T1DF president files motion in support of PBM/insurer track in the insulin class action

On Friday, April 6, 2018, T1DF president Julia Boss, as an individual pro se plaintiff, challenged the attempt by several class action law firms, led by Steve Berman and James Cecchi, to curtail the right of people with type 1 and other insulin-dependent diabetes to seek immediate relief from alleged insurer and PBM co-conspirators. She asked the Court to rule on establishing a concurrent litigation track against insurers/PBMs. Such a ruling would create a dual-track process similar to that already existing in the ongoing EpiPen litigation.

This brief, filed in New Jersey federal court (Civil Action No. 17-699-BRM-LHG) supports the previously filed Motion for Reconsideration of the Consolidation Order (Dkt. Entry 89) and responds to the opposition brief (Dkt. Entry 133) filed on April 2, 2018, by interim co-lead counsel and all law firms supporting their manufacturer-only litigation strategy, including Hagens Berman, Keller Rohrback (T1DF's former counsel retained in February 2017 to establish a PBM/insurer track), Weitz & Luxenberg, and Carella, Byrne, Cecchi, Olstein, Brody & Agnello (concurrently representing Novo Nordisk's shareholders) and Berman Tabacco. 

Boss reminded the attorneys who are trying to pry control of the insulin pricing case away from plaintiffs that she is a plaintiff in her own right as the parent of a child who depends on insulin to live: “My daughter, like any other person with type 1 diabetes, could die of DKA if, next month, I were unable to pay the inflated price my insurer demands for a vial of analog insulin.” She explained that on a Bronze ACA plan her insurer forces her to pay $273.58 for a 10 ml vial of Novolog, the analog insulin that keeps her daughter alive—while her insurer pays a low net price for that same vial, likely no more than $65 according to current reporting from Credit Suisse, SSR Health, and Bloomberg.

The desperate situation patients are facing as the direct result of the insurers’ rebate capture scheme isn’t a matter of mere “disagreement” with class action attorneys who themselves don’t want to sue insurers; it’s a matter of life and death.

Insurers are not retailers of prescription drugs: their profits are supposed to come from uniform premiums we all pay, not from treating life-saving insulin as an opportunity to price-gouge captive plan members, buying low and selling high. The insured patient’s financial responsibility properly ends at the net cost of drugs to her insurer. Yet insurers and other third-party payers have decided to base patient payments on skyrocketing list price, not the insurers’ far lower net cost (after large rebates are paid back to insurers by insulin manufacturers). The rebate-fueled ‘insurance list price’ of insulin has thus skyrocketed, and so have age-adjusted DKA hospitalization rates. The desperate situation patients are facing as the direct result of the insurers’ rebate capture scheme isn’t a matter of mere “disagreement” with class action attorneys who themselves don’t want to sue insurers; it’s a matter of life and death.

Concurrent litigation does not exonerate the manufacturers—it merely recognizes that when a house is on fire, with children trapped in an upstairs bedroom by raging flames, firefighters don’t just turn the high-pressure water on the garage. In this case, we should be fighting the PBM/insurance house fire immediately, not letting it burn for months or years while class action attorneys focus on the manufacturer garage. Yes, insulin manufacturers have secured supra-competitive net prices in the U.S.—they’re now earning about $30 per vial more than they do in Europe or Canada, where dual pricing does not exist. But the manufacturers’ ancillary benefit indirectly derived from the PBM/insurer-controlled rebate-capture enterprise pales in comparison with the additional payments over and above net cost that insurers now force people with insulin-dependent diabetes to pay: over $200 per vial.

We should be fighting the PBM/insurance fire immediately, not letting it burn for months or years.

Addressing the entire system concurrently is especially critical as manufacturers and insurers have begun negotiating “value-based” contracts that try to re-characterize rebates as a good that can be selectively delivered to some patients but not others, for example as a reward for compliance. A PBM/insurer track is crucial to establishing that all patients are entitled to see their payments based on the insurer’s low net cost—the only way to align insurers behind the patients’ need for a single low price.

Since interim co-lead counsel are unwilling to pursue the PBM/insurer claims, Boss is urging the Court to “do something meaningful to abate this crisis and to do it in 2018”—citing Judge Dan Polster’s comment on the urgency of the opioid litigation, because in the insulin class action human lives are also at stake, and delay is also unconscionable. Now is the time to address issues that the Court set aside last September, “including but not limited to the issue of joinder and/or severance of the three pharmacy benefit manage[r]s.”

About T1DF

Oregon-based 501(c)(3) nonprofit Type 1 Diabetes Defense Foundation is America's only legal advocacy organization 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.