PHILADELPHIA (KYW Newsradio) — The City of Philadelphia sued three big drug manufacturers and three pharmacy benefit managers (or PBMs) on Tuesday over an alleged scheme to increase the price of insulin.
The manufacturers named are Eli Lilly, Novo Nordisk, and Sanofi.
The PBMs named are CVS Caremark, Express Scripts, and OptumRx. PBMs act as middlemen for insurers or employers and drugmakers that manage prescription drug benefits. Their responsibilities include negotiating drug prices with manufacturers and pharmacies, processing drug claims, and establishing which drugs are covered by which plans.
The city alleges the defendants are operating an Insulin Pricing Scheme in which PBMs place higher-priced insulin more favorably on covered drug lists, making cheaper and generic alternatives more difficult to access.
The city argues insulin prices have increased from about $20 per vial in the 1990s to between $300-$700 today, despite costing as little as $2 to produce. Philly believes it has significantly overpaid for insulin while covering health benefits for more than 30,000 city employees and their dependents.
Officials estimate 14% of Philadelphia’s adults are living with diabetes, and the city’s public health commissioner noted its prevalence among Black and Brown communities.
Philadelphia is seeking restitution, punitive and compensatory damages, and an order to end the pricing scheme for what it believes are violations of RICO and the PA Deceptive and Unfair Trade Practices Act.
In a statement to KYW Newsradio, Sanofi did not comment on the specifics of the allegations made by the city, but said the company “is committed to helping patients access the medicine they need at the lowest possible price,” and went on to defend its practices.
“Following through on that commitment requires Sanofi to navigate a complex environment,” the statement continued. “Under the current system, savings negotiated by health insurance companies and PBMs through rebates are not consistently passed through to patients in the form of lower co-pays or coinsurance. As a result, patients’ out-of-pocket costs continue to rise while the average net price of our insulins declines.”
A CVS Caremark spokesperson also responded to a KYW Newsradio request for comment, and laid the blame on the pharmaceutical companies for rising insulin costs.
“Pharmaceutical companies alone are responsible for the prices they set in the marketplace for the products they manufacture,” the statement reads. “Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products and we would welcome such an action. Allegations that we play any role in determining the prices charged by manufacturers for their products are false, and we intend to vigorously defend against this baseless suit.”