Drugmakers accused of price-fixing in a class-action lawsuit

A lawsuit filed Monday alleges that the three companies that make insulin have been part of an "organized scheme to drive up prices at the expense of patients who need insulin drugs to live."

Insulin is a hormone that helps people absorb and process the sugar in food. Roughly 1.25 million people in the US who have Type 1 diabetes need to inject insulin to live, as do many people with Type 2 diabetes, the more common form.

The complaint filed in the US District Court of Massachusetts details examples of patients who pay $900 a month for the drug, as well as people who induced diabetic ketoacidosis — a potentially fatal condition in which the body builds up too much of a certain blood acid because there isn't enough insulin in the body — to have access to insulin samples in the emergency room.

The suit alleges that the drug companies — Novo Nordisk, Sanofi, and Lilly — violate the Racketeer Influenced and Corrupt Organizations Act.

“People living with diabetes are practically imprisoned under the price hikes and sadly are resorting to extreme measures to afford the medication they need to live,” Steve Berman, a managing partner at the legal firm representing the patients in the suit.

The suit is seeking class-action status.

"We strongly believe these allegations have no merit, and will defend against these claims," Sanofi said in a statement.

Lilly said in a statement that the company is aware of the suit and that "Lilly conducts business in a manner that ensures compliance with all applicable laws, and we adhere to the highest ethical standards."

In the past few years, the list price of insulin has increased routinely, often in lockstep with competitors. Here's what the list prices for Humalog and Novolog, two short-acting insulins, have been in the past 20 years.

However, thelist price doesn't tell the entire story. While drugmakers set their list prices, there are a number of middlemen who get a piece of a drug's sale — in particular, pharmacy benefit managers, or companies that negotiate rebates from drug companies that get passed on to insurers, and ideally patients.

Drugmakers pay rebates out to pharmacy benefits managers and insurance companies, and those rebates are increasing in part just so the companies can ensure their drug is kept on the list of approved drugs for a certain treatment.

Once those rebates are factored in, drug companies get something called thenet price, which can often tell a different story from the routine price increases.

What drugmakers have done to counter pricing pressure

Insulin makers have been facing criticism from everyone from politicians to the American Diabetes Association. The attention over the past few years has led to changes at each company:

Sanofi, which makes the long-acting insulin
In December, Lilly came out with a discount of up to 40% for people with high-deductible insurance plans. The discounts come through an app called
Novo Nordisk committed to limiting all future drug list price increases from the company to single digit percentages.

Drugmakers accused of price-fixing in a class-action lawsuit

A lawsuit filed Monday alleges that the three companies that make insulin have been part of an "organized scheme to drive up prices at the expense of patients who need insulin drugs to live."

What drugmakers have done to counter pricing pressure

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