The commonwealth of Virginia late last week sued the nation’s largest pharmacy benefit managers and insulin manufacturers for alleged violations of the Virginia Consumer Protection Act. The lawsuit, filed in the Circuit Court for the City of Richmond, alleged a years-long insulin pricing scheme that artificially inflated the price of lifesaving diabetes medications and deceived consumers about those inflated prices.
The lawsuit names as defendants Express Scripts, CVS Caremark and OptumRx, as well as insulin manufacturers Sanofi-Aventis U.S. and Novo Nordisk. Together, these companies are involved in nearly every step of insulin pricing, production, coverage and dispensing in Virginia, Attorney General Jason Miyares said.
“Insulin is essential to life,” he said in a news release. “For years, a group of powerful companies artificially drove up the cost of lifesaving diabetes medication, enriching themselves while Virginians paid inflated prices just to survive. That system operated without transparency, deceived Virginians and put profits over patients for far too long. This office will defend consumers from these deceptive practices.”
The complaint alleges that manufacturers required PBMs to inflate drug prices to gain formulary access and then paid an undisclosed amount of the cost back to the PBMs.
“PBMs then grant preferred status on their standard formularies based upon the largest manufacturer payment and the highest inflated list price -- which the PBMs know to be artificially inflated and which the PBMs insist that their payor clients and diabetics use as the basis for the price they pay for the at-issue drugs,” the lawsuit said. “To make matters worse, rather than pass on these manufacturer payments to diabetics or their clients to lower the prices, the PBM defendants instead obfuscate and retain significant amounts of these manufacturer payments as profit.”
The lawsuit also outlines how insulin manufacturers repeatedly raised list prices, often in lockstep, even as the products did not materially change and the cost to manufacture insulin declined. Virginia alleges that as list prices rose, PBMs required larger payments in exchange for preferred formulary placement. PBMs allegedly then used their position to keep prices up and competition down, all while deceiving Virginia consumers about why they were paying more, according to the attorney general.
Virginia is asking the court for restitution to consumers, maximum civil penalties and an injunction blocking defendants from further violations of the Consumer Protection Act.
“Virginia diabetics have been overcharged millions of dollars a year in out-of-pocket costs as a result of the insulin pricing scheme,” the lawsuit said. “For Virginia diabetics, the physical, emotional and financial tolls of paying such excessive prices for diabetes medications is devastating.
Unable to afford the drugs their doctors prescribe, diabetics in Virginia ration or underdose their insulin; inject expired insulin; reuse needles; and starve themselves to control their blood sugars. This behavior is extremely dangerous and has led to serious complications or even death.”
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