The Type 1 Diabetes Defense Foundation Files Lawsuit to Compel Disclosure of Manufacturers’ Effective Net Realized Prices for Insulin

 For immediate release.

Summary: The Type 1 Diabetes Defense Foundation has filed a lawsuit in federal court seeking disclosure of manufacturers’ net realized prices on insulin and now calls for support to expand its campaign to make insulin affordable again. The lawsuit alleges that for years insulin manufacturers and PBMs have conspired to hide the actual U.S. price of insulin—the heavily rebated prices that PBMs and insurers actually pay, instead of the artificially inflated list prices used by PBMs to calculate consumer pre-deductible and coinsurance payments. T1DF separately observes that the American Diabetes Association has continued to fundraise off the “staggering cost of diabetes” and engaged in behind-the-scenes meetings with insulin manufacturers, but has failed to take direct action to expose the exploitative dual-pricing scheme and protect people with diabetes from artificially high insulin prices and cost-related stigma. T1DF now seeks to fill the crucial role of U.S. diabetes watchdog that the ADA has thus surrendered.

March 30, 2017 - Eugene, OR. The Type 1 Diabetes Defense Foundation has retained class-action law firm Keller Rohrback and on March 17, 2017, filed a lawsuit against the nation’s three largest pharmacy benefit managers, Express Scripts, OptumRx, and CVS Caremark, and the three major insulin manufacturers, Sanofi-Aventis, Novo Nordisk, and Eli Lilly (Boss v. CVS Health Corp, 3:17-cv-01823). Learn more about Keller Rohrback's insulin overpricing case.

The lawsuit alleges that PBMs, insurers and insulin manufacturers have conspired to hide from consumers their dual pricing scheme and to mislead consumers to believe that unrebated list prices—assessed at the pharmacy point of sale and used by PBMs to calculate pre-deductible or coinsurance payments—represented the actual costs PBMs and insurers paid for insulin, while hiding the increasingly large kickbacks received from manufacturers (kept by PBMs and insurers), and thus the much lower effective net prices realized by manufacturers on analog insulins.

The following is a statement from the Type 1 Diabetes Defense Foundation:

Contrary to statements by the American Diabetes Association, the insulin pricing process is not mysterious: as PBMs have demanded ever larger rebates, manufacturers have exponentially increased analog insulin list prices to preserve their profit margins. Nor is price inflation new: Truven Health Analytics data reported last September by Business Insider shows list prices for Novolog and Humalog had already increased by 150% between 2000 and 2010, in the run-up to overall price increases of over 300%. By early 2016, the out-of-control "gross-to-net" pricing bubble, warped rebate-driven channel incentives and related wasteful costs had been thoroughly documented. Restrictive formulary manipulations—critical for extracting rebates from manufacturers—had become so prevalent that Express Scripts described these in their April 2016 answer to an Anthem lawsuit (Anthem, Inc. v. Express Scripts, Inc. (16 Civ. 2048)) as “standard industry practice” consistent with “modern benefit designs.” By the close of 2016, just one crucial missing piece remained to be exposed: the actual net prices realized by manufacturers, after delivering rebates on analog insulins potentially as high as 75% off public list prices.

Journalist David Lazarus wrote on insulin pricing late in 2016, “Drug companies respond only to the public embarrassment of being caught exploiting the misfortunes of the sick.” Charles Fournier, T1DF’s Director of Legal Advocacy, notes that drug companies also respond to lawsuits. But nearly a year after Yale endocrinologist Kasia Lipska’s “Break Up the Insulin Racket” was published in The New York Times, first bringing PBM rebating on insulin to public attention, PBMs, manufacturers and insurers had neither been  embarrassed into ending PBM-controlled dual pricing for insulin nor sued to disclose manufacturers’ effective net prices.  

Throughout 2016, despite increasing social media pressure from activists inside and outside the U.S. (including T1International’s #Insulin4All campaign) and attention from investigative journalists, industry-financed patient advocacy organizations—including the ADA and JDRF—the Endocrine Society, and sponsored diabetes news outlets instead engaged in evasive action. They called for conciliatory “continued dialogue across the diabetes marketplace,” endorsed manufacturer Patient Assistance Programs that charge patients almost twice manufacturers’ apparent net realized prices, and misleadingly blamed insulin price increases on unspecified “government-protected monopolies.” The ADA and the Endocrine Society even suggested walking back the analog standard of care. Following a November 2016 meeting with insulin manufacturers, the ADA claimed only a Congressional investigation could reveal why analog insulin prices had skyrocketed, and then launched a public petition campaign and “online hub for insulin affordability advocates” that made no mention of pricing mechanisms, thus effectively leaving Pharma lobbyists in control of proposing “solutions” to Congress.

“For years, the ADA and JDRF have contributed to stigma against people with diabetes by fundraising for research off ‘the staggering cost of diabetes in America,’ indirectly blaming people with diabetes for costing U.S. taxpayers in excess of $200 billion annually in Medicare dollars alone,” says Fournier. “Yet as the exploitative nature of the dual pricing scheme has become increasingly clear, these diabetes PAOs have taken no concrete action to bring down that artificially inflated ‘staggering cost.’ When people are dying because they can’t afford insulin, it is no longer time for petitioning and behind-the-scenes meetings. It is time to publicly embarrass PBMs, manufacturers, and insurers for exploiting people with diabetes, time to embrace price transparency lawsuits, to campaign for the end of rebate-driven dual pricing, and to demand immediate full disclosure of the effective net price for analog insulins actually realized by manufacturers.”

For the pharmaceutical industry, the stakes are high. The stakes are even higher for patients. With the 2016 issuing of the CMS Final Rule on Medicaid pricing—and its “best price available” mandate—the industry’s current challenge is to anchor all prices, including Medicaid reimbursement prices, at the highest possible point. T1DF retained Keller Rohrback and filed Boss v. CVS Health in pursuit of the opposite goal: to make insulin affordable again. Net price transparency and cost-based pricing will also benefit people with other “costly” chronic conditions including HIV/AIDS and hemophilia. We are now asking individuals and philanthropic organizations who care about U.S. drug affordability to lend their vocal support and to fund T1DF’s fight for pricing transparency.


About T1DF

The Type 1 Diabetes Defense Foundation is a nonpartisan Oregon-based 501(c)(3) nonprofit dedicated to advancing equal rights and opportunities for Americans with type 1 and other forms of insulin dependent diabetes. T1DF accepts no funding from the pharmaceutical, medical device, pharmacy benefit management, or insurance industries or from any organization they fund. We support regulatory frameworks in which manufacturers compete directly on innovation and price to consumers and where drug channel actors can engage in open and efficient price arbitraging, without price discrimination and asymmetries of information.

T1DF is currently a plaintiff in two cases that name Eli Lilly as a defendant: Boss, et al. v. CVS Health Corporation, et al. (United States District Court, District of New Jersey, No. 3:17-cv-01823-BRM-LHG — insulin pricing), and Bewley, et al. v. CVS Health Corporation, et al. (United States District Court, Western District of Washington, No. 2:17-cv-00802-RAJ — glucagon pricing). 

###

Read the full press release