Insulin Pricing Scheme Litigation
Why Has the Price of Insulin Skyrocketed?
While the public has seen the price of insulin dramatically increase as much as 1,000%, the production cost of insulin has actually decreased in recent years due to efficiency, optimized processes, and minimal innovations. One study found that, based on production costs, a year’s supply of insulin should be $48 to $71 per person and even at those prices, manufacturers would still earn generous profits. Another study found that manufacturers could even be profitable charging less than $2 per vial for insulin. Nevertheless, according to the National Institutes of Health, the average diabetic spends nearly $6,000 on insulin every year.
What is the Insulin Pricing Scheme Alleged in Recently Filed Lawsuits?
According to court filings, government reports, and the FTC, the alleged Insulin Pricing Scheme is a multi-billion-dollar price-fixing scheme orchestrated by the three largest PBMs. Cases filed by health plans and State Attorneys General also blame the three leading manufacturers of insulin. Three manufacturers control the U.S. market for insulin, while three PBMs control the market for PBM services. According to the legal actions and government investigations, the following activities are at the core of the alleged insulin pricing scheme:
- PBMs control what drugs are covered under health insurance plans through their management of formularies. Over the years, PBMs allegedly demanded increasingly large “rebates” from insulin manufacturers for preferred placement on the PBMs’ formularies.
- For their part, the manufacturers allegedly agree to pay those rebates because preferred placement on the PBMs’ formularies means greater market share for their drugs (and greater profits) which get passed on to health plans and patients.
- As outlined in the FTC’s complaint, the agreed upon structure where manufacturers bid based on rebates instead of price, allows prices to be raised without fear of price competition.
Who is Affected by the Insulin Pricing Scheme?
Self-funded health plans, State Attorneys General and the FTC are seeking to change these practices and recover for the substantial financial losses they allegedly suffered from these practices. Depending on the size of the health plan, the cost could be tens of millions of dollars.
What Can Be Done?
The conduct at issue in these cases gives rise to a number of potential legal claims. Among other potential causes of action, plaintiffs have asserted claims for violations of RICO, deceptive and unfair trade practices, and unjust enrichment. Through these claims, plaintiffs are seeking to obtain money damages and disgorgement for the alleged excessive insulin prices paid in the past and they also are seeking to ensure that those rates are not charged in the future.
Potential remedies sought include:
- Money wrongfully paid for artificially inflated insulin prices on behalf of insured beneficiaries. For some claims, the damages awarded may be trebled – not only compensate for expenses wrongfully incurred, but also to deter similar future behavior.
- Injunctive relief to stop the alleged insulin pricing scheme.
- Disgorgement of ill-gotten gains.
- Punitive damages designed to punish past misconduct and to deter future misconduct.
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About Baron & Budd
With more than 40 years of experience, Baron & Budd has the expertise and resources to handle complex litigation throughout the United States. As a law firm that takes pride in remaining at the forefront of litigation, Baron & Budd has spearheaded many significant cases for hundreds of public entities and tens of thousands of individuals. Since the firm was founded in 1977, Baron & Budd has achieved substantial national acclaim for its work on cutting-edge litigation, trying hundreds of cases to verdict and settling tens of thousands of cases in areas of litigation as diverse and significant as dangerous and highly addictive pharmaceuticals, defective medical devices, asbestos and mesothelioma, wildfires, environmental contamination, fraudulent banking practices, e-cigarettes, motor vehicles, federal whistleblower cases, and other consumer fraud issues.