Multiple drug manufacturers and pharmacy benefit managers, CVS Health, Eli Lilly, Novo Nordisk and others face civil RICO claims from the International Union of Operating Engineers Local No. 478 Health Fund.
The plaintiff is a Taft Hartley fund, which provides union members with health benefits.
It filed the suit Monday in Connecticut federal court against Eli Lilly and Co., Novo Nordisk Inc., Sanofi-Aventis U.S. LLC, Evernorth Health Inc., Express Scripts Inc., Express Scripts administrators, Medco Health Solutions Inc., ESI Mail Pharmacy Service Inc., Express Scripts Pharmacy Inc., CVS Health Corp., CVS Pharmacy Inc., Caremark Rx LLC, Caremark PCS Health LLC, UnitedHealth Group Inc., Optum Inc., OptumRx Inc. and OptumInsight Inc.
According to the lawsuit, the cost of diabetes medication has “skyrocketed” over the past 20 years, not because of “rising cost of goods, production costs, investment in research and development, or competitive market forces,” but because the defendants have worked together to increase the price for a higher profit, the complaint alleged.
“Given the [pharmacy benefit managers’] purchasing power and their control over formularies that govern the availability of drugs, their involvement should theoretically drive down list prices because drug manufacturers normally compete for inclusion on the standard national formularies,” the complaint claimed. “For insulin, however, to gain access to the [pharmacy benefit managers’] formularies, the manufacturers artificially inflate their list prices and then pay a significant, yet undisclosed, portion of that inflated price back to the [pharmacy benefit managers].”
The plaintiff claimed the defendants violated the Racketeer Influenced and Corrupt Organizations Act and the Connecticut Unfair Trade Practices Act, and committed civil conspiracy while benefiting from unjust enrichment, the complaint said.
Counsel for the defendants has not appeared yet. Spokespersons for Novo Nordisk, CVS and Optum said the lawsuit is meritless and they intend to vigorously defend against the allegations.
A spokesperson for Sanofi said it has avenues to help reduce the cost of the medicine, and the company “believes that no one should struggle to pay for their insulin.”
Optum and Novo Nordisk spokespersons similarly said they are focused on lowering the price of insulin.
“While we will not comment on the specifics of the allegations, Sanofi’s pricing practices have always complied with the law and the company is committed to helping patients access the medicine they need at the lowest possible price,” Sanofi said in a statement.
However, the complaint claimed that the manufacturer defendants “have in tandem increased the prices of their insulins up to 1000%, taking the same increase down to the decimal point within a few days of one another and, according to a U.S. Senate Finance Committee investigation, ‘sometimes mirroring’ one another in ‘days or even hours.'”
Plaintiff co-lead counsel are Mark Pifko of Baron & Budd; Brandon Bogle of Levin Papantonio Rafferty Proctor Buchana O’Brien Barr Mougey; David Buchanan of Seeger Weiss; and Ben Widlanski of Kozyak Tropin & Throckmorton.
“Rather than working to lower insulin and other Type 2 diabetes medication prices, major [pharmacy benefit managers] and manufacturers use their dominant market positions to drastically increase the price of these necessary, life-saving medications, generating billions of dollars in illicit profits,” co-lead counsel claimed in a joint statement. “Through this litigation, we are seeking reforms to stop predatory pricing and to hold entities in the health care supply chain accountable for unjustly and unlawfully profiting at the expense of unions like IUOE Local 478 and other self-funded payers.”
This is not the first lawsuit challenging similar defendants’ insulin pricing practices. A class action was filed in U.S. District Court for the District of New Jersey on behalf of insulin consumers against drug manufacturers also claiming prices were artificially inflated.
However, that class certification was denied on Feb. 5. Judge Brian R. Martinotti wrote in his opinion, “Drug manufacturers may offer rebates to an insurer’s pharmacy benefit manager to gain formulary access for their prescription drugs.”
Chief Judge Elizabeth Wolford of U.S. District Court for the Western District in Rochester also dismissed an antitrust class action against four drug manufacturers for allegedly manipulating insulin prices.
Wolford wrote, “The court … finds that plaintiffs have not pleaded facts from which a factfinder could plausibly infer a conspiracy.”