Indiana AG Todd Rokita files lawsuit against drug companies, PBMs over inflated insulin prices

(INDIANA CAPITAL CHRONICLE) — Indiana Attorney General Todd Rokita is seeking action against multiple Pharmacy Benefit Managers (PMBs) and drug companies for what he calls a “conspiracy” to raise prices on insulin medication and unfairly profit off Hoosiers.

The lawsuit was filed in Lake County Superior Court on Tuesday against Novo Nordisk and Sanofi — which manufacture the vast majority of insulins and other diabetic medications available in Indiana, according to the complaint — as well as multiple PBMs: Caremark, CaremarkPCS Health, CVS Health Corporation, Express Scripts and OptumRx. 

The Republican attorney general claimed in the legal filing that a vial of insulin costs the accused pharmaceutical companies “under $2” to produce. That’s in “stark contrast” to the annual average of $5,705 that a diabetic in the United States spent on insulin in 2016.

“When they raise prices in lockstep, we allege that they have extracted illegal profits from people who truly need this medication,” Rokita said during a Tuesday news conference.

“We believe, we have alleged, and we will prove that they have taken advantage of people with serious medical conditions like diabetes,” he continued. “Diabetes is a public health crisis for Hoosiers … This is a serious condition that requires insulin, and the soaring prices put these patients who need this medicine in a horrible position of choosing between health and financial security.”

One of Indiana’s largest and most prominent employers, drug manufacturer Eli Lilly and Company, was not included in the list of defendants, however. 

A footnote in the lawsuit states that although Lilly “is part of the conduct” described, the company “is communicating with the State regarding these allegations and has been proactive in reducing the cost of insulin.”

“Eli Lilly is cooperating with us, and so they have not been named in the lawsuit as of yet,” Rokita reiterated during the news conference.

Lilly, one of the largest insulin manufacturers, has a program that caps treatments for some at $35 but has been criticized for not lowering the cost for every patient. 

Separately, Lilly and several other companies were named as defendants in a California lawsuit filed in January for allegedly overcharging patients for insulin.

Rokita seeks to ‘change behavior’

PBMs are third-party administrators of prescription drug insurance benefits. Their key functions include negotiating prices with drug manufacturers and pharmacies, establishing drug formularies and pharmacy networks, and processing drug claims.

Rokita maintained that — by using the “complicated drug distribution scheme” relied upon by PBMs to “hide” their actions — drug companies named in the lawsuit “have conspired to raise prices on insulin medications more than 1,000% in the last decade alone.”

“Time and time again, we have seen Big Pharma — capital B, capital P — going after the little guy and crippling them financially,” he said. “They know insulin is necessary to keep these patients alive. But they still insist on jacking up the prices to the point where people simply cannot afford it.”

The attorney general added that “hundreds of thousands” of Indiana residents rely upon companies that manufacture diabetes medications. The legal challenge points to the American Diabetes Association, which estimates that approximately 640,435 Hoosiers have been diagnosed with diabetes. That number represents more than 12% of the adult population of Indiana, according to the lawsuit. 

An additional 146,000 people are estimated to have undiagnosed diabetes in Indiana, and more than one-third of the state’s residents — equal to more than 1.7 million people — have prediabetes, of which up to 70% will eventually become diabetic.

“Families are suffering enough already with economic decline,” Rokita said. “Targeting and scheming against those who have a medical condition like diabetes is absolutely unethical.”

He said Tuesday the goal of the lawsuit is to “set a strong precedent” for other pharmaceutical companies and PBMs. He mentioned, too, there are “a lot more medications than just insulin that are out there and also could be subjects of this or similar lawsuits.”

Still, Rokita maintained the lawsuit is not about money, but about “changing policy” and “behavior.” If the case ends in a monetary settlement — rather than a judgment — it’s also unclear if Hoosiers will receive individual restitution.

“How that money is distributed, and where it goes, will in large part be dictated by the terms of the settlement,” Rokita said. “I suspect that with how many patients we have in the state of Indiana on insulin, it may not be worth it to send individual checks up. But we don’t know.”

Further, it remains uncertain how long the case could take until conclusion. Rokita said his office “will resist” any efforts by the defendants to move the matter to federal court.

Increased PBM scrutiny

As their role and visibility have increased, PBMs have come under increased scrutiny from policymakers.

That includes questions from Indiana lawmakers, who have grilled PBM representatives during a debate over possible ways to decrease Indiana’s elevated health care costs.

Much of the discussion centered around insulin, a substance that people with diabetes cannot live without but can be prohibitively expensive. 

Joey Fox, a lobbyist representing CareSource — an insurance company representing roughly 74,000 Hoosiers — as well as the Pharmaceutical Care Management Association, told legislators in February 2023 that rebates from drug companies to PBMs aren’t “out of the goodness of their hearts” to lower drug prices but rather a way to secure their share of the market.

He told lawmakers the “best way” to lower the price of drugs is to lower the price of drugs: “If the price of drugs weren’t so high, my clients wouldn’t have to be there to negotiate discounts,” he said.

Senate Enrolled Act 8 was ultimately signed by the governor and will require PBMs to pass on rebates they receive from drug manufacturers to the patients buying medications. 

Last year, Rokita reached a settlement with a different PBM, Centene Corporation, in connection with alleged overcharges to Indiana’s Medicaid program for pharmaceutical costs.

According to the attorney general’s office, Centene allegedly inflated dispensing fees while serving as a PBM and failed to disclose true pharmacy benefits and services costs, causing overcharges to the state’s Medicaid program.

Under the terms of the settlement, Centene agreed to pay $66.5 million to Indiana. Although it made no admission of liability, the company also acknowledged an obligation to comply with the requirements of Indiana’s laws while serving as a PBM in the state.

Whitney Downard contributed reporting.