California lawsuit accuses drugmakers of insulin overcharging

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By Brendan Pierson

(Reuters) -California is suing the United States' leading insulin makers and pharmacy benefit managers, accusing them of using their market power to overcharge patients for the life-saving drug, the state's attorney general announced on Thursday.

The lawsuit, filed in California Superior Court in Los Angeles, targets Eli Lilly (NYSE:LLY) and Co, Novo Nordisk (NYSE:NVO) A/S and Sanofi (NASDAQ:SNY) SA, which together make more than 90% of the insulin drugs sold globally.

It also names the three largest pharmacy benefit managers (PBMs) - UnitedHealth Group Inc (NYSE:UNH)'s Optum unit, CVS Health Corp (NYSE:CVS)'s CVS Caremark and Cigna Corp (NYSE:CI)'s Express Scripts (NASDAQ:ESRX). PBMs maintain the lists of drugs covered by health insurance plans and negotiate prices with manufacturers, and the top three account for about 80% of the market.

"Allegations that we play any role in determining the prices charged by manufacturers are false," CVS Caremark spokesperson Phil Blando said in an email. "We plan to vigorously defend against this complaint."

The other companies did not immediately respond to requests for comment.

Insulin drugs are used by many people with diabetes to control blood sugar. About 8.4 million Americans depend on insulin, according to the American Diabetes Association.

Eli Lilly in 2020 began a program to limit the out-of-pocket cost of insulin to $35 per 30-day supply for insured and uninsured patients, and Sanofi last year announced it was capping the cost at $35 for uninsured patients.

California said that the companies' dominance in the market has allowed them to hike insulin prices at patients' expense, violating the state's Unfair Competition Law. The state is seeking a court order stopping future violations of the law and an unspecified amount of money damages, including reimbursements for patients.

Prices of top-selling insulin drugs have soared in recent years. According to a 2021 Congressional report, Eli Lilly had raised the price of its Humalog 1,219% per vial since it launched, Novo Nordisk raised the price of NovoLog 627% since its introduction and Sanofi has raised the price of Lantus 715%.

Minnesota, Mississippi, Arkansas and Kansas, as well as groups of drug purchasers, have previously brought lawsuits similar to California's.

California Governor Gavin Newsom announced last July that the state had allocated $100 million to make its own low-cost insulin.