A new study highlights the complex dynamic between consumer advertising for prescription drugs and patients and clinicians.
The pharmaceutical industry spends more money on advertising for drugs with lower health benefits, a new study shows.
Researchers at the Johns Hopkins Bloomberg School of Public Health found that the share of promotional spending allocated to advertising averaged 14.3 percentage points higher for drugs with low added benefit compared to drugs with high added benefit.
The analysis, to be published online in JAMA on February 7, also revealed that 92 of the 135 drugs (68%) examined by the researchers—of the top-selling prescription drugs sold in 2020— were rated as offering low added benefit.
Because the U.S. does not rate prescription drugs for comparative effectiveness, the researchers used France and Canada's ratings of the same prescription drugs sold in the U.S., some under different brand names.
The researchers say their findings highlight the complex dynamic between consumer advertising for prescription drugs and patients and clinicians.
"The findings suggest that shifting promotional dollars to direct-to-consumer advertising potentially reflects a strategy to drive patient demand for drugs that clinicians would be less likely to prescribe," says study lead author Michael DiStefano, PhD, an assistant scientist in Bloomberg's Department of Health Policy and Management.
The U.S. and New Zealand are the only countries that allow direct-to-consumer advertising for prescription drugs.
The median promotional spending per drug in the study sample, including to patients and clinicians, was $20.9 million in 2020. The median spending per drug on direct-to-consumer advertising was 13.5% of promotional budgets.
Since 1996, annual direct-to-consumer advertising budgets for prescription drugs have increased from $1.3 billion to, in 2016, $6 billion.
Earlier research suggests that direct-to-consumer advertising increases patient requests for advertised drugs and increases chances that clinicians will comply.
While patient requests for advertised drugs may present a chance to discuss treatment options, the researchers say this may also lead to tension if the patient requests are refused.
"When a consumer sees these advertisements on TV or social media, they should really question if it's the best drug for them and have a conversation with their provider," DiStefano says.
The study drew from IQVIA databases that report national sales estimates and promotional spending for pharmaceutical drugs. The analysis focused on 134 of the 150 top-selling branded prescription drugs in 2020. These 150 drugs represented 60% of all U.S. drug sales in 2020. Sixteen drugs were excluded from the primary analysis due to missing data. The percent of total promotional spending allocated to DTCA for each product was computed.
France uses five possible ratings for added benefit—major, important, moderate, minor, and none. Canada uses four categories—breakthrough, substantial, moderate, slight/none.
The ratings are based on clinical research. For their rating categories, the researchers aggregated the top three ratings into "high added benefit" and the remaining ratings into "low added benefit" from France and Canada's ratings. Both countries use their ratings to inform pricing, DiStephano says.
The researchers also found a large variation of spending on direct-to-consumer advertising among the prescription drugs analyzed in the study. Manufacturers of six of the best-selling drugs spent more than 90% of their promotional budget targeting consumers versus clinicians.
These drugs include treatment options for motor neuropathy, various cancers, including breast cancers, multiple sclerosis, and HIV. Drugs treating metabolism and the digestive tract had a significantly lower share of total promotional spending on direct-to-consumer advertising.
The authors concede that they looked at only one year, that their data did not capture all promotions, such as patient coupons, and that France's and Canada's ratings may reflect different value judgements.
"This comes down to a consumer issue, not necessarily a policy issue," says Gerard Anderson, PhD, professor in the Department of Health Policy and Management and senior author of the study.
"Another consideration is the U.S. doesn't currently rate prescription drugs," Anderson says. "Imagine if the drug ads you saw on TV were required to tell you how well the drug performed against alternative drugs for the same disease. That might change how interested you would be in the drug."
The IRA provisions took effect for Medicare Part B drugs on October 1, 2022, and for Part D drugs on January 1, 2023.
Senate Finance Committee Chair Ron Wyden, D-OR, wants the Biden administration to make public "when and how" price-gouging penalties on drug makers will be imposed under the Inflation Reduction Act.
"The Finance Committee will be paying close attention to how the inflation rebate provisions work to lower prices for seniors and hold manufacturers accountable if they continue to raise prices beyond the rate of inflation," Wyden wrote in a letter to Centers for Medicare & Medicaid Services Administrator Chiquita Brooks-LaSure.
In addition to giving CMS the power to negotiate some drug prices, another key component of the IRA – enacted in August, 2022 -- slaps civil penalties on drug makers whose prices for drugs supplied to Medicare Part B and Part D rise faster than inflation in the overall economy.
The law took effect for Part B drugs at the start of the federal fiscal year on October 1, 2022, and for Part D drugs on January 1, 2023.
"The information requested is critical to ensuring that Medicare beneficiaries understand the broad reach of the IRA and the inflation rebate provisions that intend to protect them," Wyden wrote.
The Congressional Budget Office has estimated that the IRA's inflation mandates will save Medicare more than $63 billion over the next decade.
Wyden noted that drug companies have announced price increases on 872 drugs since January 1. He cited a September 2022 report from the Department of Health and Human Services which found that more than 3,000 drugs saw price hikes in 2022, and that between July 2021 and July 2022, price increases on 1,216 drugs outpaced inflation, with an average price increase of 32%.
The HHS report also found that:
Most prescription drug price increases occur in either January or July each year, with the greatest number taking place in January. The number of increases in both months during 2022 was higher than in previous years.
In January 2022, the average price increase was nearly $150 per drug (10%), and in July 2022, it was $250 (7.8%). The dollar increases were larger than for the same months in previous years.
In 2022, several drugs increased their list prices by more than $20,000 or by more than 500%.
Wyden asked Brooks-LaSure to make public how the price-gouging provisions of the IRA will be implemented, including "a distinct timeline" for both Part B and Part D drugs, how the rebates will be calculated, and the "steps CMS is taking to help ensure invoices will go out on a timely basis."
"It is my strong hope that manufacturers that increase prices above inflation will be penalized promptly," Wyden wrote.
Senate Scrutiny Intensifies
Wyden's letter was the second this week to be made public by Senators hoping to curb price-gouging and other abuses in the pharmaceutical industry.
"The pharmaceutical industry's shameless abuse of the patent system has driven costs sky-high for consumers by keeping generics off the market and stifling innovation," Blumenthal says. "Our common-sense reforms will protect competition and reduce prices at the pharmacy."
Almost all government actions to address the soaring costs of prescription drugs have overwhelming public support, regardless of political party affiliation. A Kaiser Family Foundation poll released in October 2022 found that 88% of respondents favored capping drug price hikes to no more than the rate of inflation.
The bill 'puts an end to practices that prioritize profits for pharmaceutical companies ahead of Americans' health.'
A bipartisan group of U.S. Senators has introduced legislation to curb anticompetitive patent law abuse by "bad actors" in the pharmaceutical industry.
The Affordable Prescriptions for Patients Act, introduced this week in the Senate Judiciary Committee and sponsored by Sens. John Cornyn (R-TX) and Richard Blumenthal (D-CT), would lower drug prices for consumers by removing bad-faith, cumbersome hurdles in the patent review process such as the "patent dance" and "product hopping" that critics say are exploited by drug makers to delay market entry for cheaper generic and biosimilar alternatives, according to their joint media release.
"The pharmaceutical industry's shameless abuse of the patent system has driven costs sky-high for consumers by keeping generics off the market and stifling innovation," Blumenthal says. "Our common-sense reforms will protect competition and reduce prices at the pharmacy."
The senators say their bill "puts an end to practices that prioritize profits for pharmaceutical companies ahead of Americans' health."
"By stopping abuses of our patent system, this legislation will pave the way for generics and biosimilars to compete with branded drugs and aggressively lower drug prices for consumers in the process," Cornyn says.
"Texans shouldn't have to pay more at the pharmacy counter because of bad actors who game the patent system and prevent cheaper generics from coming to market," he says.
The bill is cosponsored by Senators Ted Cruz (R-TX), Dick Durbin (D-IL), Chuck Grassley (R-IA), and Amy Klobuchar (D-MN).
Product Hopping, Patent Dance
A 2020 analysis by Matrix Global Advisors examined five branded drugs and estimated that product hopping – a tactic used by drug makers to "hop" patient onto a newer, slightly reformulated drug as a patent is about to expire – added $4.7 billion to annual U.S. healthcare expenditures.
The patent dance, under current law, places no limits on the number of patents that a branded biologics maker can claim – abusing laws enacted by Congress in 2010 intended to ease biosimilar entry.
The Cornyn-Blumenthal bill "places a reasonable limit" on the number of patents a manufacturer can contest, preventing a "patent thicket" designed to entangle and trip up the launch of cheaper alternatives.
The senators say their bill will deter brand biologics from "gaming the system", while preserving incentives in the patent system to encourage innovation.
Bad faith exploitation of drug patents has gotten renewed media attention of late as consumers struggle with the continued and relentless growth of healthcare costs.
In a lengthy report this week, The New York Times detailed schemes that drug maker AbbieVie used to "game" the patent system and delay for years the release of generic alternatives to its golden goose arthritis treatment Humira, all of which resulted in $114 billion in additional profits for the drug maker.
PBMs Cheer
The Pharmaceutical Care Management Association cheered the news that the legislation, initially filed by Cornyn in 2021, was re-filed this week.
"PCMA applauds the reintroduction of this critical bipartisan legislation aimed at ending anti-competitive practices that game the patent system, blocking more affordable generic and biosimilar options from entering the prescription drug market," PCMA President and CEO JC Scott says.
"Promoting greater competition to lower prescription drug costs for patients is fundamental to the mission of pharmacy benefit companies and we look forward to supporting the successful passage of this important measure."
PhRMA did not return HealthLeaders' requests for comment on Wednesday.
Anita Louise Jackson, MD, faces up to 20 years in prison when she is sentenced later this year.
A federal jury in North Carolina has found a Raleigh physician guilty of mail fraud, conspiracy and other charges related to a $46 million scheme that re-used disposable medical devices for more than 1,400 nasal surgeries on Medicare patients, the U.S. Department of Justice says.
Anita Louise Jackson, 59, an ear, nose and throat physician who operated Greater Carolina Ear, Nose, and Throat, was convicted on all 20 counts related to the 2011-2017 scheme that fabricated bogus medical records and paid kickbacks to co-conspirators.
She was taken into custody immediately after the verdict was handed up and faces up to 20 years in prison and fines in excess of $250,000 when she is sentenced later this year.
"This doctor put profit ahead of patients, luring in Medicare patients with free "sinus spas" and risking infection to those patients by reusing the same single-use surgical devices on them again and again," Michael Easley, U.S. Attorney for the Eastern District of North Carolina, says in a media release. "If we allow doctors to bilk Medicare to pad their profits by performing unsupported medical procedures— each and every American taxpayer eats the cost."
The three-weeks of testimony showed that Jackson preformed 1,555 balloon sinuplasty surgeries on 919 Medicare patients using "at most" 36 new, single-use Entellus XprESS devices, which cost about $1,400 each, even though Jackson was among the nation's top-paid Medicare providers of balloon sinuplasty.
The evidence showed that Jackson lied or didn't tell patients she relied on re-used devices. Jackson admitted during cross-examination that "she had sufficient money to buy every patient a new device -- but chose not to do so," DOJ says.
Jackson billed Medicare more than $46 million dollars for the balloon sinuplasty procedures between 2014 and 2018 and banked nearly $4.8 million (since forfeited) from Medicare for these surgeries.
Jackson was also convicted on 10 counts of illegally inducing her patients to receive the sinuplasty surgery, by failing to collect the patients' co-pays. Jackson and her staff marketed the sinuplasty surgery as a free "sinus spa" to lure in prospective patients. She wrote-off or hid the up to $1,500 patient portion of the costs of the procedure on any bills sent to the patient after their visit to GCENT.
Jackson was also convicted of three counts of making false statements relating to healthcare benefits, two counts of aggravated identity theft, and three counts of mail fraud after modifying medical records to hide about $1.7 million in Medicare payments from auditors.
RxPass will cost $5 a month for an unlimted supply of ALL commonly used drugs in its generic and off-brand formulary.
Amazon Pharmacy has launched a game-changing prescription drug service RxPass that promises Prime members doorstep delivery of generic and off-brand medications for 80 common ailments, all for a flat fee of $5 a month.
“Prime members already get fast, free delivery on prescription medications, and RxPass is one more way to save with Amazon Pharmacy,” Amazon Pharmacy Vice President John Love says in a media release.
“Any customer who pays more than $10 a month for their eligible medications will see their prescription costs drop by 50% or more, plus they save time by skipping a trip to the pharmacy. We are excited to offer our customers surprisingly simple, low pricing on the eligible medications they need each month,” Love says.
To enroll in RxPass, Amazon Prime members -- who already pay $15 a month, or $139 a year for membership - can go to Amazon.com or the online mega-retailer's mobile app to create or update their Amazon Pharmacy profile. Customers will be led through a sign-up process that verifies eligibility and prescriptions.
Customers with questions during enrollment or after a prescription arrives can speak 24/7 with an Amazon pharmacists to coordinate with physicians and help with refills.
The service is available for Prime customers regardless of their health insurance status. Amazon says anyone taking two or more medications each month or managing ongoing chronic conditions such as acid reflux, high blood pressure, or anxiety will likely save money and time using RxPass.
Amazon Pharmacy already has in place a prescription savings benefit for Prime members, at no additional fee, for discounts of up to 80% for generic and 40% for off brand medications through more than 60,000 pharmacies nationwide, the company says.
Amazon Pharmacy and PillPack by Amazon Pharmacy accept most health insurance plans, and offer low, transparent pricing for customers who use insurance to pay for their prescription medications. Customers may use their HSA or FSA accounts when not paying with RxPass, the company says.
The merger comes amid growing concern that healthcare consolidations among payers and providers are driving up costs.
Elevance Health, Inc. will buy Blue Cross and Blue Shield of Louisiana and put the health insurer under its multistate Anthem umbrella, the payers announced Monday.
Financial terms were not disclosed.
The deal is expected to close this year, pending regulatory approval, and nonprofit BCBSLA, which serves about 1.9 million Louisianans, roughly one-third the state's population, will become an affiliate of Elevance's Anthem Blue Cross Blue Shield network, which now operates plans in 14 states covering about 47 million people.
"Elevance Health and Blue Cross and Blue Shield of Louisiana will combine strengths to provide services unique to the needs of Louisiana to better serve members through a whole health personalized approach," Elevance President / CEO Gail Boudreaux says in a media release.
"As organizations aligned in our missions, we are excited at the opportunity to bring our leading, innovative whole-health solutions to BCBSLA's members as we work together to become a lifetime, trusted health partner," she says.
The proposed merger comes amid growing concern that healthcare consolidation among payers and providers is driving up the cost of healthcare. A 2022 report by the American Medical Association found that “that the majority of health insurance markets in the United States are highly concentrated.”
“Coupled with external evidence on their anticompetitive behavior, this strongly suggests that health insurers are exercising market power in many parts of the country and, in turn, causing competitive harm to consumers and providers of care," the AMA report concluded.
As mergers in the healthcare sector involve larger and larger players, payers and providers blame each other for concurrent rising healthcare costs, each side saying they need a bigger footprint when negotiating prices with one another. Ultimately, of course, it is the consumer who foots the bill.
HealthLeaders' Emails Monday afternoon to Elevance and BCBSLA asking for the financial details and the potential effect on consumers were not returned.
Boudreaux says the acquisition builds on an existing joint ownership the two payers share for Healthy Blue, which serves the Louisiana's Medicaid and Medicare Dual Eligible enrollees.
The payers say the acquisition will also allow BCBSLA to access Carelon, Elevance's healthcare services organization that specializes in behavioral health, complex and chronic care programs, and innovative digital models.
Steven Udvarhelyi, MD, president / CEO of BCBSLA says the sale of the 90-year-old company was needed to "remain strong in today's environment with an ability to provide leading innovations, products and capabilities."
"We concluded that we needed a partner that could help us deliver these faster and better than we could alone," Udvarhelyi says. "Aligning with Elevance Health - a national health care organization that has been our trusted partner since 2017 - will allow us to accelerate our mission of improving the health and lives of Louisianians,"
When the deal is finalized, BCBSLA headquarters will remain in Baton Rouge and keep its workforce of about 3,000 employees.
The payers say the deal will also create "a multibillion-dollar foundation, the Accelerate Louisiana Initiative."
"This foundation is being created to address the unique and complex needs of the people of Louisiana with the mission to improve the health and lives of the people of Louisiana by addressing health inequities and strengthening local communities," the companies say.
Regulators want more evidence that the pricey drug works.
The Food and Drug Administration has rejected fast-track approval for Eli Lilly and Co.'s Alzheimer's drug donanemab, telling the company that it must produce more research showing the pricey drug's efficacy is needed before they'll green light it.
In a media release Thursday night announcing the decision, Indianapolis-based Lilly says the FDA "specifically requested that Lilly provide data from at least 100 patients who received a minimum of 12 months of continued treatment on donanemab."
"While the trial included more than 100 patients treated with donanemab, due to the speed of plaque reduction, many patients were able to stop dosing as early as 6 months of treatment, resulting in fewer than 100 patients receiving 12 months of donanemab," Lilly says. "The FDA indicated that the data to meet the exposure expectation would likely need to include the unblinded controlled safety data from TRAILBLAZER-ALZ 2 upon completion."
No other shortcomings in the application were noted by the FDA.
Lilly says an expanded Phase 3 clinical trial for the drug is underway and will be completed this year. The drug maker says it is confident that those results will prove the efficacy of the monoclonal antibody treatment and they plan to resubmit an application for fast-track status.
"We look forward to our upcoming confirmatory TRAILBLAZER-ALZ 2 Phase 3 results and subsequent FDA submission, which we've always seen as the most impactful next steps for patients," Lilly Neuroscience President Anne White says.
"We anticipate this study will confirm the benefit and safety profile we observed in the TRAILBLAZER-ALZ Phase 2 study and believe that patients and physicians will be well served by having the full Phase 3 data available alongside our Phase 2 data when they need to make treatment decisions," White says.
"We are committed to working with the FDA to ensure the fastest possible path to bring this potential medicine to patients in need."
The FDA has already granted limited fast-track approval for two similar Alzheimer's treatments; Biogen and Eisai's aducanumab, and BioGen's lecanemab (Leqembi). The three drugs target beta amyloid protein accumulations in the brains of Alzheimer's patients.
An independent analysis estimates that donanemab would be cost-effective at a price of about $20,000 a year, but with the caveat that the true cost-effectiveness will not be known until at least the results of the Phase 3 trials are completed. Leqembi cost-effectiveness threshold is about $26,500 a year, and aducanumab's is about $23,000 a year.
UsAgainstAlzheimer's COO Russ Paulsen offered a mixed reaction to the FDA's action.
"While we are disappointed this treatment won't be made available to patients sooner, the reason why is encouraging: donanemab worked too well to meet the criteria required by the FDA," Paulsen says.
"The FDA requires a minimum of 100 patients to be on the drug for at least twelve months but, due to donanemab's quick action in some patients, many were able to stop treatment in as little as six months. We are very encouraged by that and look forward to learning even more about donanemab's effectiveness when Lilly releases its Phase 3 trial data later this year in advance of its application for traditional FDA approval."
CEO says layoffs 'a difficult but necessary step' to reduce workforce redundancies and 'transition to more balanced growth of revenue and profitability.'
Telehealth provider Teladoc Health, Inc. says it will cut about 6% of its nonclinical workforce — roughly 300 jobs – as part of a cost-cutting and restructuring plan.
In a letter this week to employees, Teladoc CEO Jason Gorevic, calls the move "a difficult but necessary step" to reduce redundancies in the workforce brought on by recent mergers and "transition to more balanced growth of revenue and profitability."
"At this stage in both our evolution as an enterprise and given the challenged economic environment, we believe that balanced growth is the right step for us as a well-run company," Gorevic says. "And so, after taking several non-people cost-saving actions, including ongoing real estate and systems consolidations, we concluded that today's moves were necessary."
"As some team members leave, we will also be making changes to our organizational structure to streamline our work and best capture the opportunities ahead," Gorevic says, including a "further review of our real estate footprint and return on vendor investments."
In an 8-K filing with the Securities and Exchange Commission, Purchase, New York-based Teledoc says it "incurred approximately $4.4 million in pre-tax charges in Q4 2022, including about $2 million in costs related to employee transition, severance payments, employee benefits, and related costs, and approximately $2.4 million in exit costs associated with the office space reductions.
Under its restructuring plan, Teledoc says it anticipates "approximately $17 million in pre-tax charges in 2023, consisting of $9 million for employee transition, severance payments, employee benefits, and related costs expected to be realized in Q1 2023, and $8 million of exit costs associated with office space reductions expected to occur by Q2 2023."
From its pre-tax charges in 2023, Teledoc expects to incur about $10 million in expenditures related to the layoffs, and a $6 million reduction in stock-based compensation in Q1 2023 from forfeited stock awards.
In his letter to employees, Gorevic says the layoffs "put our company on an improved path to profitability and necessitates our collective focus on our commercial business priorities - Primary 360, chronic care management, mental health and delivering true whole person care – along with continued growth in our BetterHelp consumer brand."
"We know that more than half our commercial buyers want the integrated, whole person strategy that we offer, and delivering value across our businesses is of even greater importance in this economy," he says. "At the same time, we will continue to make significant innovation investments to ensure that our whole person offering is seamless and comprehensive."
"These actions put us on an even stronger financial footing at a time when many of our competitors are questioning their ability to keep their doors open."
The laid-off employees will get: a severance package payout based on years of service and grade level; bonus payments for 2022; subsidized COBRA benefits; access to free therapy from Teledoc's in-house BetterHelp; and job search support.
In his letter to employees, Gorevic concedes that he doesn't know if this week's action "is the beginning of ongoing layoffs or the precursor to further disruption in our company."
"What I can promise you is that today's actions were based on our best assessment of our current business needs, with the sole intent of putting us on a better path to top and bottom-line growth," he says.
Suzan Berro submitted fake reimbursement claims to several drugmakers' co-pay assistance programs.
A Michigan woman has been convicted of wire fraud and related charges for her role in a years-long scheme to steal more than $65 million from several drug co-pay help programs, the U.S. Department of Justice says.
Suzan Berro, 23, of Dearborn, was convicted on Friday after a six-day trial in U.S. District Court in Detroit. She will be sentenced on May 1, when she faces a maximum of 20 years in prison on each count.
According to court documents and evidence presented at trial, Berro submitted fake reimbursement claims to several drugmakers' co-pay assistance programs that provide patients with "coupons" to offset the often-high costs of name brand prescription drugs.
Prosecutors showed that for nearly one year Berro was a biller for multiple pharmacies. She created fake prescriptions for fake patients using addresses from real estate lists, making up names and birth dates, selecting expensive name brand, and then ultimately pairing them with real doctors' names and credentials.
The evidence showed that the conspiracy went to great lengths to make the supposed patients appear real, including ensuring that all three addresses—the real doctor, the fake pharmacy, and the made-up patient—were in close, geographic proximity. However, witnesses said that most of pharmacies only existed on paper, were never opened to the public, nor did they order inventory.
Berro and her co-conspirators submitted bogus claims on behalf of more than 40 pharmacies, totaling over $65 million.
"This was a complicated scheme that abused dozens of programs established to help those who are legitimately unable to afford their medications," says Dawn N. Ison, U.S. Attorney for the Eastern District of Michigan.
Eli Lilly, Novo Nordisk, Sanofi, CVS Caremark, Express Scripts, and OptumRx are accused of overcharging patients.
California Attorney General Rob Bonta on Thursday filed a lawsuit against the nation's biggest insulin makers and pharmacy benefits managers, accusing them of using deceptive, illegal and unfair schemes to drive up the cost of the lifesaving drug.
The 47-page suit, filed in California Superior Court in Los Angeles, accuses drug makers Eli Lilly, Novo Nordisk, and Sanofi, and PBMs CVS Caremark, Express Scripts, and OptumRx, of leveraging their vast market power to overcharge patients, a violation of the state's Unfair Competition Law.
"Insulin is a necessary drug that millions of Americans rely upon for their health, not a luxury good," Bonta says. "With today's lawsuit, we're fighting back against drug companies and PBMs that unacceptably and artificially inflate the cost of life-saving medication at the expense of vulnerable patients."
Bonta is asking the court to order the defendants to stop their unfair business practices outlined in the suit and provide restitution for consumers who have been victimized by the scheme, and issue civil fines of $2,500 for each violation of state law.
More than 3 million Californians are diabetic, about 10% of the state's population, Bonta says, and their insulin is so pricey that many can't afford it, even the insured, and are forced to ration doses, sometimes with deadly consequences.
Those facts are in line with a 2021 report that found that insulin costs roughly 10 times more in the United States than in other countries. Other studies have shown that the high insulin prices disproportionately hurt poor people and communities of color. The California Department of Public Health reports that Hispanic and Black people are much more likely to be diagnosed with Type-2 diabetes than non-Hispanic white people, and much more likely to die as a result of complications from it.
"No one should be forced to ration or go without basic medication that could mean the difference between life or death," Bonta says. "California will continue to be a leader in the fight to ensure everyone has equal access to affordable healthcare and prescription medications they need to stay healthy."
The lawsuit notes that the three drug makers named in the suit produce more than 90% of the global insulin supply, and that the three PBMs manage 80% of insulin prescription claims. Using their market stranglehold, Bonta alleges, the defendants "work in lockstep… to keep aggressively hiking the list price of insulin at the expense of many patients."
The lawsuit asserts that manufacturers and PBMs are complicit in the gouging, with drug makers setting insulin's list price and PBMs negotiating for rebates on behalf of health plans. The rebates are based on a percentage of list price, so manufacturers raise their list prices to get the biggest rebates they can offer PBMs
"PBMs are often paid for their services with a portion of the rebate they have negotiated," the suit says. "This creates an incentive to negotiate a drug with a higher rebate, not necessarily the lowest price for consumers. As a result, the drug becomes unaffordable for uninsured or underinsured patients, who have to pay the full price of insulin. High list prices also make insulin unaffordable for other patients as well, including those with high deductible health plans or coverage gaps."
Defendents Respond
CVS Health issued a statement denying the allegations raised in the suit and saying it will "vigorously defend against this complaint."
"Pharmaceutical companies alone set the list price for their products," the company says. "Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products and we would welcome such action. Allegations that we play any role in determining the prices charged by manufacturers are false."
A Novo Nordisk spokesperson says the drug maker does not comment on active litigation. However, the company issued a statement not specific to the suit which claims that Novo Nordisk's net prices for insulin have declined over the past five years "due in large part to the significant rebates and discounts manufacturers pay to ensure access for patients."
The company says that about 100,000 diabetics got free insulin from Novo Nordisk every year, and that more than 1 million get some form of financial assistance from the drug maker. The company has also extended its insulin program with Walmart that sells the drug for $25 per vial, and has seen "meaningful uptake" for its My$99Insulin program.
"However, we know there are people who continue to struggle to afford their insulin and that not one single solution will work for everyone," the statement reads.
Optum Rx issued a statement saying that PBMs negotiate for lower prices on behalf of consumers and "are the only participants in the prescription drug supply chain whose role is to reduce drug costs." The PBM says it has eliminated out-of-pocket costs on several prescription drugs, including insulin,
"Optum Rx welcomes the opportunity to show the California Office of the Attorney General, just as it has with other States Attorneys General, how we work every day to provide people with access to affordable drugs, including insulin," the statement reads.
