Over Insulin Pricing, Mississippi AG Sues Insulin Manufacturers and Pharmacy Benefit Managers
Editor’s Note: People who take insulin require consistently affordable and predictable sources of insulin at all times. If you or a loved one are struggling to afford or access insulin, click here.
On June 7, 2021, Mississippi attorney general Lynn Fitch filed a lawsuit against pharmacy benefit managers (PBMs) and insulin manufacturers for allegedly working together to inflate insulin prices in the United States, claiming violation of the Mississippi Consumer Protection Act. The lawsuit follows a decades-long and severe increase in the out-of-pocket cost of insulin, as well as a January 2021 Senate Finance Committee report that showed specific documentation of long-hypothesized but formerly-confidential pricing negotiations made between insulin manufacturers, pharmacy benefit managers, and health insurance companies.
In the late-90s, one vial of analog (modern) insulin cost about $25-40 per vial, without insurance. By 2005, this had doubled to about $80, then started sharply increasing – about $125 by 2010, $260 in 2015, and – depending on the type of insulin – up to $275 and sometimes as much as $500 or more for long-acting analog insulins. Experts have stated that, even in a capitalist but competitive market, an insulin-dependent person should be paying $130 or less per year for their insulin needs.
In the state press release, AG Lynn Fitch said, “As the mother of a diabetic, I know the emotional, physical, and financial toll the unconscionable price of insulin has on families. I filed this lawsuit on behalf of every Mississippian who relies on this medication to survive. These companies are exploiting the vulnerable. I’m fighting back because you should never have to decide between paying the ever-increasing price of insulin or compromising your care.”
The lawsuit is not the first filed by state attorney generals over insulin pricing. In October 2018, Minnesota AG Lori Swanson filed a lawsuit against insulin manufacturers for allegedly conspiring to increase the price of insulin in lock step with each other. In May 2019, Kentucky AG Andy Beshear filed the same, stating that insulin manufacturers were violating the state’s Consumer Protection Act. Similar lawsuits have been filed by patient advocates in New Jersey and by Harris County officials in Texas. Some lawsuits specifically focus on insulin manufacturers alone, while others—like the Harris County lawsuit and the recent Mississippi lawsuit—include specific callouts of PBM companies for their significant role in the price increases.
Insulin manufacturers have denied the claims that they are price fixing or working with other companies to increase the price of insulin. Important to note is that the practice of “shadow pricing”—one company matching another’s public prices, which has been documented among insulin manufacturers—is different from “a plain agreement among competitors to fix prices,” which is “almost always illegal” as noted under Federal Trade Commission antitrust laws. This is where these lawsuits face hurdles within the legal system – proving illegality versus challenging ethics. In the New Jersey lawsuit, for example, a federal judge threw out racketeering claims, but moved forward the section of the lawsuit alleging violations of consumer protection laws.
As previously reported by Beyond Type 1 in coverage of the January 2021 Senate Finance Committee report, there have been documented instances of the companies significantly and planfully raising insulin prices, oftentimes as part of negotiations to stay in favor with PBMs. From the report, “…companies set their WAC price for insulin based on competitive considerations in the insulin market, maximizing revenue, and maximizing market share.”
In 2018, when the board of directors of an insulin manufacturer voted against a proposed reduction in the price of insulin and recommended that the company continue its “reactive posture,” the board recommended that the company “monitor the market… to determine if other major pharma companies are taking list price [increases].” Internal documents show that this decision was due to “financial downsides, risk of backlash from PBMs and payers, and expected pressure to take similar action on other products.”
Within the US political system, healthcare regulation and legislation is a dance between federal and state levels. Healthcare policy is contentious to start, then federal regulation is slow due to budgeting and appropriations, essentially forcing legislators to wait on the Congressional Budget Office to “score” a bill to see how much it will spend or save. The process to pass a bill can take years or, as we often see in healthcare, decades. Once a bill passes, the majority of healthcare funding is mandated at a federal level, but states are left to determine the specifics, like with Medicare and particularly Medicaid operations.
Enter: state-based policy actions to try to speed the process. These state based lawsuits are happening alongside a recent increase in state-based insulin copay cap laws which, while a step, still leave many insulin-dependent people without proper coverage because the laws are almost always limited to people with specific types of private health insurance.
Beyond Type 1 believes that everyone impacted by diabetes — Type 1, Type 2, and beyond — has a right to the best care possible for their unique situation. High quality, modern insulin must be available to people with diabetes regardless of employment or insurance status, across all demographics, without barriers and at an affordable and predictable price point. If you or a loved one are struggling to afford or access insulin, click here.