Who has been overcharged and what are the possible damages?
Large corporations, cities, counties, labor unions, medical centers, universities, school boards, and similar large employers with self-funded healthcare plans are eligible to hold insulin manufacturers and PBMs accountable for their substantial loss.
The overpricing scheme has had a substantial financial impact. It is estimated that insulin costs in the U.S. are approximately four times higher than they should be so damages would start at 75% of total insulin expenses for the past 10-20 years.
For employers spending $10 million annually on insulin, the potential damages could amount to $7.5 million per year, amounting to $100 million or more in total damages for larger employers. Treble damages are also possible.
Status of the Insulin Pricing Litigation
Insulin manufacturers, including Eli Lilly, Novo Nordisk, and Sanofi, alongside PBMs such as Express Scripts, CVS Caremark, and OptumRx, have been accused of artificially inflating insulin prices through a pricing scheme driven by rebate agreements. Under this scheme, PBMs were incentivized to continue recommending the manufacturers’ products in exchange for significant rebates, perpetuating the inflated costs passed on to self-funded plans.
Numerous lawsuits have been filed nationwide by affected payers, and these cases were consolidated into a multidistrict litigation (MDL) in the U.S. District Court of New Jersey at the end of 2023. The MDL seeks to hold insulin manufacturers and PBMs accountable for their pricing practices through claims of RICO violations, deceptive trade practices, and unjust enrichment.
The insulin overpricing MDL seeks several forms of relief:
- Injunctive Relief: A court order to discontinue the pricing scheme and protect self-funded plans from future price inflation.
- Monetary Relief: Reimbursement for claimants who overpaid for insulin, addressing past overcharges and preventing future pricing abuses. Potentially 75% of total insulin expenses over the past 10-20 years.
- Ceasing Illicit Revenues: Halting the financial gains made by PBMs and manufacturers through these inflated pricing practices.
- Punitive Damages: Compensation for prior misconduct, aimed at deterring future violations by the responsible parties.
The risks of not pursuing legal action include the potential of a class action lawsuit by your plan beneficiaries for an ERISA breach of fiduciary duty for not protecting them from unjust overcharges. Timely action is essential to ensure that the fullest measure of damages are preserved.
