Princeton sues drug companies, pharmacy intermediaries over ‘artificially inflating’ insulin prices

In June, Princeton filed a lawsuit against certain insulin manufacturers and pharmacy benefit managers, alleging a price-fixing scheme that led to the University overpaying for employee healthcare costs. 

Among the defendants in the June 2 lawsuit are the insulin producers Eli Lilly and Company, Novo Nordisk Inc., and Sanofi-Aventis U.S. LLC, which together control over 90 percent of the global insulin market by value. Three major pharmacy benefit managers, or PBMs  — CVS Caremark, Express Scripts, and OptumRx — are also listed as defendants.

This week, the University announced plans to switch out its pharmacy benefits manager from OptumRx to Judi Rx starting in 2027 for benefits-eligible faculty and staff. In August, the Student Health Plan also phased out its benefits manager from OptumRx to Judi Rx. 

High healthcare costs driven by insulin prices “ha[ve] a significant detrimental effect on Plaintiff’s overall budget and, in turn, critically limits its ability to fulfill its educational and research mission,” according to the complaint filed by the University. The lawsuit is one of hundreds at a time when pharmaceutical companies are facing heightened criticism for insulin prices. 

The lawsuit, which seeks monetary compensation for damages, comes as the University faces lower endowment return projections and federal funding uncertainty. This has already led to budget cuts to many University programs as well as benefit cuts for its employees.

“We believe the University has been overcharged for insulin for many years and have filed this lawsuit to recover those costs,” former University spokesperson Jennifer Morrill wrote in a statement to The Daily Princetonian in August. “The University looks forward to arguing the merits of this case.”

The Princeton case will be consolidated with over 450 similar cases and heard by Judge Brian Martinotti in the U.S. District Court of New Jersey at a to-be-determined date.

Novo Nordisk, OptumRx, and CVS Caremark representatives all denied allegations of price-fixing in statements to the ‘Prince.’ Eli Lilly declined a request for comment. Sanofi, and Express Scripts did not respond to requests for comment.

Lawsuit claims price-fixing scheme, patient harm

The University’s lawsuit centers on an alleged effort to artificially elevate insulin prices by PBMs and drug manufacturers. According to the lawsuit, both manufacturers and PBMs benefited financially from the practice, while “the steep price tag has severely limited access and hurt patients physically, financially, and psychologically.”

PBMs can decide which drugs to include in health insurance plans. According to the lawsuit, in order to retain a preferential spot on the list, manufacturers willingly met “the PBM Defendants’ demands for increased rebates” or other forms of payment such as “administrative fees” and “service fees,” most of which the PBMs keep for their own profit.

The lawsuit claims that manufacturers chose to artificially raise list prices to pay the rebates PBMs demanded without losing their profit. The complaint alleged that patients were kept in the dark about this pricing scheme. This alleged deception is a key reason why the University is suing PBMs and manufacturers for damages done to patients, according to the complaint.

Under this arrangement, the lawsuit alleges that patients were harmed because they had to pay “substantially more for insulin,” were it not for the price-fixing scheme. 

The University is represented by the firm Grabar Law Office, a Pennsylvania-based antitrust litigation firm that has previously investigated insulin overpricing. 

“The complaint alleges that defendants engineered a system that rewarded ever-increasing insulin prices rather than competition and affordability,” Joshua H. Grabar of Grabar Law said in a press release. “Princeton University, like many self-funded employers, ultimately paid the price for these alleged practices.”

Grabar Law did not respond to multiple requests for comment. 

Pharmaceutical companies respond to allegations

A Novo Nordisk spokesperson wrote to the ‘Prince’ that “Novo Nordisk believes that the allegations against it are meritless, and we intend to vigorously defend against these claims.” 

“While we will not comment further on pending litigation, we recognize that not all patient situations are the same and have a number of insulin affordability offerings available through NovoCare®,” the spokesperson wrote.

Compared to the manufacturer’s more defensive tone, PBMs took a much more aggressive stance in directly naming their manufacturer counterparts as the main reason for the elevated price levels.

Phillip Blando, a CVS Caremark spokesperson, wrote to the ‘Prince’ that “[p]harmaceutical companies alone are responsible for the prices they set in the marketplace for the products they manufacture.  Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products, and we would welcome such an action. ”

Katherine Wojtecki of OptumRx wrote in a statement to the ‘Prince’ that “for many years, OptumRx has aggressively and successfully negotiated with drug manufacturers and taken additional actions to lower prescription insulin costs. PBMs, like OptumRx, are the key counterweight to pharmaceutical companies’ otherwise unchecked monopoly power to set and raise drug prices.” 

Pharmaceutical companies under scrutiny for insulin prices

Shaina Kasper, the executive director of T1International, a nonprofit advocating for increased insulin access not involved in the lawsuit, told the ‘Prince’ that Princeton’s lawsuit “really confirm[s] what T1International’s community has documented through the years with so much patient testimony, and our out-of-pocket expenses and rationing survey … that corporations are putting profits over patients’ lives.”  

Kasper warned that a new corporate trend is actively threatening the insulin supply chain. As massive pharmaceutical manufacturers shift their focus towards highly profitable GLP-1 weight-loss medications, such as Ozempic and Wegovy, they quietly discontinued older, less lucrative insulin products, she said. 

Despite recent legislative efforts like the federal $35 insulin Medicare cap, Kasper cautioned against buying into corporations’ public relations campaigns that she said claim the insulin price gouging issue has been resolved. 

With this lawsuit, Princeton joins a growing group of universities, including the University of Pennsylvania and Penn State University, which have filed lawsuits against the same PBMs and manufacturers over insulin pricing.

These universities similarly pointed to an alleged scheme to raise insulin prices for profit between PBMs and manufacturers.

UPenn and Penn State representatives did not respond to multiple requests for comment.

Beyond universities, other entities, including government institutions and nonprofits, are filing lawsuits alleging an insulin pricing scheme among PBMs and manufacturers across the state. Currently, over 450 insulin pricing lawsuits have been consolidated before Martinotti, the district judge. 

Beyond seeking monetary compensation, many plaintiffs in the lawsuit, including Princeton University, are seeking court approval for a mandatory stop on the price-raising practices alleged in the lawsuit. The goal of requesting such an order is to lower insulin costs and prevent further price inflation, according to Princeton’s complaint.

However, it may be too early to consider the lawsuits as offering a solution to the broader insulin pricing problem, Kasper cautioned. “When these suits produce settlements, the resulting relief needs to be tied to actual access and not just quietly absorbed into institutional budgets.”

Nilufer Bektas is a News contributor for the ‘Prince’ and a member of the Class of 2030 from the Philadelphia suburbs.

Keira Wolk is a News contributor for the ‘Prince’ and a member of the Class of 2030 from New York City.

Andrew Zhu is a News contributor for the ‘Prince’ and a member of the Class of 2030 from Seattle.

Please send any corrections to corrections[at]dailyprincetonian.com.