Price-fixing class action lawsuit levelled at three major insulin producers

pharmafile | January 31, 2017 | News story | Manufacturing and Production, Sales and Marketing Eli Lilly, Novo Nordisk, Sanofi, diabetes, insulin, price-fixing 

A group of patients has filed a class action lawsuit in a federal court in Massachusetts, accusing three companies of fixing the price of insulin to the raise the price over the last five years. The three companies are Sanofi, Novo Nordisk and Eli Lilly – the three companies that dominate the diabetes treatment market.

The price of insulin has increased by over 150% over the last five years, with the case citing some patients needing to pay $900 per month to obtain their medication. Though the case is aimed at the companies involved, the main factor that the case brings to light is the role of the pharmacy benefits managers (PBMs).

The PBMs take a cut of the ‘discounts’ that are offered by the drug companies on the list price of the drug and, since the PBMs control whose medicine appears in pharmacies, this gives PBMs strong influence over the market.

“The drug companies know that the PBMs stand to profit from large spreads between real and benchmark prices. Inflated benchmark price increases do not cost the PBMs so long as real prices remain constant (after all, they pay the real price, not the benchmark price). Taking advantage of these realities, drug manufacturers competing with the same therapeutic class have begun to offer the PBMs higher benchmark prices instead of lower real prices”, states the document filed to the Massachusetts court.

This explains why the list price of the insulin drugs has risen dramatically but not why they have appeared to do so in concert. Each of the major drug companies have raised their prices in very similar patterns, suggesting, but not conclusively pointing towards, collusion between the companies.

Each company has already reacted to the rumblings that have been occurring for the months now upon pricing by taking action. Novo Nordisk has committed to single-digit price increases; Sanofi has frozen the list price of its insulin, Lantus, while Lilly offered discounts through releasing its own app.

All of the companies has vehemently denied the validity of the case.

Ben Hargreaves

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