Arizona attorney general sues pharmaceutical manufacturers for insulin price inflation scheme

Attorney General Kris Mayes filed a lawsuit on Monday against multiple pharmaceutical manufacturers and pharmacy benefit managers for inflating the price of insulin and other diabetes drugs in violation of the Arizona Consumer Fraud Act.

The lawsuit seeks restitution for insulin overpayments, disgorgement of excessive profits, and civil penalties for unfair and deceptive trade practices. It also aims for an order from the court permanently enjoining the defendants from engaging in similar pricing schemes, according to court documents.

"This lawsuit isn't just about insulin prices," Mayes said. "It’s about exposing and stopping these deceptive and unfair rebate schemes, so medication prices don't continue to skyrocket for patients."

According to Mayes, over the past 20 years, the price of insulin in Arizona has increased faster than prices for other consumer goods and services in the state, and pharmaceutical companies are to blame.

“We now know that while thousands of Arizonans struggled to pay for this life-saving drug, pharmaceutical companies and middlemen were scheming to inflate prices and skim extra profits off the top to enrich themselves,” Mayes said in a public statement on Nov. 27.

In the statement, Mayes explained how she believes pharmacy benefit managers, or PBMs, inflate the price of insulin. She elaborated on how PBMs manage pharmacy benefits for health insurance providers by controlling which drugs are available to patients under their health insurance plans.

According to Mayes, if a particular brand of insulin is excluded from a formulary, the manufacturer is blocked from selling that insulin to any patients covered by the formulary. This forces manufacturers to provide rebates on their insulin.

However, according to Mayes, when this occurred, instead of the manufacturers just paying the rebates, they increased the price of insulin across the board to make up for the cost of rebates they paid to PBMs. Instead of passing the increased rebates to patients and health insurers, the PBMs kept the inflated profit for themselves, according to Mayes.

“While the drug companies and PBMs were engaged in a secretive system of baseless price increases and kickbacks, Arizona diabetes patients were facing life-or-death struggles to pay for their medication,” she said.

The main PBMs named as defendants are CVS Caremark, Express Scripts, and OptumRx. The insulin manufacturers named as defendants in the lawsuit are Novo Nordisk Inc., Sanofi-Aventis U.S. LLC, and Eli Lilly and Company.

Regarding her hopes from this action, Mayes stated, "This lawsuit will not only force these companies to return their unfair profits to Arizona consumers but will also force the companies to operate transparently so patients can understand the true cost of their prescription drugs."

This article originally appeared on Arizona Republic: Arizona attorney general sues pharmaceutical manufacturers for insulin price inflation