California sues drug makers, PBMs over rising prices for insulin

California has joined the legal fight over insulin prices for patients with diabetes.

State Attorney General Rob Bonta this week filed suit against insulin makers and pharmacy benefit managers (PBMs) “for driving up the cost of the lifesaving drug through unlawful, unfair, and deceptive business practices in violation of California's Unfair Competition Law.” The lawsuit claims Eli Lilly, Novo Nordisk, Sanofi, which make more than 90% of the global insulin supply, and PBMs CVS Caremark, Express Scripts, and OptumRx, which manage about 80% of prescriptions across the country, have used their market power to overcharge patients.

The lawsuit will fight back against pharmaceutical giants and PBMs that inflate prices for vulnerable patients, Bonta said in a news release.

“Insulin is a necessary drug that millions of Americans rely upon for their health, not a luxury good,” Bonta said in the news release.

“No one should be forced to ration or go without basic medication that could mean the difference between life or death,” Bonta said. “California will continue to be a leader in the fight to ensure everyone has equal access to affordable healthcare and prescription medications they need to stay healthy.”

The lawsuit seeks control of insulin costs through greater competition and barring deceptive pricing practices, and recovery for California residents who overpaid for the drug.

Other actions

The California lawsuit follows several state and federal actions involving PBMs in 2022.

In June last year, the Federal Trade Commission (FTC) voted to examine rebates and fees paid by drug makers to PBMs for disfavoring lowest cost drugs. The FTC announced a new inquiry into business practices of the six largest PBMs.

In the FTC’s June meeting, a spokeswoman for the Pharmaceutical Care Management Association argued PBMs use market forces to push drug makers and pharmacies to lower prices for patients and health plan sponsors. It is possible regulatory action on PBMs would hurt physicians and patients through greater costs.

In December 2020, Arkansas then-Attorney General Leslie Rutledge won a case in the U.S. Supreme Court for state regulation over PBMs. Rutledge last year filed suit against drugmakers over rising insulin prices.

In the courthouse

The California attorney general’s lawsuit recounted the historical rise in insulin prices over the last two decades, with patients now paying “thousands of dollars per year for insulin.”

Bonta said the U.S. insulin market is an oligopoly controlled by the three drug makers that control 95% of the global insulin market, and that drive up prices for a drug that costs less than $10 a month to make. The PBMS promote higher-priced insulin products over lower-priced ones due to their secretive pricing and rebate strategies, the complaint said.

While they engage in a civil conspiracy to boost prices, patients – many of them Black, Hispanic, or in low-income communities – must ration insulin or skip doses while risking loss sight, limbs, or life. Bonta estimated about 3 million Californians, or about 10% of the state’s population, have diabetes, with many of them dealing with Type 2 diabetes that progresses over time in adults.

Federal regulations have made it difficult or impossible for new sellers to enter the U.S. market for analog insulin, the lawsuit said. The current drug manufacturers benefit from charging prices that are not justified by additional research on diabetes or the cost of making insulin.