Milberg Representing Various Entities in Insulin Overpricing Litigation
by Kaitlin Gagnon
Milberg attorneys are prepared to represent states, counties, municipalities, school districts, and other entities that maintain self-funded healthcare plans against insulin manufacturers for the cost of artificially overpriced insulin medication.
Lawsuits have been filed against insulin manufacturers and pharmacy benefit managers (“PBMs”) by at least nine states and the territory of Puerto Rico, as well as dozens of local governments across the country (In re: Insulin Pricing Litigation, MDL No. 3080).
Insulin: A Growing Demand
Insulin is a hormone produced by the pancreas responsible for the regulation of the body’s blood sugar levels. If the pancreas does not produce enough insulin naturally, it leads to elevated blood sugar levels, typically resulting in diabetes.
Prescription insulin is used to control diabetes and bolster the body’s ability to process food into energy.
In 2021, 38.4 million Americans – accounting for 11.6% of the population – had diabetes, with 1.2 million Americans newly diagnosed each year.
While the market demand for insulin consistently grows, the cost of the medication has taken a concerning turn.
Insulin, which cost manufacturers as little as $2 per vial to make – once priced at $20 per vial in the 1990s – now range in price from $300 to over $700 per vial.
Of concern, insulin list prices continue to rise, driven by multiple complex factors including manufacturers competing by offering greater proprietary rebates to pharmacy benefit managers for formulary placement.
Understanding Insulin Overpricing
The artificial overpricing of insulin in the United States is the direct result of the coordinated actions of the manufacturers and PBMs that control the insulin market.
Only three manufacturers – Eli Lilly, Novo Nordisk, and Sanofi – control the supply and distribution of 96% of the insulin supply chain. Meanwhile, three pharmacy benefit managers – CVS Caremark, Express Scripts, and Optum – control 75% of the prescription drug market.
Most health insurers contract with third-party PBMs to manage their prescription drug plans. The PBMs control which medications are included on the health plan’s formulary, the list of brand name and generic prescription drugs covered by a given health plan.
However, PBMs can also negotiate rebates with the drug manufacturers, thereby controlling which manufacturer’s drugs receive favorable placement on the PBM’s standard formulary.
To offset PBM rebates, manufacturers have in turn dramatically increased the cost of insulin, often in lockstep with one another.
The result of this practice?
Manufacturers can drive sales and increase revenues by obtaining favorable placement on the PBM’s formulary, while PBMs profit through rebates, passing on the increased cost of insulin to consumers.
Federal Trade Commission Takes Action
This concerning conduct has raised red flags – not only for consumers – but for the Federal Trade Commission.
In September 2024, the FTC brought action against the “Big Three” PBMs.
The FTC alleged the prescription drug benefit managers engaged in, “anticompetitive and unfair rebating practices that have artificially inflated the list price of insulin drugs, impaired patients’ access to lower list price products, and shifted the cost of high insulin list prices to vulnerable patients.” The FTC further alleged the PBMs created a “perverse drug rebate system” which excluded affordable options in favor of “high-list price, highly rebated” insulin products.
A subsequent statement also pointed to the role the major insulin manufacturers played in the alleged scheme.
Indeed, all drug manufacturers should be on notice that their participation in the type of conduct challenged here raises serious concerns, and that the Bureau of Competition may recommend suing drug manufacturers in any future enforcement actions.
Milberg’s State & Local Government Group
State and local governments have a fundamental responsibility to provide for the welfare of the public.
Milberg’s State & Local Government Practice Group attorneys have achieved success against some of the world’s largest and most powerful corporations, including drug companies, tobacco companies, mining companies, and oil and gas companies – even bringing forth PFAS litigation.
States, local governments (counties, municipalities, school districts, and special districts), unions, and other self-funded organizations that paid or reimbursed for insulin medication have claims against the manufacturers and PBMs for the overpricing scheme.
The potential for damages is substantial; Milberg’s State & Local Government Practice Group is well prepared to represent such entities to bring compensatory relief to those who have been affected.
