TOPEKA – Kansas Attorney General Derek Schmidt filed a lawsuit on Friday against leading national insulin manufacturers and pharmacy benefit managers (PBM) over alleged violations of the Kansas Consumer Protection Act (KCPA), accusing them of operating an insulin pricing scheme that forces Kansans to pay excessive costs for the life-saving drug to control diabetes.
Schmidt filed the lawsuit in Shawnee County District Court on behalf of thousands of Kansas residents who rely on insulin to control their diabetes and maintain their quality of life. The complaint alleges that defendants maintained a pricing scheme that inflated the cost to produce insulin, forcing Kansans with diabetes to choose between rationing their medication to stretch their health-care dollars or going without insulin and risking potentially deadly complications.
Named in the lawsuit are manufacturers Eli Lilly and Company, Sanofi-Aventis U.S. LLC, and Novo Nordisk Inc. Combined the three companies account for 99 percent of the insulin currently on the U.S. market. Also named were PBMs CVS Health Corporation, CVS Pharmacy Inc., Caremark Rx LLC, Caremark LLC, CaremarkPCS Health LLC, Evernorth Health Inc., Express Scripts Inc., Express Scripts Administrators LLC, Medco Health Solutions Inc., ESI Mail Pharmacy Service Inc., Express Scripts Pharmacy Inc., and OptumRx Inc.
As alleged in the lawsuit, the insulin pricing scheme worked by the insulin manufacturers gaining formulary access from the PBMs for their diabetic treatments, artificially and willingly raising their prices, and then secretly paying a significant portion of that price back to the PBMs. PBMs then granted national formulary status based on the highest inflated price and upon which diabetes medications generate the largest profits for these PBMs.
“Kansans with diabetes who are either uninsured or are in high deductible plans have been substantially damaged as a direct result of the scheme,” Schmidt said. “One in four Kansas diabetics can no longer afford their insulin and are forced to either ration their medicine or to go without. The consequences can be fatal.”
The lawsuit alleges that since 2003, these insulin manufacturers have worked in lockstep to raise the reported prices of insulin in an astounding manner. Insulin that costs manufacturers less than $5 to produce and that was originally priced at $20 when released, now ranges between $300 and $700 in Kansas.
Schmidt alleges that through the insulin pricing scheme the defendants have engaged in deceptive acts and practices as prohibited by the provisions of the KCPA. It is further alleged that the defendants received unjust enrichment by knowingly, willfully, and intentionally deceiving Kansas diabetics and receiving a financial windfall from the insulin pricing scheme at the expense of Kansas diabetics. Finally, Schmidt alleges the insulin manufacturers and the PBMs conspired by failing to disclose the details of their pricing structures, agreements, and sales figures in order maintain the secrecy of their scheme.
The lawsuit arises from Schmidt’s ongoing investigation into the practices and activities of PBMs in Kansas. That investigation began in 2020, and the lawsuit filed today is the second it has produced. Last year, Schmidt settled with Centene Corp. regarding its business practices in Kansas, recovering more than $27 million for Kansas.
A copy of the lawsuit filed in Shawnee County District Court is available at https://bit.ly/3VtxLKI.
