Gavel with drugs The ruling“clears the way for us to begin obtaining discovery from themanufacturers and PBMs so we can shine the light on exactly whathas driven insulin prices sky-high,'' Steve Berman, a plaintiffs'lawyer. (Photo: Shutterstock)

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Novo Nordisk A/S and two other insulin makers must face claimsthey gouged diabetes patients through deceptiveprice lists for their life-saving drugs.

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U.S. District Judge Brian Martinotti in New Jersey on Fridayallowed a proposed class-action lawsuit filed by 67 diabeticsagainst Novo, Eli Lilly & Co. and the U.S. unit of Frenchdrugmaker Sanofi to proceed on consumer-fraud allegations tied toskyrocketing insulin prices. The judge threwout the plaintiffs' racketeering claims.

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The ruling comes as a growing number of cases targeting insulinmakers' price hikes have been filed in Martinotti's court andgathered before the judge for pretrial information exchanges.Plaintiffs contend companies are illegally raising insulin pricesto provide rebates for pharmacy-benefit managerswho decide which drugs get on preferred insurance lists.

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Related: Walgreens to pay $269 million over insulin fraudallegations

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“This ruling blows the insulin racket wide open,'' said SteveBerman, a plaintiffs' lawyer who is one of the leaders of thepotential class-action case. The ruling “clears the way for us tobegin obtaining discovery from the manufacturers and PBMs so we canshine the light on exactly what has driven insulin pricessky-high,'' he said.

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“We're pleased with the court's dismissal of the RICO claims andnumerous state law claims, and will continue to defend the companyagainst any remaining claims,” Ken Inchausti, a U.S.-basedspokesman for Bagsvaerd, Denmark-based Novo, the world's biggestmaker of insulin, said in an email.

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Ashleigh Koss, a spokeswoman for Paris-based Sanofi, said whilethe allegations in the suit are meritless, the company couldn'tcomment on Martinotti's ruling because the case was ongoing.Gregory Kueterman, a Lilly spokesman, said while the company wouldcontinue to defend itself from the insulin allegations, he couldn'tcomment on the judge's decision.

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The suit accuses the companies of raising insulin sticker pricesby more than 150 percent over five years, forcing diabetics toforgo the drug, take less insulin than needed or use expiredversions. The complaint notes some patients intentionally failed totake proper amounts of insulin to wind up in emergency rooms, wherethey could get free samples of the drug.

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The crux of the suit targets the companies' allegedly deceptivepricing practices. Diabetics say insulin manufacturers' stickerprices are different from the prices insurers pay after discountsare awarded to pharmacy-benefit managers. The patients contend therebates amount to kickbacks for benefit managers, who recommendwhich drugs should be covered by insurers. Higher list prices meanlarger-percentage rebates out of which PBMs take a slice.

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The judge found patients could press ahead with claims that therebate system violated consumer-protection laws in states such asNew Jersey, New York, Wisconsin, Tennessee and New Hampshire,according to court filings.

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While Martinotti agreed with the companies' arguments thatpatients couldn't make a proper racketeering claim over therebates, he gave plaintiffs an opportunity to amend their suit toaddress defects in the claim.

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The case is Chaires v. Novo Nordisk Inc., 17-cv-699, U.S.District Court, District of New Jersey (Trenton).

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