Insulin Pricing in Crisis: Lawsuits and Legal Actions Shaping the Future
The escalating cost of insulin—a vital medication for millions managing diabetes—has triggered significant legal and regulatory action in recent years. Multiple major pharmaceutical companies and pharmacy benefit managers (PBMs) have come under increasing scrutiny from patients, advocacy groups, and government agencies over allegations of price inflation and anticompetitive practices.
A Widespread Crisis
More than 37 million Americans – 11% of the population – live with diabetes, according to the American Diabetes Association. For many, insulin is not optional; it is life-sustaining. However, in the past two decades, the price of insulin has surged by up to 1000%, despite minimal technological innovation.
A 2022 Yale study highlighted the devastating human impact of this pricing surge: over a million Americans are forced to spend more than 40% of their post-subsistence income on insulin. The resulting affordability crisis has left too many families choosing between essential medication and other basic needs.
Impact on Patients and the Healthcare System
The high cost of insulin has led some patients to resort to dangerous measures. The Federal Trade Commission (FTC) investigations found significant evidence that less expensive insulin products were systematically excluded by PBMs in favor of higher cost products, making the medication unaffordable for patients. This leads many to attempt to ration their medication, a highly dangerous practice that often results in severe health complications and even death.
The FTC currently is investigating these practices further to establish a new precedent for transparency and fairness in drug pricing. Lawsuits have been filed to compensate the victims.
Class Action Lawsuits
In 2017, a class-action lawsuit was filed against the three major insulin manufacturers, including Eli Lilly, Novo Nordisk, and Sanofi, accusing them of conspiring to inflate insulin prices. The plaintiffs argued that these companies set artificially high list prices, while providing rebates to PBMs to secure favorable formulary placements, increasing out-of-pocket costs for patients and violating federal antitrust laws. The lawsuit stated that the price of insulin, previously set at $25, was raised to between $300 and $450, causing significant strain on health insurers and their patients who needed the lifesaving drug.
In May 2023, Eli Lilly agreed to a settlement that included a $13.5 million payment and a commitment to cap out-of-pocket insulin costs at $35 per month for four years. Initially the settlement was seen as a significant step toward making insulin more affordable. However, in April 2024, the settlement was abandoned following a ruling by U.S. District Judge Brian Martinotti, who declined to sign off on the settlement, citing the concerns of nine U.S. states that the agreement would be used to shield the company from future lawsuits by states.
Regulatory Actions and Investigations
Beyond class action lawsuits, regulatory bodies have intensified their scrutiny of insulin pricing practices. In July 2024, the FTC launched an investigation into PBMs, examining their role in drug pricing and potential conflicts of interest. The FTC’s interim report highlighted concerns that PBMs may have contributed to higher drug prices through complex rebate systems and preferential treatment of certain medications.
Additionally, in September 2024, the FTC filed lawsuits against the three largest PBMs—OptumRx, Express Scripts (ESI), and CVS Caremark (also known as the “Big Three”), and their affiliated group purchasing organizations (GPOs), Zinc Health Services, Ascent Health Services, and Emisar Pharma Services—alleging that their practices led to inflated insulin prices and limited access to more affordable alternatives. These companies administer nearly 90% of all prescriptions in the United States.
Ultimately, the goal of these lawsuits is to prohibit these PBMs from favoring medications that yield higher profits at the expense of patients in the future.
Multi-District Litigation (MDL) Lawsuits: The Path to Accountability
In late 2023, lawsuits against insulin manufacturers and PBMs consolidated into a multi-district litigation (MDL) in the United States District Court of New Jersey (Case 2:23-md-03080-BRM-RLS. This is a federal case, so any group or individual in the United States with a qualifying claim may join the lawsuit. The MDL establishes three litigation tracks:
- Self-Funded Payer Track
- State Attorney General Track
- Third-Party Payer Class Track
These tracks aim to address the injustices of the insulin pricing scheme by seeking:
- Injunctive relief– to halt predatory pricing practices and protect self-funded plans and their members from further harm.
- Reimbursement– for those who have overpaid due to artificially inflated insulin prices.
- Seizure of illicit revenues– amassed by PBMs and manufacturers.
- Punitive damages– to deter similar misconduct in the future.
Who Can Join?
The burden of exploitative insulin pricing falls heavily on self-funded healthcare plans and their members/patients, including self-funded U.S. government entities and unions at the state, county, and city levels. These groups and the individuals in them have a unique opportunity to hold insulin manufacturers and PBMs accountable by joining the litigation.
Generally, you may qualify if you:
- Are a diabetic patient (or are an insurer of one) who has paid for insulin out-of-pocket or through insurance;
- Are part of a self-funded health plan that has incurred increased costs due to high insulin prices; or
- Represent a health plan or organization whose inflated prices have been financially impacted
The state of insulin, as well as other prescription pricing is undergoing significant changes due to these legal challenges and regulatory interventions. If you represent an affected entity or want to learn more about filing a claim, reach out to our team here at Herd Law Firm at 713-955-3699 or charles.herd@herdlawfirm.com for more information about filing a claim!
11/15/2024
