Grabar Law Office has filed a complaint on behalf of The Trustees of the University of Pennsylvania in the United States District Court for the District of New Jersey, alleging a price-fixing conspiracy dating back to 2011 involving pharmaceutical manufacturers, insurance companies, and their affiliated pharmacy benefit managers (PBMs) to artificially inflate the prices of insulin. The defendants include major pharmaceutical companies – Eli Lilly, Novo Nordisk, and Sanofi – and leading PBMs such as CVS Caremark, Express Scripts, and OptumRx. The complaint accuses these entities of engaging in an “Insulin Pricing Scheme,” which has caused significant financial harm to plaintiffs. The University of Pennsylvania joins more than 600 large employers, or self-funded payors, that have individually filed suit to recover overcharges they were forced to pay for their employees’ insulin.
Key Allegations
The complaint outlines a scheme wherein manufacturers set artificially high list prices for insulin while providing undisclosed rebates and other payments to PBMs in exchange for favorable formulary placement. This arrangement allowed both manufacturers and PBMs to reap substantial profits at the expense of consumers and employers that subsidize the cost of their employees’ health coverage (so-called “self-funded payors”). Over the past two decades, insulin prices have risen exponentially – by as much as 1,000% – despite declining production costs. For example, insulins that cost $20 in the 1990s now range from $300 to $700 per unit.
The PBMs, which control over 80% of the U.S. market for pharmacy benefit management services, are alleged to have used their dominant position to extract higher rebates from manufacturers while simultaneously inflating drug prices through opaque contractual arrangements. These practices have resulted in exorbitant costs for payors like the University of Pennsylvania Health System (UPHS), which self-insures its healthcare costs and provides health benefits to thousands of employees and their dependents.
Legal Claims
The plaintiffs assert that these practices violate several laws, including:
- Racketeer Influenced and Corrupt Organizations (RICO) Act: The defendants are accused of forming a RICO enterprise to manipulate insulin pricing through fraudulent means.
- Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL): The complaint alleges deceptive trade practices that harmed consumers and payors.
- Common Law Claims: These include unjust enrichment and fraud.
Damages Sought
The plaintiffs seek a range of remedies, including:
- restitution for overpayments made due to inflated insulin prices;
- disgorgement of profits obtained through unlawful practices;
- treble damages under RICO;
- punitive damages;
- injunctive relief to prevent further harm.
Broader Implications
This case highlights systemic issues within the pharmaceutical supply chain, particularly the role of PBMs in driving up drug costs through non-transparent rebate schemes. It also underscores the financial burden placed on institutional payors like UPHS, which has spent millions more on diabetes medications than it would have in a competitive market.
By bringing this action, Grabar Law Office and The Trustees of the University of Pennsylvania aim not only to recover financial losses but also to address broader inequities in drug pricing practices that affect millions of Americans reliant on life-sustaining medications like insulin.
