The state of Texas is accusing major pharmacy benefit managers and drug companies of colluding to raise the cost of insulin.
Texas alleged drug manufacturers Eli Lilly, Novo Nordisk and Sanofi raise the price of insulin and then pay an undisclosed amount back to PBMs Optum Rx, Express Scripts and CVS Caremark through a quid pro quo agreement.
PBMs then give preferred status on its standard formularies to drugs with the highest list prices, the state said.
Insulin costs $2 to produce and could be purchased for $20 in the 1990s but now costs up to $700, the Office of the Attorney General of Texas wrote in a news release.
“This is a disturbing conspiracy by which pharmaceutical companies were intentionally and artificially inflating the price of insulin,” said Texas Attorney General Ken Paxton in a statement. “Big pharma insulin manufacturers and PBMs worked together to take advantage of diabetes patients and drive prices as high as they could.”
In 2012, PBMs began creating exclusionary formularies that did not include certain drugs to, per the lawsuit, reap greater profits. Because of the PBMs' and pharma companies' tactics, Texas said the corporations have overcharged health plans and patients with diabetes by millions of dollars each year. The practices also lead to patients rationing medicine, creating negative health outcomes.
Drug companies met with executives at the major PBMs many times from 2010 to 2018 in “futherance” of the tactics described in the lawsuit (PDF), Paxton's office said.
The Pharmaceutical Care Management Association, the main trade group representing PBMs with top PBM execs on its board, holds an annual conference each year. The plaintiffs claim private meetings at these conferences are “at the center” of the alleged conspiracy. Pharma companies are traditionally in attendance at this conference and sponsor the event.
The filing goes so far as to describe a LinkedIn group these executives would use to discuss insulin pricing tactics.
The Federal Trade Commission (FTC) recently sued Optum Rx, Express Scripts and Caremark for rising insulin prices and anticompetitive practices. The PBMs reject the FTC’s findings. Drug manufacturers were not included in the lawsuit.
Texas’ lawsuit also noted the consolidation in the PBM market, arguing it gives PBMs a “disproportionate amount of market power.” Nearly 40 PBM entities have now been consumed by UnitedHealth Group, Cigna and CVS Caremark.
Other states like California and Oklahoma have filed similar lawsuits. Hawaii was unsuccessful in its bid to hold PBMs accountable when a federal judge tossed a recent lawsuit.
Arkansas chose to focus its attention toward PBMs’ alleged role in furthering the opioid crisis.