California sues major PBMs, drugmakers over insulin prices

California has filed suit against a slew of major drugmakers and pharmacy benefit managers, alleging that they acted unlawfully to drive up the cost of insulin.

The lawsuit claims that Eli Lilly, Novo Nordisk and Sanofi, major manufacturers of insulin, and CVS Caremark, Express Scripts and Optum, the three largest pharmacy benefit managers, used their market share to overcharge patients. A recent analysis shows that insulin costs roughly 10 times more for American patients as it does elsewhere, according to an announcement from Attorney General Rob Bonta's office.

The three drugmakers produce 90% of the global insulin supply, and the three PBMs manage 80% of prescription claims in the U.S., according to the lawsuit.

The lawsuit argues both set of companies are complicit in the high cost of insulin as manufacturers are responsible for setting list prices and then PBMs negotiate rebated costs on behalf of health insurers. Because rebates are based on list price, drugmakers will increase list prices to secure higher rebates.

People of color and those with low incomes are disproportionately affected by high insulin prices, according to the announcement. More than 3 million people in California alone—more than 10% of the adult population—have diabetes.

“Insulin is a necessary drug that millions of Americans rely upon for their health, not a luxury good. With today's lawsuit, we're fighting back against drug companies and PBMs that unacceptably and artificially inflate the cost of life-saving medication at the expense of vulnerable patients,” said Bonta in the release.

“No one should be forced to ration or go without basic medication that could mean the difference between life or death. California will continue to be a leader in the fight to ensure everyone has equal access to affordable healthcare and prescription medications they need to stay healthy," he added.

The lawsuit seeks to establish price competition for insulin, eliminating what it calls "unlawful, unfair, and deceptive practices," as well as to recover restitution for people in California who where overcharged for insulin.