Diabetes Patients Sue Drugmakers Over Escalating Insulin Prices

Insulin is an essential hormone, and millions of Americans get the insulin that they need to stay alive and healthy from a vial. With insulin prices on the rise, a group of diabetes patients has filed a federal lawsuit against three drug companies, accusing them of carrying out a fraudulent pricing scheme.

Not everyone pays that inflated price, of course. The Washington Post explains that the lawsuit focuses on the practice of rebates, a part of the drug market that consumers don’t see. Drugmakers negotiate with the pharmacy benefit managers that negotiate how much insured patients actually pay for their medications, setting prices but also setting secret rebates.

The lawsuit accuses drugmakers of abusing the rebate system by hiking the list prices for insulin so they can offer bigger rebates. This leaves patients with high-deductible insurance plans, participants in Medicare drug plans, and uninsured people with huge bills: a month’s supply of some insulins can cost $900.

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The plaintiffs are bringing the lawsuit [PDF] under the Racketeer Influenced and Corrupt Organizations (RICO) Act, a conspiracy-fighting law designed for organized crime operations, to charge drugmakers with working with pharmacy benefit managers to raise prices while keeping patients away from competing

Let’s take Lantus, a popular long-acting insulin from Sanofi-Aventis, as an example.

“[T]he Lantus Pricing Enterprise periodically and systematically inflated the benchmark price of Lantus and represented—either affirmatively or through half-truths and omissions—to the general public, health care payers, and consumers, including Plaintiffs and the class, that Lantus’ benchmark price fairly and accurately reflected the actual cost of this drug,” the initial complaint of the lawsuit says.

Sanofi-Aventis offered rebates to pharmacy benefit managers along with its price hikes, which has led the price of Lantus to increase by triple-digit amounts just in the last few years.

“I think that publishing a price that you know is artificially inflated and is not a real price––other than to one group of people––is a fraud,” one of the attorneys representing the eleven plaintiffs in this case told the Washington Post.