Metro Detroit Counties First In Michigan To File Lawsuits Over Insulin Price-Fixing

 

Detroit — Four Michigan counties filed lawsuits against pharmacy benefit managers and pharmaceutical manufacturers Wednesday, claiming "excessive costs" for insulin in what are the first diabetes drug price-fixing lawsuits by governmental bodies in the state.

Wayne, Washtenaw, Macomb and Monroe officials announced the lawsuits at a news conference Wednesday at the Detroit Rescue Mission Ministries. Though they are the initial price-fixing lawsuits for the drug to be filed in Michigan, attorneys expect more to follow.

Detroit Mayor Mike Duggan said the city also plans to file a lawsuit, and requested on Wednesday that the City Council authorize it.

"In the city of Detroit, we have more than one out of six of our residents who are suffering from diabetes today," Duggan said. "If they are not on Medicare, they're subject to the same gouging."

The lawsuits come as the price of insulin has increased dramatically, nearly tripling between 2002 and 2013, according to the Journal of the American Medical Association Network website. The issue has drawn the attention of the Biden administration, which capped out-of-pocket insulin costs for Medicare patients at $35 last year. Biden said in 2023 that benefit should be expanded to everyone and not just those on Medicare.

The complaints were filed in the U.S. District Court for the District of New Jersey, where previous insulin price-fixing lawsuits were consolidated along with future municipal cases. The counties are suing to recover damages associated with the costs that county employees, retirees and their dependents, and other county programs have paid for insulin over the last 20 years.

Three manufacturers dominate the insulin market worldwide, pushing up the price and forcing many diabetic people to forgo treatment or limit their insulin use, critics have said.

The counties allege three insulin producers, Indiana-based Eli Lilly and Co., Delaware-based Sanofi-Aventis U.S. LLC and Novo Nordisk Inc., have engaged in a scheme with at least 15 pharmacy benefit managers to artificially inflate the price of insulin, according to court filings.

"Wayne County pays an awful lot of money for drugs, particularly insulin in this case for its employees, and we've been gouged and we know we've been gouged, and that money needs to be recouped," Wayne County Executive Warren Evans said. "We want that money back. We want to be able to use that money for the kinds of things that will help make health care in Wayne County an easier thing to tackle and deal with."

Macomb County expects to spend about $64 million in the 2024 budget for employees' and retirees' health care benefits. Roughly 2% of that will go for insulin costs, Hackel said.

"But it's not just with our retirees and those that are active employees," Hackel said. "We have a jail to maintain and we have to deal with managed care for inmates."

The pharmacy benefit managers and manufacturers are accused of violating the Racketeer Influenced and Corrupt Organizations Act, the Sherman Anti-Trust Act, the Michigan Anti-Trust Act and the Consumer Protection Act, said Melvin Butch Hollowell, an attorney with the Miller Law Firm in Rochester, Michigan, at the news conference.

PBMs are third-party administrators of prescription drug programs for health plans including state government employee plans, commercial health plans and self-insured employer plans.

The counties claim in the lawsuit that the PBMs demand large rebates from the manufacturers in exchange for putting their insulin products on their preferred drug list and increasing sales. The local governments claim that the rebate amounts are kept secret, and the manufacturers continuously increase insulin prices and pass the costs on to the public, according to the Washtenaw County filing.

"CVS Caremark, Express Scripts, and OptumRx are PBMs that work in concert with the manufacturer defendants to dictate the availability and price of the at-issue drugs for most of the U.S. market," the filing asserts.

The three manufacturers controlled roughly 92% and 96%, by volume and revenue respectively, of the global market for diabetes drugs in 2020, according to the filing by Washtenaw County. The three main pharmacy benefit manager defendants, CVS Caremark, Express Scripts, and OptumRx, control more than 80% of the PBM market.

The lawsuits, which are similar, seek injunctive relief or the suspension of alleged price gouging conduct that has caused insulin prices to "explode" in the U.S., according to the Washtenaw County filing.

Sanofi did not comment on the specific allegations in the lawsuits but said its pricing practices always have complied with the law and it is committed to helping patients access their medicine at the lowest possible price.

"Under the current system, fees and savings negotiated by health insurance companies and PBMs through rebates are not consistently passed through to patients in the form of lower co-pays or coinsurance," Sanofi said. "As a result, patients’ out-of-pocket costs continue to rise while — between 2012 and 2022 — the average net price of our insulins declined by 58%." 

Sanofi also said that no one should struggle to pay for insulin. The company offers several patient-centric savings programs to help people reduce their prescription medicine costs, it said. 

"While we will not comment further about ongoing litigation, we recognize that not all patient situations are the same and we have a number of different insulin affordability offerings available through NovoCare," the company said. "Importantly, we continually review and revise our offerings as well as work with diverse stakeholders to create solutions for differing patient needs."

Novo Nordisk said it offers affordable insulin options, some in conjunction with national pharmacies, ranging in price from $35 to $25 per vial.

"Novo Nordisk also has an Immediate Supply program in the U.S. where eligible patients at risk of rationing can receive a one-time, free, short-term supply of insulin (up to three vials or two packs of pens)," the company said.

The company announced a price reduction last month for several insulin products. The price of two legacy insulin brands, for example, was reduced by 75% and now costs $72.34 for a vial and $139.71 for a flex pen, or pre-loaded insulin dispenser.

Novo Nordisk said the allegations in the lawsuits are without merit and the company intends to "vigorously" defend itself.

Eli Lilly said the company has been working to reduce out-of-pocket costs for insulin and that the health care system incentivizes local governments to choose higher list-price medicines over lower-priced options. Last year the company capped out-of-pocket costs for their insulins at $35 a month and the average monthly cost for customers is $20.48, it said.

"These complaints are baseless and should be dismissed, just like cases brought by other local governments have been," the company said. "It’s the local governments filing these lawsuits — not Lilly — who decide the terms of the rebate arrangements they now say are improper, including whether to pass rebates on to people who take insulin."

CVS Caremark said pharmaceutical companies, not PBMs, are responsible for setting market prices.

"Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products and we would welcome such an action," the company said. "Allegations that we play any role in determining the prices charged by manufacturers for their products are false, and we intend to vigorously defend against this baseless suit."

Express Scripts and OptumRx, did not immediately respond to requests for comment.

Insulin is naturally produced by the body in response to high blood sugar. People with diabetes either cannot produce enough insulin or cannot use it as well as they should, according to the Centers for Disease Control and Prevention.

Nearly 1 million people in Michigan, about 12% of the population, had diabetes in 2023, according to the American Diabetes Association. Evans said residents often have to forgo insulin treatment because they can't afford it.

"If you're not getting enough insulin, your blood pressure your blood sugar is routinely too high and that you are running the risk of long-term consequences: loss of hearing loss of sensation in your legs, cardiovascular disease, stroke," said Abdul El-Sayed, Wayne County medical director.

When it was first awarded over 100 years ago, the patent for insulin was sold to the University of Toronto for $1 to ensure it was accessible and affordable.

"The normal drivers of cost increases in the pharmaceutical arena, which is primarily research and development, does not exist with insulin in any meaningful way," said Mark Bernstein, an attorney in the case. "The cost increases that we're talking about is not supported by that type of justification."