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The Commonwealth of Virginia has filed suit against various pharmacy benefit managers (PBMs) and insulin manufacturers for allegedly violating the Virginia Consumer Protection Act. According to the lawsuit, the defendants, including Express Scripts, CVS Caremark, and OptumRx, as well as Sanofi-Aventis U.S. and Novo Nordisk, engaged in an insulin pricing scheme that artificially inflated insulin prices, deceiving consumers in the process.
Virginia Attorney General Jason Miyares claims that the defendants are collectively involved at every step of insulin production, pricing, coverage, and dispensing. As a result, he alleges that these companies conspired to drastically increase prices for the lifesaving diabetes medication that many Virginia residents need to survive. Miyares described the system's lack of transparency about pricing as deceptive and said it placed profits over patients.
More specifically, Miyares claims in the lawsuit that insulin manufacturers require PBMs to raise drug prices to gain access to their formularies and then pay a portion of those costs back to the PBMs. The PBMs then grant preferred status for the drugs on their standard formularies based on which manufacturer paid them the most and had the highest list price. In other words, PBMs knowingly set an overinflated price basis for insulin, which determines the amount insurance companies and diabetics must pay for the drug while receiving payments from drug companies as an incentive to do so. However, the PBMs retain most of the drug companies' payments as profit rather than passing the savings on to consumers through lower prices.
The lawsuit also notes that insulin manufacturers consistently raised list prices for insulin in tandem, even though the cost of insulin remained unchanged and manufacturing costs decreased. Accordingly, PBMs required larger payments from manufacturers to maintain preferred formulary placement. In taking these actions, PBMs kept prices high and competition low, while failing to explain price hikes to consumers.
Virginia is seeking restitution for consumers, maximum civil penalties, and an injunction barring the defendants from further violations of the Consumer Protection Act. The lawsuit points to not only the financial losses for Virginians who rely on insulin to survive, but also the medically dangerous actions of consumers who have had no choice but to ration or underdose their insulin, use expired insulin, reuse needles, or engage in other similar behaviors due to skyrocketing prices.
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