Minnesota Attorney General Lori Swanson targeted drug manufacturers in her lawsuit Tuesday for inflating the cost of insulin medication, but she accused others of being complicit in the price-gouging of sick and needy patients with diabetes.
The federal lawsuit named three companies in Sanofi-Aventis, Novo Nordisk and Eli Lilly that since 2002 have tripled the list prices of their synthetic insulin medications, which people with diabetes need to manage their blood sugar and reduce their risk of disability and death. But Swanson said their price hikes are due in part to the rebate structure created by pharmacy benefit managers (PBMs) who have ignored the rising costs and their impact on patients.
“This has been going on way, way too long,” she said. “Change has to come one way or the other.”
Rising insulin prices have raised concerns over the past year — with President Donald Trump demanding price cuts and U.S. Sen. Amy Klobuchar, D-Minn., appealing directly to insulin manufacturers and authoring legislation that would compel them to lower their prices if they don’t do so voluntarily.
Minnesota is the first state to bring a case against the insulin manufacturers, but others have subpoenaed records from the companies and are considering legal actions. Swanson said she hoped a court ruling against the manufacturers could upend the entire pricing system, which hurts poor and uninsured people the most because they end up paying the list prices for the drugs.
“Many people can’t afford the price hikes but can’t afford to stop taking the medication either,” she said.
The current “scheme” is based on the role that PBMs play in deciding which drugs are listed on insurance companies’ preferred lists, she said. Because PBM profits come through rebates off list prices, the manufacturers have incentives to curry favor with them by raising prices and inflating the rebates, Swanson explained.
“In most industries, competitors compete with one another to offer the lowest prices,” she said. “That’s how competition is supposed to work in this country. Here we have drug companies … competing to offer the highest prices.”
PhRMA, the trade group representing drug manufacturers, has sought through various publicity campaigns to explain the current pricing system, the role of PBMs and to promote rebate and discount programs for patients.
Statements from Lilly and Sanofi promised vigorous defenses against Swanson’s allegations, while a statement from Norvo said its “practices are consistent with legal and regulatory requirements.”
While manufacturers and PBMs are responsible, Swanson said she decided to “go right to the top after the drug companies” that ultimately set their prices. The lawsuit, filed in New Jersey because two of the companies are based there, accused the manufacturers of deceptive trade practices and consumer fraud.
Dr. Victor Montori, a Mayo Clinic endocrinologist, supported the lawsuit and said it is “cruel” for the companies to set such unaffordable prices.
“Lives have been made miserable and some have been cut short by the decision to place insulin outside their reach,” he said.
One recent patient was airlifted to HCMC with a dangerously high blood sugar level due to his lack of insulin, and he needed to be intubated and placed in intensive care. HCMC’s Dr. Lisa Fish said many people with diabetes are forced to ration insulin, especially at the start of the year when new deductibles kick in for their health plans.
One patient, Amanda Swanson, said she has private insurance but still finds months when she must pick between her medication for her type 1 diabetes and family food.
Rationing insulin leaves her exhausted, but she does it anyway, she said. “Where do you draw the line? Because I have kids that have to eat, and I have to live.”