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Schmidt suit claims insulin 'pricing scheme'

Some of the nation's most prominent drug companies and pharmacies forced Kansans to pay exorbitant costs for insulin, Attorney General Derek Schmidt argued in a lawsuit filed Friday.

The lawsuit, filed in Shawnee County District Court, targets Eli Lilly and Co., Sanofi-Aventis, and Novo Nordisk, collectively the largest insulin manufacturers in the United States. It also charges a slate of middlemen with allegedly furthering a pricing scheme that drove up costs.

Similar lawsuits have been filed in other states, notably Arkansas, Mississippi and Minnesota. Michigan is also undertaking an investigation of its own into the pricing practices.

The lawsuit alleges violation of the Kansas Consumer Protection Act, arguing the pharmaceutical companies combined with the middlemen charged with determining which drugs are covered by insurance, dubbed pharmacy benefit managers, to produce a mutually profitable system that harmed diabetics.

Not only did drug-makers inflate costs of manufacturing the insulin, the lawsuit alleges, but the manufacturers then provided significant rebates to the pharmacy benefit managers. Schmidt's office also alleges they failed to disclose details of the pricing structure.

Insulin costs have increased in recent decades, drawing the attention of both state and federal officials. The lawsuit alleges that insulin costing between $300 and $700 for diabetics in Kansas was made for less than $5.

“Kansans with diabetes who are either uninsured or are in high deductible plans have been substantially damaged as a direct result of the scheme,” Schmidt said in a statement. “One in four Kansas diabetics can no longer afford their insulin and are forced to either ration their medicine or to go without. The consequences can be fatal.”

Congress has considered whether or not to cap the out-of-pocket cost of insulin in recent years, though the fate of a proposal to institute a $35 limit appears uncertain.

In a statement, Eli Lilly said it was "disappointed by the false accusations about our insulins."

"Today, anyone is eligible to purchase their Lilly insulin prescription for $35 or less per month, regardless of the number of pens or vials they use, and whether they are uninsured or use commercial insurance, Medicaid, or are enrolled in a participating Medicare Part D plan," the statement said. "Despite rising deductibles, the average monthly out-of-pocket cost for Lilly insulin has dropped by 44 percent, to $21.80, over the last five years."

Schmidt's office also struck a deal with insurance giant Centene to recoup $27 million to settle allegations that PBMs who manage prescription drug benefits for the state's Medicaid program overcharged the state.

Reporter: Andrew Bahl Topeka Capital-Journal


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