Gov’t sues insulin makers, pharmacy benefit managers over ‘excessive and unjustified’ price hikes

An official from the Justice Department’s Office of Monopolistic Affairs said patients have had to pay for the growing increase in insulin prices, “either through co-payments because they exceed the limit of their coverage or because they simply do not have a medical plan.”

By THE STAR STAFF

The Department of Justice has sued leading insulin manufacturers and pharmacy benefit managers (PBMs) for engaging in unfair and deceptive commercial practices that raised insulin prices by over 1,200% of its original cost over the past decade.

Justice Secretary Domingo Emanuelli Hernández made the announcement at a press conference Wednesday.

“These companies have created a scheme of excessive and unjustified increases in insulin prices for their greed and to the detriment of diabetics in Puerto Rico,” he said. “Approximately 30% of the population suffers from diabetes and depends on insulin treatment to live.”

Through the Office of Monopolistic Affairs (OAM), the Department of Justice represents the Puerto Rico government in the lawsuit against insulin manufacturers: Eli Lilly & Co., Eli Lilly Export, Novo Nordisk Inc. and Sanofi Aventis, and the PBMs: Express Scripts Inc., CaremarkPCS Health, Caremark Puerto Rico and OptumRx Inc. They control most of the market in the United States. Several states, including California last week, have filed similar lawsuits.

PBMs are companies subcontracted by health insurers to handle purchases and authorizations of prescription drugs for patients. They control the list of drugs covered by insurance policies since they can determine which are included or excluded from the formulary.

As revealed by the assistant secretary of the OAM, Guarionex Díaz Martínez, the PBMs began to implement the tactic of requiring insulin manufacturers to offer them “rebates” or refunds and threatening manufacturers with the possible exclusion of their insulin product from the drug formulary, which PBMs control.

“Manufacturers increased their prices to maintain their profit margin, giving PBMs large rebates to get them to include their product or give them preference,” Díaz Martínez. “This scheme created a huge incentive for manufacturers to artificially inflate the price for the sole purpose of being included or obtaining a favorable position in the PBM formulary. PBMs retain much of those refunds. However, these rebates or discounts have not translated into lower costs for patients. On the contrary, patients have had to pay for the growing increase in prices, either through co-payments because they exceed the limit of their coverage or because they simply do not have a medical plan.”

For example, if the manufacturer set the price of the insulin at $100, and a PBM wanted a $40 rebate, the manufacturer would increase the list price to $140 to give the PBM the $40 “rebate” and keep the rest.

“To give you an idea of the effect of the scheme, while in the United States and Puerto Rico the price of insulin produced by Eli Lilly can fluctuate around $300 but in Canada it costs approximately $30.00,” Díaz Martínez said.

The Justice secretary said the lawsuit “demands the cessation and desistance of said deceptive practices, the restitution of money collected unjustifiably, the payment of damages caused and the disbursement of profits obtained through the illegal scheme.”

Emanuelli Hernández added that this year, “in addition to continuing to strengthen strategies to combat crime, with special attention to gender violence and corruption, the Department of Justice will focus on doing justice to the most vulnerable populations,” through civil claims like the one filed Wednesday and the recovery of the people’s money.