Iowa Attorney General Files Sweeping Lawsuit Alleging Insulin Price Manipulation

According to a statement released by Bird’s office, the attorney general said the alleged conduct amounts to exploiting people who depend on insulin to stay alive. In the same release, Bird said, “Artificially increasing prices to profit off of people who could die without your product is terrible,” adding, “We are suing so Iowans can afford the medicine they need to live and to prevent pharmacy benefit managers and insulin manufacturers from gaming the system at the expense of vulnerable people.”

Per a statement and the 145-page complaint, the lawsuit argues that a small group of manufacturers and pharmacy benefit managers, often called PBMs, control more than 80% of the insulin market and use that dominance to inflate prices. PBMs are the middlemen who negotiate between drugmakers and insurers and decide which medications appear on insurance formularies, or covered-drug lists, according to the American Medical Association. The suit claims that being excluded from, or placed low on, those lists can cost a drug company millions of dollars in lost sales.

The state is accusing the defendants of violating the Iowa Consumer Fraud Act, unjust enrichment, and civil conspiracy by allegedly working together to push up insulin list prices while steering profits to PBMs. Among the best-known PBMs named are CVS Caremark, Express Scripts, and OptumRx, which together dominate the PBM market and wield enormous influence over which drugs patients can access and at what price, according to the filing.

Related: Trump Announces New Drug Pricing Deals With Major Pharmaceutical Companies

According to a statement from Bird’s office, insulin makers such as Eli Lilly, Novo Nordisk and Sanofi allegedly respond to that system by raising the list prices of their products. The higher prices allow PBMs to extract larger rebates in exchange for placing a manufacturer’s insulin at the top of a formulary, a practice the attorney general says ultimately shifts higher costs onto patients.

Bird estimates that at least 300,000 Iowans rely on insulin every day to survive. Per a statement in the lawsuit, certain insulin products have seen their list prices climb by more than 1,000% in Iowa since 2003. By 2016, the four most commonly used types of insulin averaged about $450 a month, and those costs have continued to rise, according to Bird’s filing.

The complaint says the escalating prices have forced many low-income diabetics to take dangerous measures, including reusing needles, injecting expired insulin, rationing doses, and even skipping meals to try to control blood sugar. According to a statement, these hardships are a direct result of what the attorney general describes as a “pay-to-play” system that rewards companies for keeping prices high.

The lawsuit also points to testimony given before the U.S. Senate in 2023 in which manufacturers said that between 75 and 84 cents of every dollar spent on insulin’s list price ends up with PBMs. In addition, per a statement from Bird, PBMs collected administrative fees totaling more than $16 billion from manufacturers between 2012 and 2016.

Bird argues that the gap between what manufacturers list as a drug’s price and what they actually receive after rebates has become so wide that it violates the law. According to a statement quoted in the complaint, “Indeed, the manufacturers’ list prices have become so untethered from their net prices” that they amount to unlawful pricing. The state is seeking court orders and other remedies it says are needed to rein in the alleged scheme and bring down the cost of insulin for Iowa patients.

Source: Court House News