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Keller Rohrback L.L.P. Files Class-Action Lawsuit Over the Inflated Price of Insulin

Keller Rohrback L.L.P. filed suit against the nation's three largest pharmacy benefit managers and the three major insulin manufacturers, who produce the well-known and widely-prescribed analog insulins. (Photo: Business Wire) Multimedia Gallery URL

SEATTLE--(BUSINESS WIRE)--

Attorney Advertising. On March 17, 2017, the nationally recognized class-action law firm of Keller Rohrback L.L.P. filed suit against the nation’s three largest pharmacy benefit managers (“PBMs”), Express Scripts (ESRX:US), OptumRx (UNH:US), and CVS Caremark (CVS:US), and the three major insulin manufacturers, Sanofi-Aventis (SNY:US), Novo Nordisk (NVO:US), and Eli Lilly (LLY:US), who produce the well-known and widely-prescribed analog insulins: Lantus, Apidra, Levemir, Humalog, and Novolog. The complaint, which was filed in the New Jersey federal district court, alleges that the PBMs—insurance industry middlemen who negotiate drug prices and create drug formularies that determine how much patients pay—conspired with the insulin manufacturers to artificially inflate the price of insulin for their own collective benefit. This profit-seeking move has directly injured individual patients and other purchasers of insulin financially and put the lives of millions of diabetes sufferers at risk.

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The Plaintiffs in Keller Rohrback’s case—Boss v. CVS Health Corp. et al., No. 17-cv-01823 (D.N.J.)—are individuals who purchase insulin for themselves or their children, and the Type 1 Diabetes Defense Foundation, a nonprofit organization dedicated to promoting the social welfare and protecting the legal rights of individuals who must take insulin to survive. Together these Plaintiffs bring a perspective arising from their own personal experiences and the foundation’s organizational purpose. And their case is focused holistically on the problem, the responsible parties, and the breadth of injury to insulin purchasers. Thus, their complaint includes defendant parties not included and/or claims that have not yet been asserted in two other recently filed cases.

The artificially high cost of insulin needlessly inflicts physical, emotional, and financial harm on patients and their families. While insulin manufacturers certainly contribute to the problem, they do not act alone. Rather, manufacturers collude with PBMs to raise insulin “list prices”—which the PBMs direct consumers to pay—thus reaping outsized profits from people who need insulin to stay alive.

The Insulin Pricing Scheme alleged in Plaintiffs’ complaint explains how PBMs sell exclusionary or preferential access to their formularies in exchange for a cut of rebates and other fees paid by the drug manufacturers to the PBMs. Formularies are ranked lists of drugs that health insurers rely upon to determine how much of their members’ drug costs they will cover. Manufacturers’ sales depend on access to these enormous purchaser pools for their profits. Although the PBMs claim the rebates and other payments lower the cost of insulin, in fact, this is misleading. The rebates and other payments decrease the cost of insulin for the PBMs and the insurers with whom the rebates are shared, but drive up the cost for consumers, whose pre-deductible or coinsurance payments at the pharmacy point-of-sale are based on the unrebated “list” price.

The PBMs and manufacturers game the system. Instead of competing on price for access to the PBMs’ formularies, the manufacturers compete based on the amount of the rebate and other fees that they pay to the PBMs. To prevent the rebates and other fees—and the wasteful transactional costs created by an increasingly convoluted system of payments—from cutting into their profits, the manufacturers raise what they call the “list” price of insulin.

Meanwhile, considerable rebates to PBMs maintain at a steady point the “net” price actually realized by the manufacturers. The higher the “list” price, the higher the rebate and other fees, and the larger the profit to the PBMs. The result is a vicious cycle of “list” price increases by manufacturers, vying to win the favor of the PBMs. Consumers with out-of-pocket payment obligations, a large and growing population, are charged an amount based upon the artificially inflated “list” price. This includes the uninsured and people in a variety of types of health plans with co-insurance, co-payment, and high-deductible requirements.

Plaintiffs hired Keller Rohrback not only to make sure the PBMs are held accountable for their role in driving up insulin prices, but also to ensure that all types of plan participants are represented and their claims asserted. For example, the scheme affects participants in both ACA and employer-sponsored plans. Most employer-sponsored welfare benefit plans are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”)—which is why Plaintiffs in this action have pleaded claims under ERISA in addition to the other federal claims available to the ERISA Class under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and the Sherman antitrust act. Plaintiffs also have asserted claims on behalf of the uninsured, a Medicare Class, and a class of ACA and state exchange, private, and employer plans that are not covered by ERISA. This class structure is significant because it aligns the injured parties with the types of plans they have and the types of claims they can assert, including state consumer protection laws and common law claims for non-ERISA plans and the uninsured.

Finally, Plaintiffs’ complaint seeks both monetary and injunctive relief on behalf of the Classes. As in two other recently filed insulin cases, Plaintiffs are requesting remedies that would refund their overpayments and force Defendants to disgorge their ill-gotten gains. Critically, the injunctive relief that is unique to the Boss case would impose disclosure requirements going forward that will increase transparency in a market where a hidden dual pricing system has driven insulin prices through the roof—at severe financial and physical costs to users and purchasers of insulin. Disclosure of this information will make it more difficult for the Defendants to manipulate the cost of insulin in the future, should they attempt to replace the current system with some other scheme.

Keller Rohrback looks forward to litigating this case and working with the other plaintiffs and their counsel who have filed similar cases to hold all responsible entities accountable and pursue all available claims. Keller Rohrback L.L.P. has decades of experience helping consumers and insureds fight back against fraud and abuse. Keller Rohrback L.L.P. serves as lead and co-lead counsel in class action lawsuits throughout the country, including actions asserting RICO, ERISA, and consumer claims against PBMs. With offices in New York, Seattle, Phoenix, Ronan, Oakland, and Santa Barbara, our Complex Litigation Group is proud to offer its expertise to clients nationwide. Our trial lawyers have obtained judgments and settlements on behalf of clients in excess of eighteen billion dollars.

If you purchase prescription insulin produced by any of the above-listed manufacturers, you may be paying artificially inflated and anti-competitive prices. Please contact an attorney to learn more about whether you too have been subject to unlawful pricing. Call 800.776.6044 or email consumer@kellerrohrback.com.

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