Two Connecticut communities recently filed separate but identical federal lawsuits accusing major insulin manufacturers and pharmacy benefit managers of orchestrating a long-running scheme that artificially inflated the cost of diabetes medications, driving up expenses for taxpayers and public employees.
The first lawsuit was filed in U.S. District Court for the District of Connecticut on Dec. 22 by the town of Glastonbury and its board of education, while the second was filed in the same court on Jan. 5 by the town of Southington.
Both lawsuits were filed on behalf of the towns by Madison-based attorney Kenneth Bartlett and Florida-based law firm Levin, Papantonio, Proctor, Buchanan, O’Brien, Barr & Mougey.
The lawsuits each accuse drugmakers Eli Lilly and Co., Novo Nordisk Inc. and Sanofi-Aventis U.S. LLC of conspiring with the nation’s three largest pharmacy benefit managers (PBMs) — CVS Caremark, Express Scripts and OptumRx — to raise list prices for insulin and other diabetes drugs while secretly sharing billions of dollars in rebates and fees.
The suits claim the practice forced each town to overpay for diabetes medications provided through its self-insured health plan covering municipal and/or school employees, retirees and their dependents, diverting public money from essential services.
According to the lawsuits, insulin prices have increased by as much as 1,000% over the past two decades, despite declining production costs and little change in the drugs themselves. The complaint alleges that manufacturers colluded to raise list prices to secure favorable placement on PBM drug formularies, while PBMs retained a substantial portion of undisclosed rebates and fees tied to those inflated prices.
The lawsuits contend that the pricing structure benefited both sides: manufacturers maintained market access and higher revenues, while PBMs — many of which are vertically integrated with insurers and retail pharmacies — captured growing shares of each prescription dollar. They also claim that, in some cases, PBM-affiliated entities kept nearly half of the money spent on insulin prescriptions.
The alleged conduct dates back at least to 2003 and continues today, the lawsuits claim.
The complaints name a wide set of defendants, including CVS Health Corp., UnitedHealth Group Inc. and Cigna Group subsidiaries, as well as PBM-affiliated rebate aggregators such as Zinc Health Services, Ascent Health Services and Emisar Pharma Services.
Both Southington and Glastonbury allege violations of the Connecticut Unfair Trade Practices Act, the Connecticut Antitrust Act, the federal Sherman Antitrust Act and the Racketeer Influenced and Corrupt Organizations Act, along with common-law claims including fraud, civil conspiracy and unjust enrichment. The town is seeking injunctive relief, restitution, disgorgement, damages and attorneys’ fees.
Defendants have not yet filed responses to the complaint.
The two Connecticut towns are not the only communities pursuing lawsuits against drug companies and PBMs on this issue. On Dec. 23, the city of Philadelphia filed a similar lawsuit in U.S. District Court for the District of New Jersey.
The lawsuits come amid a broader national debate over the role of pharmacy benefit managers, which have faced growing scrutiny from Congress, state regulators and the Federal Trade Commission over opaque pricing practices, rebate arrangements and their expanding vertical integration with insurers and pharmacies.
Lawmakers in multiple states have advanced PBM transparency and pricing reforms in recent years, while federal regulators are examining whether PBM business models contribute to higher drug costs for employers, governments and patients.
