases “an arms
race,” as each of the three defendants – Sanofi, Novo Nordisk and Eli
Lilly – has raised its benchmark price in “perfect lock step” with its
competitors to ensure that the large PBMs keep its drug in rotation. The
lawsuit alleges that in a January 2017 statement, Eli Lilly admitted to
the benchmark price – a net price scheme.
The
figures in the lawsuit illustrate this behavior. There are two types
of analog insulin: long-acting and rapid-acting. Novo Nordisk’s Levemir
and Sanofi’s Lantus compete in the long-acting category, and Eli Lilly’s
Humalog and Novo Nordisk’s Novolog compete in the rapid-acting category.
The firm says this arms race hurt patients – the plaintiffs here – who
must pay for a high percentage of their drugs out-of-pocket. Uninsured
patients and patients in high-deductible health plans, plans with high
coinsurance rates, and Medicare Part D plans have been seriously injured
by Sanofi, Novo Nordisk and Eli Lilly’s benchmark price hikes, 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.”
“It is our hope that this suit not only reclaims losses for the millions
of U.S. patients struggling to survive with diabetes right now, but that
it also shines a spotlight on an egregious scheme perpetrated by these
defendants. It’s time to break up the Insulin Racket, and that is the
objective of this case,” he added.
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.
About
Hagens Berman
Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law
firm with offices in 10 cities. The firm served as lead counsel in
historic settlements involving inflated benchmark drug prices, including
Average Wholesale Price MDL and a class-action lawsuit against McKesson
Corp., one of the nation's largest drug wholesalers, recovering more
than $500 million for plaintiffs. More about the law firm and its
successes can be found at www.hbsslaw.com.
Follow the firm for updates and news at @ClassActionLaw.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170130005967/en/
Contacts:
Hagens Berman Sobol Shapiro LLP
Ashley Klann, 206-268-9363
ashleyk@hbsslaw.com
Source: Hagens Berman Sobol Shapiro LLP
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