Glucagon Kit Overpricing
Bewley, et al. v. CVS Health Corporation, et al.
United States District Court, Western District of Washington
Case No. 2:17-cv-00802-RAJ
On May 24, 2017 the nationally-recognized firm of Keller Rohrback L.L.P. filed a class-action lawsuit against the nation’s three largest pharmacy benefit managers (“PBMs”), Express Scripts, OptumRx, and CVS Caremark, and the two drug manufacturers, Eli Lilly and Company and Novo Nordisk, who produce the widely-prescribed glucagon kits: Glucagon Emergency Kit and GlucaGen HypoKit, respectively. These kits provide a life-saving emergency injection of glucagon—a hormone that counteracts the effects of low blood sugar or excess insulin. For patients with diabetes who depend on insulin to manage their diabetes, glucagon is a vital tool to prevent serious health damage and death. The complaint alleges that the PBMs—insurance industry middlemen who negotiate drug prices and create drug formularies that determine how much patients pay—conspired with the glucagon kit manufacturers to artificially inflate the price of glucagon for their own collective benefit. This profiteering has directly injured individual patients and other purchasers of glucagon kits financially and put the lives of millions of diabetes patients at risk.
Glucagon Pricing Scheme Explained
The Glucagon Pricing Scheme alleged in Plaintiffs’ complaint explains how PBMs sell exclusionary or preferential access to their formularies in exchange for a cut of rebates and other fees paid by the drug manufacturers to the PBMs. Formularies are ranked lists of drugs that health insurers rely upon to determine how much of their members’ drug costs they will cover. Manufacturers’ sales depend on access to these enormous purchaser pools for their profits. Although the PBMs claim the rebates and other payments lower the cost of glucagon kits, in fact, this is misleading. The rebates and other payments decrease the cost of glucagon kits for the PBMs and the insurers with whom the rebates are shared, but drive up the cost for consumers, whose pre-deductible or coinsurance payments at the pharmacy point-of-sale are based on the unrebated “list” price.
The PBMs and manufacturers game the system. Instead of competing on price for access to the PBMs’ formularies, the manufacturers compete based on the amount of the rebate and other fees that they pay to the PBMs. To accommodate the PBMs’ rebate demands and to ensure their own profits and sales volumes, the manufacturers repeatedly raise what they call the “list” price of glucagon kits. In fact, the two glucagon manufacturers have raised their prices in lock-step over the past decade, often down to the penny, inflating the cost of a drug that cost well under $100 when it first came out to over $300 today.
The higher the “list” price, the higher the manufacturers’ revenue and profits and the higher the rebates and other fees to the PBMs. The result is a vicious cycle of “list” price increases by manufacturers, vying to win the favor of the PBMs, all of whom are engaged in a price-fixing and fraudulent conspiracy to gouge consumers who must purchase this life-saving emergency drug no matter what price is demanded. Indeed, consumers with out-of-pocket payment obligations, a large and growing population, are charged an amount based upon the artificially inflated “list” price. This includes the uninsured and people in a variety of types of health plans with co-insurance, co-payment, and high-deductible requirements.
Plaintiffs’ complaint seeks both monetary and injunctive relief on behalf of health plan participants and beneficiaries, as well as uninsured consumers. Plaintiffs are requesting remedies that would refund their overpayments and force Defendants to disgorge their ill-gotten gains. Critically, the injunctive relief would impose disclosure requirements going forward that will increase transparency in a market where a hidden dual pricing system has driven glucagon kit prices through the roof—at severe financial and physical costs to users and purchasers of glucagon kits. Disclosure of this information will make it more difficult for the Defendants to manipulate the cost of glucagon kits in the future, should they attempt to replace the current system with some other scheme.
If you purchase GlucaGen HypoKits and/or Glucagon Emergency Kits produced by any of the above-listed manufacturers, you may be paying artificially inflated and anti-competitive prices. Please contact attorney Gretchen Obrist to learn more about whether you too have been subject to unlawful pricing. Call 800.776.6044 or email .
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Class-Action Complaint – 05/24/2017