Large nonprofit health system sues PBMs, drug companies over insulin prices
A large nonprofit health system based in Philadelphia has filed a lawsuit against multiple pharmacy benefit managers (PBMs) and drug companies, alleging they actively conspire to control the price of insulin, artificially increasing the price of the crucial hormone.
In its Dec. 30 court filing, Jefferson Health said the alleged collusion caused it to spend more on patient care. The complaint comes shortly after the city of Philadelphia filed a similar lawsuit, alleging its public health insurance plan has suffered from the actions of drug manufacturers and the PBM middlemen, who set costs for medical plans looking to buy drugs for members.
Many of the patients on the city-run health insurance are seen by Jefferson Health’s 32 hospitals and 200 specialized care centers and divisions, which provide primary and specialty services. Jefferson itself employs some 58,000 people, most of whom have healthcare benefits through the health system.
The lawsuit was filed in a New Jersey federal court, as Jefferson Health operates in multiple states. The list of defendants includes PBMs CVS Caremark, Express Scripts and Optum Rx; and drug makers Eli Lilly, Novo Nordisk and Sanofi.
Jefferson Health’s complaint stems from a common rebate program used by the manufacturers, where insulin is offered at a discounted rate, which is passed on to certain pharmacies or commercial plans by PBMs as a benefit, leaving self-insured and public plans paying more as a de facto subsidy.
“The insulin pricing scheme thus creates a ‘best of both worlds’ scenario for defendants,” the lawsuit reads. “The manufacturers increase their sales and revenues by being favorably placed on formularies, while the PBMs receive a portion of the manufacturer’s sales through lucrative and secret manufacturer payments based on the manufacturers’ list prices. As the PBMs receive increasing manufacturer payments, the manufacturers simply raise their list prices further.”
Insulin was chosen as a focal point for the lawsuit because of its historical cost data. According to Jefferson Health, since the 1990s, the cost of a single vial has risen from $20 to $350. Pricing, too, is determined more by the rebate negotiating tactic than market forces, according to the lawsuit.
Related lawsuits pending
The three PBMs listed as defendants in Jefferson Health’s lawsuit are also defendants in a currently-stalled antitrust case brought by the Federal Trade Commission (FTC). That lawsuit does not officially name the drug manufacturers as defendants, but the vertically integrated group purchasing organizations (GPOs) associated with each PBM are—and the FTC’s complaint is also focused entirely on insulin prices, alleging defendants engaged in collusion to jack the price.
In October 2024, Texas announced a lawsuit against Cigna’s Express Scripts, CVS Health’s Caremark and UnitedHealth Group’s Optum Rx for the same reason, opting to also name Eli Lilly, Novo Nordisk and Sanofi—the same three drug companies being sued by Jefferson Health.
That case has yet to formally resolve, and there’s been little news since Texas Attorney General Ken Paxton made the announcement.
In separate statements, the main three PBMs at the center of these lawsuits have all denied the allegations and reject that they set drug prices.
Jefferson Health’s case, which is newly filed, has yet to be heard in front of a judge. The defendants have also yet to formally respond to the allegations.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.