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.
