Insulin Lawsuits Over Price Fixing Centralized in Federal MDL

A panel of federal judges has transferred all insulin lawsuits brought in U.S. District Courts nationwide to one judge for coordinated discovery and pretrial proceedings, since they each involve common questions of fact and law about whether drug makers and benefits managers colluded to artificially inflated prices of the critical diabetes drug.

Over the past few months, there have been a growing number of complaints filed throughout the federal court system, each alleging that there has been a widespread price fixing scheme that has caused consumers and state medical plans to pay $300 to $700 for insulin, when it only costs about $2 per dose to produce.

Insulin is a key treatment for diabetes, as it helps the body properly process, store and use glucose. Patients with Type 1 diabetes use insulin on a daily basis, and many with Type 2 diabetes also use insulin regularly to maintain proper blood glucose levels.

According to the lawsuits, insulin manufacturers and pharmacy benefit managers (PBMs) have engaged in scheme to fix the prices higher, causing billions in damages for consumers and states that often pay the inflated costs.

Inflated Insulin Price Scheme

PBMs regularly release formulary lists of drugs insurers should be willing to pay for, which usually determines which drugs are sold on the U.S. market. However, a number of states have filed lawsuits alleging that manufacturers and PBMs have created a scheme where manufacturers pay high “administrative fees” to ensure their drugs get on those lists, which the lawsuit claims is a form of illegal rebate.

These fees, and other inflated prices, drive up the cost of insulin significantly, resulting in a drug that is only $2 to produce still costing consumers hundreds of dollars. The same insulin only cost $20 per vial as recently as the 1990s, and the cost to manufacture insulin has decreased since then, the lawsuits indicate.

The insulin price fixing problems are exacerbated by the fact that the three largest manufacturers, Eli Lilly, Novo Nordisk and Sanofi control 92% of insulin manufactured in the U.S. and receive 96% of the revenue of the global diabetes drug market. In turn, the three largest PBMs in the U.S., CVS Caremark, Express Scripts and OptumRX control more than 80% of the PBM market and the largest pharmacy chains in the U.S.

According to the American Diabetes Association, the cost of diabetes treatment in the U.S. cost about $327 billion in 2017, representing one out of every four dollars spent on healthcare in the U.S. that year.

Insulin Price-Fixing Lawsuits Consolidated in New Jersey Federal Court

In May, five states filed a motion for transfer with the U.S. Judicial Panel on Multidistrict Litigation (JPML), seeking to have the lawsuits consolidated before one federal judge in the Southern District of Mississippi for coordinated discovery and pretrial proceedings.

Such consolidation is common in complex product liability lawsuits, where large numbers of cases are pending before different judges which involve similar injuries or damages caused by the same product.

After hearing oral arguments last week, the JPML issued a transfer order (PDF) on August 3, calling for all current and future insulin lawsuits to be consolidated in the U.S. District Court of New Jersey under Judge Brian Martinotti for coordinated pretrial proceedings.

At the hearing, defendants opposed centralization, claiming state-specific issues would make the creation of an insulin price-fixing multidistrict litigation (MDL) inefficient, and that informal coordination was preferred. However, the JPML determined that their arguments were “unpersuasive.”

“Considering that the alleged conspiracy to fraudulently raise insulin prices is at the heart of all actions, the alleged factual and legal differences implicated by the involvement of distinct state laws and programs do not preclude centralization,” the JPML wrote. “We often have held that the assertion of different legal claims or additional facts is not significant where, as here, the actions arise from a common factual core.”

The panel noted that, since plaintiffs originally filed the motion to consolidate, the court has become aware of at least eight more lawsuits filed in federal courts nationwide.

The insulin pricing fixing MDL will keep the cases as individual lawsuits filed by the state, but will have them go through discovery, pre-trial motions and potentially bellwether cases. If, after the pretrial proceedings are concluded, the cases have not yet been resolved through a settlement agreement or other court action, they will be remanded back to their original District Courts for individual trials.