djr-2019-01-17-news-fitch-agp3

Mississippi Attorney General Lynn Fitch

JACKSON • Attorney General Lynn Fitch is suing six major companies over an “insulin pricing scheme” that she says inflated the diabetes drug’s price by as much as 1,000% over the past decade and ripped off Mississippi patients and taxpayers.

The 108-page suit, filed last week in Hinds County Chancery Court, names some of the world’s largest drugmakers, including Eli Lilly, Novo Nordisk and Sanofi, as well as some of the biggest pharmacy benefit managers in CVS Caremark, Express Scripts and OptumRx. It claims the defendants’ efforts to manipulate and inflate prices have resulted in both the state of Mississippi as well as diabetes patients being overcharged by millions of dollars per year.

“As the mother of a diabetic, I know the emotional, physical, and financial toll the unconscionable price of insulin has on families,” the Republican AG said in a statement announcing the suit. “I filed this lawsuit on behalf of every Mississippian who relies on this medication to survive. These companies are exploiting the vulnerable. I’m fighting back because you should never have to decide between paying the ever-increasing price of insulin or compromising your care.”

The lawsuit opens by noting that diabetes is an epidemic in Mississippi: More than 400,000 Mississippians, or nearly 14%, have the disease – the highest prevalence in the country. It’s the seventh-leading cause of death in Mississippi and frequently causes blindness, kidney failure and limb amputations, the suit notes.

And, at least in the U.S., it’s expensive to treat: Roughly 1 in 4 health care dollars in the U.S. goes to treating diabetes.

Over the last 15 years, the AG wrote, the drug manufacturers “have in lockstep raised the reported prices of their respective diabetes drugs in an astounding manner despite the fact that the cost to produce these drugs has decreased during the same time period.”

The suit alleges that insulin drugs which cost manufacturers around $2 to make – and that were originally priced around $20 when they came out more than two decades ago – now run anywhere from $300 to $700. That’s despite nothing changing over that time about the drug itself, attorneys wrote.

Also part of the “insulin pricing scheme” are drug middlemen known as pharmacy benefit managers, the complaint says. These companies set up lists of preferred drugs, known as formularies, essentially choosing which insulin medicines are covered, and not covered, by insurers. This drives the utilization of certain drugs, the complaint says, and means pharmacy benefit managers “wield enormous control over drug purchasing behavior” – a fact drug manufacturers know well.

The suit alleges that manufacturers gain access to these preferred drug lists by raising their prices, then secretly paying a chunk of that increase back to the pharmacy benefit managers or PBMs. These payments are often labeled as rebates or discounts – but Fitch alleges in reality they are a “quid pro quo” for the manufacturer’s drug being placed by the PBM on the preferred list, so that more will be sold.

The PBMs make money off this arrangement, too, the court documents allege, including by “retaining a significant – yet undisclosed – percentage of the secret Manufacturer Payments.” PBMs argue they help lower the price of insulin and other drugs thanks to bargaining power that comes from serving as middlemen and controlling the preferred drug lists. Fitch argues in the lawsuit it’s actually the opposite.

“PBMs are not lowering the price of diabetes medications as they publicly represent – they are making billions of dollars by fueling these skyrocketing prices,” the court papers say.

Fitch alleges that the result of this alleged arrangement between manufacturers has resulted in the state – via the state employee health plan, the Division of Medicaid and other agencies – being overcharged by millions of dollars per year for insulin. And diabetics who must pay for their medication out-of-pocket – and face steadily-rising prices – have also been overcharged by millions. Insured diabetics, too, have faced higher prices, as they often still cover a substantial amount of the drug cost out-of-pocket, according to the lawsuit.

“For diabetic Mississippians, the physical, emotional, and financial tolls of paying such excessive prices for diabetes medications is devastating,” the lawsuit states. “Unable to afford the drugs their doctors prescribe, many diabetics in Mississippi are forced to ration or under-dose their insulin, inject expired insulin, reuse needles, and starve themselves to control their blood sugars with as little insulin as possible.”

The AG alleges violations of the Mississippi Consumer Protection Act, as well as unjust enrichment and civil conspiracy.

The Daily Journal reached out to the six companies Wednesday for comment. Only two responded: CVS Caremark and Novo Nordisk. Both denied the allegations.

“We are aware of the complaint and disagree with the allegations made against the company,” a Novo Nordisk statement said. “We are vigorously defending ourselves in these matters. At Novo Nordisk, we have a longstanding commitment to supporting patients’ access to our medicines.”

Mike DeAngelis, a CVS spokesman, said: “The allegations made in this lawsuit are built on a false premise and completely without merit. Pharmaceutical companies alone are responsible for the prices they set in the marketplace for the products they manufacture. Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products and we would welcome such an action. Allegations that Caremark plays any role in determining the prices charged by manufacturers for their products are false, and we intend to vigorously defend against this baseless suit.”

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