Texas attorney general sues insulin makers and pharmacy middlemen over high costs

(Reuters) – The Texas attorney general has sued leading insulin manufacturers and pharmacy benefit managers (PBMs), accusing them of collaborating to inflate the cost of insulin.

Texas Attorney General Ken Paxton’s office said on Thursday it had sued insulin makers Eli Lilly (NYSE:), Novo Nordisk (NYSE:) and Sanofi (NASDAQ:).

The office had also sued PBMs, including CVS’ Caremark, Cigna (NYSE:)’s Express Scripts, and UnitedHealth (NYSE:)’s OptumRx, who act as intermediaries in negotiating drug prices and coverage.

WHY IT’S IMPORTANT

The lawsuit targets both insulin manufacturers and PBMs. The previous action by U.S. antitrust regulators only targeted PBMs.

The U.S. Federal Trade Commission, in September, sued the same PBMs, accusing them of steering diabetes patients towards higher-priced insulin in order to secure millions of dollars in rebates from pharmaceutical companies.

At that time, the FTC had not sued the insulin manufacturers, but had criticized their role in what it called a broken system.

CONTEXT

In the Texas lawsuit, Paxton accused that manufacturers artificially raised the prices of insulin and then paid a significant, undisclosed portion back to the PBMs for preferential treatment in return.

The PBMs subsequently awarded preferred status to the manufacturer with the highest list prices, while excluding lower-priced drugs, the press release from the attorney general’s office said.

KEY QUOTE

“Big Pharma insulin manufacturers and PBMs worked together to take advantage of diabetes patients and drive prices as high as they could,” said Paxton.

“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,” said CVS in an emailed statement.

“Novo Nordisk believes that the allegations in the lawsuit are meritless, and we intend to vigorously defend against these claims,” a company spokesperson told Reuters.

The other companies did not immediately respond to a request for comment.