JPML to Hear Oral Arguments Over Consolidation of Insulin Pricing Lawsuits Next Month

A panel of federal judges will hear oral arguments next month, over whether to consolidate and centralize all insulin pricing lawsuits pending throughout the federal court system before one judge for coordinated discovery and pretrial proceedings.

Over the past few months, there have been a growing number of lawsuits against insulin manufacturers and other entities, alleging that there has been a widespread pricing scheme that has artificially increased the cost of the critical drug.

Insulin is a key treatment for diabetes, as it helps the body properly process, store and use glucose. Patients with Type 1 diabetes use insulin on a daily basis, and many with Type 2 diabetes also use insulin regularly to maintain proper blood glucose levels.

According to the lawsuits, insulin only costs about $2 per dose to produce, yet consumers and state medical plans are forced to pay $300 to $700 to purchase it, since drug manufacturers and pharmacy benefit managers (PBMs) have colluded to inflate prices.

Inflated Insulin Price Scheme

Lawsuits have been filed by a variety of different states, including Arkansas, Illinois, Kansas, Mississippi, Montana and others, seeking to hold the manufacturers and PBMs responsible for millions, and potentially billions, in damages caused by inflated costs paid by medical plans and consumers.

PBMs regularly release formulary lists of drugs insurers should be willing to pay for, which usually determines which drugs are sold on the U.S. market. However, the states allege manufacturers and PBMs have created a scheme where manufacturers pay high “administrative fees” to ensure their drugs get on those lists, which the lawsuit claims is a form of illegal rebate.

These fees, and other inflated prices, drive up the cost of insulin significantly, resulting in a drug that is only $2 to produce still costing consumers hundreds of dollars. The same insulin only cost $20 per vial as recently as the 1990s, and the cost to manufacture insulin has decreased since then, the lawsuits indicate.

The insulin pricing problems are exacerbated by the fact that the three largest manufacturers, Eli Lilly, Novo Nordisk and Sanofi control 92% of insulin manufactured in the U.S. and receive 96% of the revenue of the global diabetes drug market. In turn, the three largest PBMs in the U.S., CVS Caremark, Express Scripts and OptumRX control more than 80% of the PBM market and the largest pharmacy chains in the U.S.

According to the American Diabetes Association, the cost of diabetes treatment in the U.S. cost about $327 billion in 2017, representing one out of every four dollars spent on healthcare in the U.S. that year.

Insulin Pricing Scheme Lawsuit Consolidation to be Considered

Last month, five states filed a motion for transfer with the U.S. Judicial Panel on Multidistrict Litigation (JPML), petitioning to have the complaints consolidated before one federal judge in the Southern District of Mississippi for coordinated discovery and pretrial proceedings.

In a Notice of Hearing Session (PDF) filed by the JPML on June 16, the judges indicate they will hear oral arguments on the consolidation of the five claims brought by Arkansas, Illinois, Kansas, Mississippi and Montana on July 27 at the Phillip Burton U.S. Courthouse in San Francisco, California.

Such consolidation is common in complex product liability lawsuits, where large numbers of cases are pending before different judges which involve similar injuries or damages caused by the same product.

If the JPML agrees to consolidate the cases before one judge for pretrial proceedings, they would create an insulin pricing scheme multidistrict litigation (MDL), where the cases would remain individual lawsuits filed by the state, but go through discovery, pre-trial motions, and potentially bellwether test cases. If, after the pretrial proceedings are concluded, the cases have not yet been resolved through a settlement agreement or other court action, they will be remanded back to their original District Courts for individual trials.