“County Sues Over Insulin Price Fixing Scheme” – Urban Milwaukee
TL/DR –
Milwaukee County has filed a federal lawsuit against some of the largest pharmacies and insurance companies in the US, accusing them of fabricating a price-fixing scheme that has inflated the cost of insulin. The lawsuit alleges that the companies involved intentionally manipulated and inflated the price of insulin, causing vials that cost $2 to produce to sell for as much as $700, thereby defrauding and damaging the county. The lawsuit cites violations of the Racketeering Influence and Corrupt Organizations Act, the Wisconsin Deceptive Trade Practices Act, Common Law Fraud, Civil Conspiracy and Unjust Enrichment.
Milwaukee County Files Insulin Price-Fixing Lawsuit Against Top Pharmacies and Insurance Companies
Milwaukee County is suing some of the largest pharmacies and insurance companies in the U.S., accusing them of organizing a price-fixing scheme that has drastically inflated the cost of insulin. It’s alleged that these companies have manipulated prices of insulin, leading to vials that cost $2 to manufacture being sold for up to $700. The county says this has resulted in significant overcharges for insulin in the health plans it offers to employees.
The lawsuit is part of a multi-district litigation joined by the county. In similar litigation, the county secured a $102 million settlement from opioid distributors and manufacturers in 2021 and 2023.
The suit claims that over decades, industry leaders have monopolized the market and colluded to raise prices while allegedly not informing customers about these corrupt business practices. Among the 21 defendants named are pharmaceutical and insurance giants like Eli Lilly and Company, Novo Nordisk, Sanofi-Aventis, Express Scripts, CVS, OptumRx, and United Health.
The case, filed in the U.S. District Court of New Jersey, alleges violations of the Racketeering Influence and Corrupt Organizations Act (RICO), Wisconsin Deceptive Trade Practices Act, Common Law Fraud, Civil Conspiracy, and Unjust Enrichment.
The complaint references information from bipartisan congressional investigations into insulin price fixing. At the heart of the scheme are Pharmacy Benefit Managers (PBMs) who act as intermediaries in the supply chain. These entities control manufacturers’ access to the market, and leveraging this power, charge billions in costs passed onto consumers.
Manufacturer, PBM, Formulary, Fraud
The complaint further outlines how PBMs and manufacturers collude to set prices and decide which drugs appear on drug formularies. As a result, insulin prices have rocketed up to 1000%, often in coordination with each other. This price increase boosts their revenue, the size of kickbacks to PBMs, and their tax breaks from insulin donations.
The PBMs, owned by entities that also own major insurance companies, pocket the difference between what they charge a client payor and what they pay the pharmacy.
The defendants are accused of running a racket and committing fraud by inflating list prices and failing to disclose these practices.
Government Attention
Despite generating more than $300 billion in annual revenue from the alleged scheme, the PBM defendants spend only a few million dollars annually on lobbying Congress and federal agencies. However, as public outcry and political pressure have mounted, companies have significantly increased their lobbying investments.
In 2019, the U.S. Senate began an investigation into insulin pricing. As a result, The Inflation Reduction Act was passed, including a provision capping insulin prices for seniors on Medicare. Consequently, Sanofi, Novo Nordisk, and Eli Lilly capped their co-pays at $35 for Medicare patients.
The Cap Inflation Prices Act was introduced in the U.S. Senate in 2023 by Sen. Josh Hawley (R-MO). However, it did not advance out of committee.
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