Baltimore is taking Eli Lilly and other pharmaceutical giants to court, accusing them of artificially inflating the cost of insulin and other diabetes medications.
Mayor Brandon Scott, a Democrat, and the Baltimore City Council filed a lawsuit in the U.S. District Court of Maryland against Eli Lilly and 17 other companies, including CVS and drug maker Novo Nordisk. They are requesting a jury trial.
In the lawsuit, filed Monday, Scott and the council accuse the companies of violating state antitrust and consumer protection laws, as well as the Racketeer Influenced and Corrupt Organizations Act a federal law, better known for its acronym RICO, which was passed in 1970 to take down organized crime.
They also allege that the drug companies and pharmacy benefit managers named in the suit conspired to unjustly enrich themselves by purposefully driving up the price of life-sustaining medications.
Pharmacy benefit managers — companies like CVS — are controversial players in the pharmaceutical supply chain that manage prescription drug benefits on the behalf of payers like large employers, health insurers and Medicare Part D drug plans. They have a big behind-the-scenes role in negotiating drug prices, and have faced scrutiny for their lack of transparency and the part they play in rising prescription drug costs and spending.
In a statement, however, CVS spokesman Mike DeAngelis said pharmaceutical companies alone are responsible for the prices they set in the marketplace for the products they manufacture.
“Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products and we would welcome such an action,” DeAngelis said. “Allegations that we play any role in determining the prices charged by manufacturers for their products are false, and we intend to vigorously defend against this baseless suit.”
Allison Schneider, a spokeswoman for the Danish pharmaceutical company Novo Nordisk, similarly described the claims in the lawsuit as “without merit” and said the company planned to vigorously defend itself against them. The company is trying to make insulin more affordable for patients, Schneider said, citing an option called MyInsulinRx that costs $35.
Eli Lilly spokeswoman Antoinette Forbes gave a similar statement. The average monthly out-of-pocket cost for Lilly insulin is $20.48, she said. The company also cut insulin prices by 70%, she added, and automatically caps monthly out-of-pocket costs at $35 or less wherever possible.
According to the lawsuit, Baltimore offers a self-funded insurance plan to more than 60,000 employees, retirees and their dependents. Because the plan is self-funded, Baltimore — rather than a third-party insurer — pays for a portion of its beneficiaries’ prescription drugs. Between January and October 2023, the suit said, the city paid more than $11 million for diabetes medications.
Normal market factors cannot explain the rise in drug prices, the lawsuit alleges. It takes less than $10 to produce a vial of insulin, according to the suit, but the list price for a single vial of Eli Lilly’s Humalog was $332 in 2019 — a spike from the $21 it cost in 1999. A single vial of Novo Nordisk’s Novolog was $39.75 in 2001 but had increased to $290 in 2021, according to the suit.
Vinny DeMarco, president of the Maryland Health Care for All! Coalition, praised Scott and his administration for filing the lawsuit.
Progress has been made to lower the cost of insulin, both federally with the Inflation Reduction Act — which requires drug companies to pay rebates on certain drugs if they raise prices faster than the rate of inflation — and more locally with Maryland’s Insulin Cost Reduction Act, which caps the co-pay cost for a 30-day supply of insulin to $30 or below for many state residents.
Those laws will help Marylanders and Baltimore residents afford insulin moving forward, but the lawsuit will help the city recoup exorbitant losses it has faced from drug companies over the past two decades, DeMarco said. The timeframe alleged in the suit is from 2006 to the present.
The suit also cites Baltimore’s high diabetes rate as reason for urgency, noting that 13% of city residents are diagnosed with the chronic condition, compared to 10% of the population nationwide. African American adults are 60% more likely than non-Hispanic white adults to be diagnosed with diabetes and twice as likely to die from diabetes, according to the U.S. Department of Health and Human Services Office of Minority Health.
It’s common for metropolitan areas to have higher rates of diabetes, and it’s even more common for disadvantaged neighborhoods in those areas, said Dr. Rana Malek, an endocrinologist who sees patients at the University of Maryland Center for Diabetes and Endocrinology at Midtown.
That’s because people in those areas often live in food deserts or can’t afford nutritious food at the grocery store, Malek said. Their neighborhoods may not have any green spaces where they can exercise, and may have poorly paved sidewalks. Research also shows that people living in under-resourced areas may be more likely to be exposed to certain endocrine-disrupting chemicals, she said.
While the federal government now has tools to reduce the cost of insulin for Medicare recipients through the Inflation Reduction Act, it can’t do the same for people with private insurance. Many people who struggle to afford their medications don’t have health insurance or have commercial insurance with high deductibles, Malek said.
When people can’t afford insulin, they may try to ration it — stretching a dose that’s meant to last one month to two or three months, she said. Over time, this will cause their blood sugar to rise and put them at risk of diabetes complications, such as chronic kidney disease, nerve damage and problems with their feet, oral health, vision, hearing and mental health.
Malek described Baltimore’s lawsuit as an interesting approach to the problem of high cost diabetes medications. However, she wishes preventative strategies — like more equitable urban planning and nutrition policies — would get more attention and funding.
Indiana’s attorney general, a Republican, also is suing Novo Nordisk and other drug companies and pharmacy benefit managers for conspiring to raise prices on insulin medications and unfairly profit off state residents.
Previously, Eli Lilly settled a similar lawsuit with Minnesota, agreeing to give residents access to insulin for $35 per month for at least the next five years.
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