[UPDATED on Jan. 13]
California Attorney General Rob Bonta on Thursday sued the six major companies that dominate the U.S. insulin market, ratcheting up the state鈥檚 assault on a profitable industry for artificially jacking up prices and making the indispensable drug less accessible for diabetes patients.
The alleges three pharmaceutical companies that control the insulin market 鈥 Eli Lilly and Co., Sanofi, and Novo Nordisk 鈥 are violating California law by unfairly and illegally driving up the cost of the drug. It also targets three distribution middlemen known as pharmacy benefit managers: CVS Caremark, Express Scripts, and OptumRx.
鈥淲e鈥檙e going to level the playing field and make this life-saving drug more affordable for all who need it, by putting an end to Big Pharma鈥檚 big profit scheme,鈥 Bonta said at a news conference after filing the lawsuit in a state court in Los Angeles. 鈥淭hese six companies are complicit in aggressively hiking the list price of insulin, at the expense of patients.鈥
In the lawsuit, Bonta argued that prices have skyrocketed and that their medicine or forgo buying insulin altogether. The attorney general said a vial of insulin, which diabetics rely on to control blood sugar, cost $25 a couple of decades ago but now costs about $300.
found that the price of a long-acting insulin pen made by Novo Nordisk jumped 52% from 2014 to 2019 and that the price of a rapid-acting pen from Sanofi shot up about 70%. From 2013 to 2017, Eli Lilly had a 64% increase on a rapid-acting pen. The investigation implicated drug manufacturers and in the increases, saying they perpetuated artificially high insulin prices.
鈥淐alifornia diabetics who require insulin to survive and who are exposed to insulin鈥檚 full price, such as uninsured consumers and consumers with high deductible insurance plans, pay thousands of dollars per year for insulin,鈥 according to the complaint.
Eli Lilly spokesperson Daphne Dorsey said the company is 鈥渄isappointed by the California attorney general鈥檚 false allegations,鈥 arguing that the average monthly out-of-pocket cost of insulin has fallen 44% over the past five years, and the drug is available to anyone 鈥渇or $35 or less.鈥
Mike DeAngelis, a spokesperson for CVS, said it would vigorously defend itself, saying that pharmaceutical companies alone set list prices. 鈥淣othing in our agreements prevents drug manufacturers from lowering the prices of their insulin products, and we would welcome such action. Allegations that we play any role in determining the prices charged by manufacturers are false,鈥 he said.
OptumRx, a division of UnitedHealthcare, said it welcomes the opportunity to show California 鈥渉ow we work every day to provide people with access to affordable drugs, including insulin.鈥 And company spokesperson Isaac Sorensen said it has eliminated out-of-pocket costs for insulin.
Other companies targeted in the suit, and the trade associations that represent them, did not immediately respond to inquiries seeking comment, or declined to comment on the lawsuit. Instead, they either blamed one another for price increases or outlined their efforts to lower costs. Costs for consumers vary widely depending on insurance coverage and severity of illness.
California follows other states, including , , and , in going after insulin companies and pharmaceutical middlemen, but Bonta said California is taking an aggressive approach by charging the companies with violating the state鈥檚 Unfair Competition Law, which could carry significant civil penalties and potentially lead to millions of dollars in restitution for Californians.
If the state prevails in court, the cost of insulin could be 鈥渕assively decreased鈥 because the companies would no longer be allowed to spike prices, Bonta said.
Bonta joins fellow Democratic leaders in targeting the pharmaceutical industry. Gov. Gavin Newsom has launched an ambitious plan to put the nation鈥檚 most populous state in the business of making its own brand of insulin as a way to bring down prices for roughly who rely on the drug.
鈥淏ig Pharma continues to put profits over people 鈥 driving up drug prices and restricting access to this vital medicine,鈥 Newsom spokesperson Brandon Richards told KHN. 鈥淭hat is why California is moving towards manufacturing our own affordable insulin.鈥
By launching an aggressive attack against the pharmaceutical industry, California is also wading into a popular political fight. Many Americans express outrage at drug costs while manufacturers blame pharmacy middlemen and health insurers. Meanwhile, the middlemen point the finger back at drugmakers.
Edwin Park, a California-based research professor with Georgetown University鈥檚 Center for Children and Families, said California鈥檚 push to enter the generic drug business, while also suing the pharmaceutical industry, could ultimately lead to lower patient costs at the pharmacy counter.
鈥淚t can put downward pressure on list prices,鈥 Park said, referring to the sticker price of drugs. 鈥淎nd that can lead to lower out-of-pocket costs.鈥
There isn鈥檛 much transparency in how drug prices are set in the U.S. Manufacturers are predominantly to blame for high drug costs, because they set the list prices, Park said. A growing body of research also indicates that the pharmaceutical middlemen are a prime driver of high patient drug costs. To lower prices, it鈥檚 critical to target the entire supply chain, experts say.
鈥淭he list price has definitely gone up,鈥 said Dr. Neeraj Sood, a professor of health policy, medicine, and business at the University of Southern California who has . 鈥淏ut over time a larger share of the money is going to the middlemen rather than the manufacturers.鈥
This story was produced by , which publishes , an editorially independent service of the .
[Update: This article was updated at 1:30 p.m. ET on Jan. 13, 2023, to include remarks from a CVS spokesperson, delivered after publication.]
