You hand over your insurance card, the pharmacist rings up your insulin refill, and the amount you owe is far higher than expected. For millions of Americans who depend on insulin, having health insurance does not necessarily mean having affordable insulin.
Why does insulin cost so much, even with insurance? Part of the answer lies in a complicated pricing system involving drug manufacturers, pharmacy benefit managers, or PBMs, rebates, list prices, and insurance cost-sharing. That system is now at the center of major insulin pricing litigation.
Why Insurance Does Not Always Protect You From High Insulin Costs
Insulin has a list price set by the manufacturer. Behind the scenes, PBMs may negotiate significant rebates and discounts with manufacturers, reducing the net cost paid within the healthcare system.
Patients do not always benefit from those lower net prices.
Depending on the insurance plan, deductibles and coinsurance may be connected to the insulin’s higher list price rather than the lower price after rebates. This can leave insured patients paying significant amounts at the pharmacy counter, particularly when they have not met their deductible or are responsible for a percentage of the drug’s cost.
That helps explain a frustrating situation many patients experience: having health insurance but still struggling to afford insulin.
How PBMs and Insulin Rebates Affect Drug Prices
PBMs operate between drug manufacturers, health plans, and pharmacies. Among other responsibilities, PBMs help determine which drugs receive preferred placement on insurance formularies.
That placement is valuable to manufacturers. A preferred position can make a particular insulin easier for insured patients to access and help manufacturers protect or expand market share.
Insulin pricing lawsuits allege that this created a system in which manufacturers had incentives to raise list prices while offering increasingly large rebates to PBMs. PBMs, meanwhile, allegedly benefited from arrangements tied to those higher prices.
Patients whose out-of-pocket obligations were tied to list prices could end up paying more even when substantial rebates were available elsewhere in the system.
What Do Insulin Pricing Lawsuits Allege?
Current insulin pricing litigation challenges the conduct of major insulin manufacturers and PBMs.
Plaintiffs allege that manufacturers, including Eli Lilly, Novo Nordisk, and Sanofi, worked with major PBMs, such as CVS Caremark, Express Scripts, and OptumRx, to implement a pricing structure that artificially inflated insulin list prices.
The litigation includes allegations under federal and state laws involving racketeering, antitrust violations, deceptive trade practices, consumer protection laws, and unjust enrichment.
Federal regulators have also scrutinized PBM practices. The Federal Trade Commission has pursued action against major PBMs over insulin rebate practices, drawing further attention to the relationship between rebates, formulary placement, and prescription drug costs.
Where Does the Insulin Pricing Litigation Stand?
Federal insulin pricing cases have been consolidated in In Re: Insulin Pricing Litigation, MDL No. 3080, in the U.S. District Court for the District of New Jersey.
Multidistrict litigation allows cases involving similar allegations and defendants to proceed together for important pretrial matters such as discovery and motions.
Farrell & Fuller is actively involved in this litigation. Our attorneys have extensive experience pursuing large-scale cases involving multiple corporate defendants, including our work in national opioid litigation that helped secure more than $60 billion for affected communities.
The insulin litigation similarly seeks to uncover how pricing decisions were made, how rebates operated in practice, and who benefited as insulin costs increased.
The Human Cost of Expensive Insulin
Insulin pricing is more than a dispute over corporate contracts and healthcare economics. The consequences reach people who need insulin to survive.
When insulin becomes unaffordable, some patients may stretch doses or skip injections. Insulin rationing can have serious medical consequences, including diabetic ketoacidosis and other potentially life-threatening complications.
High insulin costs can also lead to depleted savings, debt, delayed medical care, and difficult decisions between prescriptions and other basic expenses.
Understanding why insulin costs so much, even with insurance, means looking beyond the price displayed at the pharmacy. Manufacturer pricing, PBM rebates, formulary decisions, and insurance cost-sharing can all play a role.
At Farrell & Fuller, we pursue complex litigation when corporate practices cause widespread harm. If insulin pricing practices have affected you, your family, or your organization, our team can help you better understand the litigation and what it may mean for your circumstances.