By Katie Thomas, The New York Times.
A lawsuit filed Monday accused three makers of insulin of conspiring to drive up the prices of their lifesaving drugs, harming patients who were being asked to pay for a growing share of their drug bills.
The price of insulin has skyrocketed in recent years, with the three manufacturers — Sanofi, Novo Nordisk and Eli Lilly — raising the list prices of their products in near lock step, prompting outcry from patient groups and doctors who have pointed out that the rising prices appear to have little to do with increased production costs.
The lawsuit, filed in federal court in Massachusetts, accuses the companies of exploiting the country’s opaque drug-pricing system in a way that benefits themselves and the intermediaries known as pharmacy benefit managers. It cites several examples of patients with diabetes who, unable to afford their insulin treatments, which can cost up to $900 a month, have resorted to injecting themselves with expired insulin or starving themselves to control their blood sugar. Some patients, the lawsuit said, intentionally allowed themselves to slip into diabetic ketoacidosis — a blood syndrome that can be fatal — to get insulin from hospital emergency rooms.
A recent study in The Journal of the American Medical Association found that the price of insulin nearly tripled from 2002 to 2013.
“People who have to pay out of pocket for insulin are paying enormous prices when they shouldn’t be,” said Steve Berman, a lawyer whose firm filed the suit on behalf of patients and is seeking to have it certified as a class action.
In a statement, Sanofi said, “We strongly believe these allegations have no merit, and will defend against these claims.” Lilly said it had followed all laws, adding, “We adhere to the highest ethical standards.”
A spokesman for Novo Nordisk said the company disagreed with the allegations in the suit and would defend itself. “At Novo Nordisk,” the company’s statement said, “we have a longstanding commitment to supporting patients’ access to our medicines.”
The rising costs of drugs has led to several hearings in Congress and has drawn the attention of President Trump, who this month pledged to address the issue and said the industry was “getting away with murder.”
In December, attorneys general in 20 states accused several generic drug makers, including two of the biggest — Teva Pharmaceuticals and Mylan — of engaging in a price-fixing scheme in which executives coordinated at informal gatherings and through phone calls and text messages. Federal investigators are also said to be looking at the issue of drug prices, and several companies, including Valeant Pharmaceuticals International, have said they have received subpoenas.
Several companies have recently tried to head off criticism by taking actions to address rising prices. In December, Lilly said it would offer a 40 percent discount off the list price of its insulin product, Humalog, for patients who are forced to pay full price. And Novo Nordisk, which makes Novolog, has pledged to limit price increases in the American market to less than 10 percent in a year.
The lawsuit filed Monday claimed that the three companies intentionally raised the list prices on their drugs to gain favorable treatment from pharmacy benefit managers, who work with health insurers and drug makers and help decide how a drug will be covered on a list of approved drugs.
Insurers do not pay the list prices that the drug makers set. Instead, the pharmacy benefit managers negotiate a rebate that is returned to them. The benefit managers, in turn, take a slice of that rebate for themselves, although the amount of the rebate, and the amount they keep, is not made public.
As a result, the drug manufacturers end up setting two prices for their drugs — the higher list price and the lower, secret, “real” price that insurers pay. The lawsuit claims that rather than competing with one another to offer a lower, “real” price to the insurers, the drug makers are vying to offer the best payment to the pharmacy benefit manager, which is why they have been raising the list price.
When the list price goes up, many patients see their out-of-pocket costs rise, even if they have health insurance. That’s because plans increasingly carry high deductibles, which require patients to pay for their drug costs themselves until they hit a certain limit, as well as to pay a percentage of the list price even after their deductible is met.
While Mr. Berman accused the benefit managers of being complicit, he said the lawsuit focused on the drug makers because “they are playing the game, and they are the ones who publish the list price.”
Michael Carrier, an antitrust professor at Rutgers Law School, described the filing of the lawsuit as “big news” and said it was interesting because it turned its attention to the inner workings of the pharmacy benefit managers, which until now “have floated under the radar of sustained drug pricing scrutiny.”
Brian Henry, a spokesman for Express Scripts, the nation’s largest pharmacy benefit manager, declined to comment on the lawsuit, but said, “Rebates don’t raise drug prices, drug makers raise drug prices.”
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Paying the Price for Insulin
By
My patient, Jeanne (not her real name) was almost embarrassed to mention that her insulin cost $300 for a single vial that lasts about five days. That’s more than $21,000 a year. Did I have any ideas that might help? I did, and directed Jeanne and her husband to places where they could buy insulin at a discount. Even then, it would cost $1,800 each year but it would be a slower insulin that isn’t quite as good as what she was used to.
This scenario must have Canadians Frederick Banting and Charles Best spinning in their graves. They discovered insulin — one of the most important discoveries of the past century — in 1921 and sold the original patent to the University of Toronto for $1, believing that a drug this important should always be available and affordable to individuals who needed it.
That ideal got lost along the way. Accounting for inflation, a vial of insulin that cost $1 in 1967 should cost $16.43 today — not the $300 it cost my patient. To be fair, the quality of insulin is better today, but not by nearly twentyfold.
Many of my patients struggle to pay for insulin. Some of them don’t use the full dose each day so they can make it last the month until insurance covers it again.The high cost has been especially onerous for people without health insurance, those with high deductibles, or those relying on Medicare who reach the donut hole — or the yearly coverage cap — on a given drug. It’s even affecting many of my patients who have commercial insurance, because of the high copayments.
Without decisive action, this crisis is likely to worsen quickly.
The number of Americans who use insulin (I’m one of them), currently estimated at about 7.4 million, is growing rapidly. They are struggling to understand what mechanisms, beyond greed, could have pushed the cost of insulin to equal or surpass the cost of a mortgage. They feel disenfranchised, lacking a voice among health care policymakers who claim to be laser-focused on improving health outcomes for all and reining in drug costs.
The status quo reflects a society in which those who sell pharmaceuticals like insulin are accustomed to charge whatever price the market will bear — and buyers must pay it because there isn’t an alternative and without it they would die.
Other developed nations do not allow this. Outside of the U.S., insulin prices are negotiated by the government, not by private payers as happens here. Perhaps the most dramatic example is that a box of five pens of Tresiba, one of the newer insulins, has a retail price of about $500 in the U.S., while in Spain that same box of pens is 5 Euros (about $6).
The reason for the discrepancy is simple: No real price controls exist in the U.S., as they do in almost every other developed nation.
Two years ago, Sen. Bernie Sanders (I-Vt.) and Rep. Elijah Cummings (D-Md.) stepped up pressure to investigate drug makers for potential price collusion on insulin; the Department of Justice is now investigating one of the middlemen. Numerous class-action lawsuits about price fixing were filed last year. Two other lawmakers, Reps. Diana DeGette (D-Colo.) and Tom Reed (R-N.Y.), both parents of children with type 1 diabetes, have teamed up to focus on drug prices. And at least five states, including my home state of Washington, have begun investigating companies that make insulin.
Dr. William T. Cefalu, the chief scientific, medical, and mission officer for the American Diabetes Association, recently testified before the U.S. Senate Special Committee on Aging that the high cost of insulin challenges any reasonable explanation — and that uninsured and underinsured patients are subsidizing the system. The association released these and other findings in a white paper.
I hope these efforts yield details that explain the current untenable circumstances for people who need insulin to stay alive and find a fix to halt the profiteering taking place at their expense.
The question is not whether it’s possible to make insulin affordable again. Instead, we should ask: How quickly can we change this unsustainable trend?
Insulin is not a concierge drug to be used only by those who can afford it. Affordable access to it should be a right, not a privilege, in the United States.
Irl Hirsch, M.D., who was diagnosed with type 1 diabetes at age 6, is a diabetes expert and professor of medicine at the University of Washington School of Medicine. He reports receiving a research grant from Medtronic Diabetes and consults for Abbott Diabetes Care, Roche, Bigfoot, and Becton Dickinson.
MAY 17, 2018
Editor: Although the date of this article may not be current the information is still valid.
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