Analog Insulin Drug Makers’ Kickbacks to PBMs RICO Class Action

This class action alleges that pharmacy benefit managers (PBMs) are taking kickbacks from drug manufacturers in ways that raise the prices of prescription drugs. The drugs at issue in this case are analog insulin drugs, and the case has been brought by a drug wholesaler, which claims that it must pay more for drugs because of the kickbacks. The complaint names as defendants a number of drug makers and three groups of PBMs—CVS Caremark, Express Scripts, and OptumRx.

PBMs are used by insurers and health plans to handle prescription drug benefit programs. PBMs negotiate with drug maker over a number of issues—rebates that lower the prices insurers pay for drugs, benefit rules (such as those for copayments and deductibles), and formularies (that is, which drugs are covered by which insurance plans).

A single PBM may negotiate for a number of health plans. The more “covered lives” a PBM represents, the greater its negotiation power. This has led to increasing consolidation. The complaint says, “Together, the three largest PBMs (CVS defendants Caremark, Express Scripts, and OptumRx) control over 85% of the market and possess the market power of more than 200 million people.”

This has given PMBs increased power in drug price negotiations. According to the complaint, they are now negotiating kickbacks for themselves from the drug manufacturers.

The complaint says that the effect of these kickbacks “has been to corrupt the market policing mechanisms that the Defendant PBMs would otherwise perform, causing significant supra-competitive pricing inflation and market-wide consumer harm.”

Previously, the complaint says, if a drug manufacturer had prices that were too high, PBMs would penalize it by favoring cheaper drugs from other makers. However, the complaint says that there is now a conflict of interest: The PBMs “are not simply indifferent to the Defendant Drug Manufacturers’ large annual price increases, but they actually benefitted from such increase because the price increases inflated the amount of bribes and kickbacks” that they receive.

The complaint alleges, “Under federal and state anti-kickback and bribery laws it is and was illegal for the Defendant Drug Manufacturers to pay rebates, fees, and other moneys to Defendant PBMs in return for formulary placement.” The kickbacks are wrong on another level as well, the complaint contends, because the PBMs owe duties of fidelity and fiduciary duty to their health plan and insurance clients.

According to the complaint, the kickbacks lead PBMs to favor higher-priced over lower-priced drugs, remove curbs on drug price increases, and accelerate increases in drug makers’ prices for their insulin drugs. The complaint’s counts include violations of RICO laws.

The class for this action is all persons or entities in the US and its territories that directly purchased the insulin drugs Apidra, Basaglar, Fiasp, Humalog, Lantus, Levemir, Novolog, Tresiba and/or Toujeo directly from Eli Lilly, Novo Nordisk or Sanofi.

Article Type: Lawsuit
Topic: RICO

Most Recent Case Event

Analog Insulin Drug Makers’ Kickbacks to PBMs RICO Complaint

April 27, 2020

This class action alleges that pharmacy benefit managers (PBMs) are taking kickbacks from drug manufacturers in ways that raise the prices of prescription drugs. The drugs at issue in this case are analog insulin drugs, and the case has been brought by a drug wholesaler, which claims that it must pay more for drugs because of the kickbacks. The complaint names as defendants a number of drug makers and three groups of PBMs—CVS Caremark, Express Scripts, and

Analog Insulin Drug Makers’ Kickbacks to PBMs RICO Complaint

Case Event History

Analog Insulin Drug Makers’ Kickbacks to PBMs RICO Complaint

April 27, 2020

This class action alleges that pharmacy benefit managers (PBMs) are taking kickbacks from drug manufacturers in ways that raise the prices of prescription drugs. The drugs at issue in this case are analog insulin drugs, and the case has been brought by a drug wholesaler, which claims that it must pay more for drugs because of the kickbacks. The complaint names as defendants a number of drug makers and three groups of PBMs—CVS Caremark, Express Scripts, and

Analog Insulin Drug Makers’ Kickbacks to PBMs RICO Complaint
Tags: Kickbacks, Pharmaceuticals, RICO laws