Broward schools to sue pharmaceutical companies over insulin prices

Broward schools plan to file a lawsuit against several pharmaceutical companies and pharmacy managers, alleging they worked together to inflate insulin prices, leaving the district with exorbitant health insurance costs.

The district is self-insured, meaning it pays most of its employees’ actual health care costs out of its own budget.

The district has spent about $26 million on insulin over the past seven years to help employees manage diabetes, General Counsel Marylin Batista told the School Board at a recent meeting. The cost should have been a fraction of that, attorneys from several personal injury firms told the board. They said the total cost of goods and services has doubled over the past 20 years, but the cost of some diabetes medications has increased tenfold.

“These price increases are not a result of rising costs of goods, production costs, investments in research and development, or competitive market forces,” the school district said in a summary for an Aug. 20 meeting.

Instead, the district and its attorneys blame the high costs on “the insulin cartels,” identified in the district document as Eli Lilly and Company, Novo Nordisk and Sanofi, the three dominant players in the insulin market.

Juan Martinez, a Florida attorney for the national law firm Morgan & Morgan, said prices have risen because of drug rebates. These rebates are not given to consumers but to third parties known as pharmacy benefit managers, who act as middlemen between insurance companies and drug companies.

“Our estimates are that for every insulin-dependent diabetic patient that the School Board treats, you pay an additional $5,000 to $6,000 per user, which is money that the Board can use for a myriad of reasons,” he told the School Board at its Aug. 21 meeting.

A county review found that pharmacy benefits managers at CVS Health, Express Scripts and OptumRx “conspired to inflate a secret margin between the insulin cartel’s published list prices and their undisclosed net sales prices for insulin.”

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The district’s contract, approved by the School Board on Aug. 21, will involve several law firms, including Morgan & Morgan. The attorneys would be paid on a contingency basis of 25 percent of what they collect.

Broward is the first school district the attorneys are representing, Martinez said, and said they are also representing the city of Orlando in the same matter. The school district would be the sole plaintiff in the case, but it would join other cases from around the country that have been brought together before a New Jersey district judge, who is handling the pretrial aspects of the cases, he said.

Insulin prices have received a lot of attention in recent years, as President Biden successfully pushed through a $35 cap on insulin for Medicare patients. A number of state attorneys general have sued pharmaceutical companies over insulin, with states like New York and Minnesota reaching settlements in the past year to cap insulin prices at $35.

Several pharmaceutical companies identified by the district have provided statements to the South Florida Sun Sentinel refuting the district’s claims.

“These allegations are unfounded,” a Lilly spokesperson said in a statement. “It is the school board and other health insurers — not Lilly — that negotiate the terms of their discount programs, including whether those discounts should be passed on to people who use insulin. Counties and other local governments that filed similar lawsuits have since withdrawn these allegations, saying they knew about and benefited from these allegedly ‘secret’ discounts.”

The statement said Lilly is working to lower the cost of insulin.

“Lilly was the first and still the only company to cap what people pay for all of our insulins at $35 per month. We have reduced insulin prices by 70 percent, and the average monthly cost of Lilly insulin is just $17.16,” the statement said.

A spokeswoman for Novo Nordisk also called the complaint unfounded.

“While we will not comment further on ongoing litigation, we recognize that not all patient situations are the same and we have a number of different affordable insulin offerings available through NovoCare,” including a $35 insulin option, said spokeswoman Charlotte Zarp-Andersson.

Mike DeAngeli, a spokesman for CVS Health, said, “Pharmaceutical companies alone are responsible for the prices they set in the marketplace for the products they produce. Nothing in our agreements prevents drugmakers from lowering the prices of their insulin products, and we would encourage such action.”

He said allegations that “we play a role in determining the prices manufacturers charge for their products are false, and we intend to vigorously defend ourselves against this baseless lawsuit.”

He said the company’s members “pay less than $25 on average, well below list prices and well below the Biden administration’s $35 cap. We also offer access to $25 insulin to every American, insured or uninsured, through our ReducedRx program at any of our 67,000 network pharmacies and more than 9,000 CVS pharmacies.”

Officials at Sanofi, Express Scripts and OptumRx could not be reached for comment.