Novo Nordisk, Eli Lilly and Sanofi must face lawsuit over insulin prices

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The three big insulin makers, Novo Nordisk, Eli Lilly and Sanofi, must face a lawsuit that claims they gouged diabetes patients with the price of their lifesaving medications, according to Bloomberg.

The proposed class-action lawsuit, filed by 67 diabetics, was allowed to proceed on consumer-fraud allegations tied to skyrocketing insulin prices, but a judge threw out the plaintiffs' racketeering claims.

The lawsuit accuses the three drugmakers of raising the list price of insulin by more than 150 percent in the last five years. As a result of the increased prices, many diabetics have resorted to not taking the drug, taking less than the recommended dose of insulin or obtaining expired versions, the lawsuit claims.

The plaintiffs' argument centers on deceptive pricing practices. Insulin sticker prices are different from the prices insurers pay after rebates, or discounts that are awarded to pharmacy benefit managers. The plaintiffs claim the rebates amount to kickbacks for PBMs, who recommend which drugs should be covered by insurers. Higher list prices mean larger-percentage rebates out of which PBMs take a slice. The judge ruled that patients could forge ahead with the claims that the rebate system violated consumer protection laws in some states.

"This ruling blows the insulin racket wide open," Steve Berman, a plaintiffs' lawyer who is one of the leaders of the potential class-action case, told Bloomberg.  The ruling "clears the way for us to begin obtaining discovery from the manufacturers and PBMs so we can shine the light on exactly what has driven insulin prices sky high."

The opinion was brought by U.S. District Judge Brian Martinotti, who said "This Court finds plaintiffs have adequately alleged fraudulent, unfair or unconscionable conduct."

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