On Monday, July 24, 2023, the City of Cleveland filed a lawsuit against drug manufacturers and pharmacy benefit managers (PBMS). The City alleges the defendants artificially inflated the price of insulin at the expense of self-funded health plans and their members and beneficiaries.

According to a release from the Cleveland Office of the Mayor, defendants exploit diabetics’ dependency on insulin to guarantee a price-fixing scheme. People who need insulin to stay alive find themselves unable to afford the medicine. As a prescription benefit sponsor, the City of Cleveland literally pays the price for the defendants’ greed.

“Diabetic medications are among the highest costs under the City’s prescription benefit plan provided to its employees,” states an article on the Office of the Mayor’s website. “The lawsuit seeks to recover those costs.”

The City of Cleveland is the first U.S. city to file an insulin pricing scheme lawsuit. However, it follows a similar action filed in May by Lake County, Illinois in which the County accuses Eli Lilly, Novo Nordisk, Sanofi, Express Scripts, and OptumRx are accused of violating the state’s Consumer Fraud Act and the RICO Act.

“The mystery of how this country’s exorbitant insulin prices persist in a climate of cheaper production and minimal R&D can be explained in a single word: greed,” said Levin Papantonio attorney Brandon Bogle in a press release announcing the Lake County lawsuit.

Levin Papantonio Rafferty law firm is working with a consortium of nationally recognized law firms to investigate insulin overpricing lawsuits.

Insulin Overpricing Affects Over 1 Million People

A 2022 Yale study reported the disturbingly high cost of treating diabetes in the U.S. According to the study, 1.2 million Americans (14% of the country’s insulin users) spend “catastrophic” amounts—40% of their post-subsistence income—on this life-saving medication.

Self-funded healthcare plans and their plan holders carry the financial burden of shocking list prices for the drug, which have mushroomed to more than 1000% of their 2003 values. These price increases are unjustifiable, as they do not reflect any substantial improvements to the drug or changes in production or distribution costs.

List Price Per Milliliter of Insulin in the U.S.

1. Late ‘90s: $25-$40
2. 2015: $260
3. 2022: $500+

For two years, the U.S. Senate Finance Committee investigated rising insulin prices. In January 2021, the committee released its 90-page report, which highlighted alarming findings, including:

In 2018, two insulin manufacturers considered lowering the drug’s list prices but decided against the decrease because of its calculated effect on business profits.

1. Increasing list prices are driven by profits for insulin manufacturers and PBMs, and the PBM practice of pressuring manufacturers for rebates, on top of threatening to drop manufacturers’ products from insurance formularies.
2. By insulin manufacturers’ own admissions, an 89% drop in rebates would still result in a profitable business.

Report authors stated, “…the opaque business practices of pharmaceutical manufacturers and PBMs have huge implications for patients, payers, and the Federal government, with respect to insulin and therapies for other diseases.”

As LPR attorney Troy Rafferty explained in a recent video on the topic, “Insulin costs around $2 a vial. They’re selling it for hundreds of dollars a vial. When insulin was created, the patent holder, a doctor, sold the patent—the right to make insulin–to the University of Toronto for one dollar. And he wrote a letter that said, insulin belongs to the world—not one person, not one company—because it is a life-saving drug.”