Less than a month after the Federal Trade Commission (FTC) sued pharmacy benefit managers (PBMs) over inflated insulin prices, Texas Attorney General Ken Paxton did the same, including both PBMs and manufacturers as defendants for their conflicts of interest in distributing insulin, according to a press release.1 Similar to the FTC’s complaint regarding a “broken rebate system,”2 Texas’ lawsuit is a move to hold PBMs accountable for their behind-the-scenes practices that have been alleged to significantly raise prescription drug costs overall, not just insulin.
“This is a disturbing conspiracy by which pharmaceutical companies were intentionally and artificially inflating the price of insulin. Big Pharma insulin manufacturers and PBMs worked together to take advantage of diabetes patients and drive prices as high as they could. These companies acted illegally and unethically to enrich themselves, and we will hold them accountable,” said Attorney General Paxton.1
Key Takeaways
- Texas Attorney General Ken Paxton issued a lawsuit last week aimed at major PBMs and drug manufacturers for their roles in the increase of insulin prices.
- In a long line of lawsuits in the recent past, Texas is following the lead of other states and regulators like the FTC to bring accountability to PBMs, drug manufacturers, and their conflicts of interest.
- While the inner workings of pharmacy benefits involve all types of prescription drugs, Texas' lawsuit solely focuses on insulin costs.
The lawsuit issued on October 3, 2024, includes PBMs like Express Scripts and CVS Caremark as well as drug manufacturers like Eli Lilly and Novo Nordisk.3 And while PBMs and manufacturers typically work together to determine the prices of and distribute all types of prescription drugs, this lawsuit focuses solely on insulin.
“Through this conspiracy, the manufacturers artificially and willingly raised the prices of insulin then paid a significant, undisclosed portion back to the PBMs as a quid pro quo for inclusion in the PBMs’ standard offerings. The PBMs then granted preferred status to the manufacturer whose drug has the highest list price while excluding lower-priced drugs,” according to Paxton’s statement.1
Read More: How the Big 3 PBMs Utilize Various Market Strategies
The statement also included statistics highlighting the egregious pricing of insulin over the years. Keeping in mind that it costs manufacturers less than $2 to produce, insulin was originally priced at around $20 when it was released to the public in the late 1990s. Today, the price of an insulin prescription can range from $300-$700, constituting manufacturer price increases of up to 1000%.
With these price increases, patients must now suffer from rising out-of-pockets costs for insulin and pharmacists must endure declining reimbursements for the insulin they dispense. All the while, speaking back to the aforementioned “broken rebate system,” manufacturers and PBMs have reveled in the profits they’ve garnered from the unspoken collaboration between the 2 entities.
Furthermore, on a more overarching scale of providing care to patients nationwide, the lawsuit argues that PBM and manufacturer practices did the opposite. Instead, they coordinated with each other to rise prices and profits at the expense of payors and diabetics in Texas.
“While the PBM defendants represent that they perform their services on behalf of their clients (including Texas payors) and diabetics to lower drug prices, increase access to affordable drugs, and promote diabetic health, these representations are false. Rather, the PBM defendants have worked in coordination with the manufacturer defendants to distort the market for diabetic treatments to their benefit at the expense of Texas diabetics and payors,” read the lawsuit.3
From the FTC’s lawsuit in September to more recent state lawsuits directed at PBMs, Texas’ case is yet another suit in a long line of states and other regulators attempting to bring the hammer down on PBMs and their deceptive practices. While the FTC’s recent complaint was solely directed at PBMs like the Texas lawsuit, the Commission was sure to mention manufacturers’ role in raising insulin prices as well.
“PBMs are not the only potentially culpable actors—the Bureau also remains deeply troubled by the role drug manufacturers like Eli Lilly, Novo Nordisk, and Sanofi play in driving up list prices of life-saving medications like insulin. Indeed, all drug manufacturers should be on notice that their participation in the type of conduct challenged here raises serious concerns, and that the Bureau of Competition may recommend suing drug manufacturers in any future enforcement actions,” the FTC wrote.2
Texas Attorney General Paxton’s recent action against PBMs and manufacturers is not the first lawsuit attempting to hold these entities accountable for rising drug costs, and it certainly won’t be the last. At the end of the day, organizations, advocates, and patients alike are fighting for fair and transparent drug prices so that valued care is more accessible across the country. But until the conflicts of interests between PBMs and manufacturers are regulated, pharmacists and patients will continue to experience inflating prices for both insulin and hundreds of other prescription drugs.
READ MORE: Senators Call on FTC to Investigate PBM Co-Manufacturing Tactic
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