Insulin Overpricing Lawsuit 2023

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Picture of Researcher: Ariana Arce​

Researcher: Ariana Arce​

a.arce@legalhelpadvisor.com

Picture of Journalist: Aaron Vivanco

Journalist: Aaron Vivanco

a.vivanco@legalhelpadvisor.com

Picture of Editor: Daniela Polo

Editor: Daniela Polo

d.polo@legalhelpadvisor.com

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Insulin Overpricing Lawsuit 2023

The Insulin Overpricing Lawsuit involves plaintiffs alleging collusion among large pharmaceutical companies to artificially increase the prices of analog insulins, such as Lantus, Apidra, Levemir, Humalog, and Novolog, above normal competitive pricing.

Young teenage girl applicating insulin with insulin pen.

The increase in prices for diabetes medication has resulted in financial and medical risks for numerous patients. Limited awareness of these practices hinders patients’ ability to make informed choices about their medication, leading to higher costs.

The upcoming article will provide information on the Insulin Overpricing Lawsuit, allowing readers to determine whether they have a potential legal claim against the corporations involved. If unsure, you may always contact us for free legal advice.

What are the facts regarding the increasing price of insulin?

Insulin was introduced in 1923, and its astonishing health benefits became popular all over the world. Despite its fame, the doctors who created it were aware of the ethics of their recent discovery.

This is why, after long consideration, they sold their insulin patent to the University of Toronto, Canada. The asking price was only one dollar, to make the supply of insulin affordable and accessible to everyone.

However, in the years that followed, the pharmaceutical industry decided to utilize this discovery differently, prioritizing profits over patients’ well-being.

How has the cost of insulin evolved?

According to a review made by RAND Corporation, ordered by the United States (US) Department of Health and Human Services, the numbers are shocking. Over the last 25 years, the list price of different types of insulin has increased more than tenfold when compared to the average of all other countries combined.

The list price per vial of insulin in the United States in 2018 was $98.70, whereas it was significantly lower in Canada ($12.00), Germany ($11.00), the United Kingdom (UK) ($7.52), and Australia ($6.94).

Indeed, the most striking example is Humalog, Eli Lilly’s patented insulin. In 1996, its list price was $21 per vial in the US, while in 2019, it increased to $275. This fact is surprising considering that a 2018 study found that the production cost of a vial of analog insulin, which is used by most patients, is approximately $2 to $4.

This secrecy behind settling insulin prices is at least confusing. It is difficult to tell which percentage goes to the profits of drug manufacturers versus savings from health insurance plans. The situation transforms the cost of living for people with diabetes who are uninsured, underinsured, or pay high deductibles. It is more difficult for them to obtain their insulin supply, and they are forced to take extreme measures.

What are the consequences of insulin overpricing for patients with diabetes?

As a consequence of expensive insulin, diabetes patients are forced to cut corners and find ways to limit this basic medication. In addition, this act, as one might expect, ends up making the difference between life and death.

Furthermore, a study published in the Annals of Internal Medicine demonstrated that in 2021, roughly 1 in 5 diabetes patients in the United States will have either skipped, delayed, or used less insulin than needed to save money. That translates to around 1.3 million adults (or 16.5% of those who need insulin). Moreover, this situation affects not only the patients but also their families who have to take on financial burdens to afford the expensive treatment.

This is the case of Hattie Salzman, 25, from Kansas City, Missouri. She had to pay around $550 per month for her insulin as she was enrolled in a high-deductible plan. She could not afford it and ended up limiting her medication. Eventually, she landed in the emergency room, where she was told she was in danger of diabetic ketoacidosis, a life-threatening condition caused by a lack of insulin. Fortunately, she managed to obtain better health insurance and no longer limits her diabetes medication.

How does the pricing schemes for insulin work?

According to a report from the US Senate Finance Committee published in 2019, insulin prices are kept high due to a system of secrecy. The drug manufacturers negotiate with pharmacy benefit managers and other middlemen, creating confusion around the pricing schemes for insulin.

The insulin market involves Eli Lilly, Novo Nordisk, and Sanofi Aventis. They produce nearly 100% of the insulin supply in the US and 90% globally. With this market strength, these insulin manufacturers determine the list price, also known as the price of any drug.

After setting the price, these companies negotiate with the pharmacy benefit manager (PBM), a third-party administrator of prescription drug programs. They are responsible for securing lower insulin costs for health plans.

The three major PBMs in the US are Express Scripts, CVS Caremark, and Optum RX, which control 89% of the deals made. They negotiate rebates with insulin manufacturers, which are based on a percentage of the list price.

Both manufacturers and PBMs are responsible for the increase in insulin costs.

If manufacturers raise the list price, mirroring each other’s prices, they can provide the largest rebates to the PBMs. These parties get paid based on the percentage of the rebates they can get.

As previously mentioned, these ambiguous pricing schemes only benefit big pharmaceutical companies. As a result, insulin prices increased.

What are the plaintiff’s claims in the Insulin Overpricing Lawsuit?

The plaintiffs in the Insulin Overpricing Lawsuit have brought several potential legal claims against the companies involved.

First, they claim that pharmaceutical companies participated in anti-competitive behavior to inflate prices, which violates antitrust laws. Second, they argue that their rights were violated under consumer protection laws. Finally, they claim that pharmaceutical companies acted negligently.

Latest updates in the Insulin Overpricing Lawsuit

After the case became widely known, the government took action through the Inflation Reduction Act. It caps the cost of insulin at $35 per month for seniors who have Medicare.

On March 1, 2023, Eli Lilly announced it was cutting insulin prices by 70% and limiting out-of-pocket expenses to $35 per month. Lilly’s cuts will take effect at various points in 2023.

Later that month, Novo Nordisk announced it was cutting insulin prices by 65% and 75% off the current list price. Novo’s cuts will be effective on January 1, 2024.

Sanofi Aventis is still expected to announce a similar price cut soon.