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In recent years, the rising cost of insulin has sparked a wave of lawsuits across the United States. These legal battles have brought to light the complex dynamics between insulin manufacturers, pharmacy benefit managers (PBMs), and the healthcare system at large. This article explores the key aspects of these lawsuits, the parties involved, and the broader implications for the healthcare industry.

Background on Insulin Pricing

According to CDC, 38.4 million people of all ages or 11% of the US population have diabetes. Insulin, a life-saving medication for millions of Americans with diabetes, has seen its price skyrocket over the past decade.  This has led to significant financial strain on patients, many of whom struggle to afford their necessary doses. The high cost of insulin has prompted numerous lawsuits, alleging that manufacturers and PBMs have colluded inflating prices artificially.

Key Lawsuits and Allegations

In late 2021, the House Committee on Oversight and Reform published a from a three-year investigation into the pharmaceutical industry. The report focused on insulin pricing in the United States and uncovered that insulin manufacturers Eli Lilly, Novo Nordisk, and Sanofi control 90% of the global insulin market. The report alleges that these companies have used aggressive strategies to maintain monopoly pricing and defend against competition from biosimilars, including “shadow pricing,� where drug manufacturers consistently raise prices in lockstep with their competitors to keep prices high. For example, the report found that Humalog (Eli Lilly) had a price increase of 1219%, Lantus (Sanofi) had a price increase of 715%, and Novolog (Novo Nordisk) had a price increase of 627%.

The Role of PBMs

Pharmacy benefit managers (PBMs) play a crucial role in the pricing dynamics of insulin. PBMs negotiate with drug manufacturers on what plans will pay for drugs, maintaining they secure discounts that plans pass on to patients. However, the Federal Trade Commission (FTC) sued 3 large PBMs in September of 2024 for their practices alleging that PBMs systematically prefer high list price insulin products with high rebates and fees over low list products. This practice incentivizes drugmakers to raise prices and limits access to less expensive alternatives. For example, the FTC states that Humalog, a popular insulin, was only $21 in 1999.However, PBMs began demanding higher rebates and fees from insulin manufacturers in exchange for placement on their formularies which the FTC labeled a “chase the rebate� strategy. In 2017, the cost of Humalog skyrocketed to $274.

Executives from pharmaceutical companies have testified that the price increases are a direct result of the large rebates they must pay to the PBMs to attain formulary placement. They claim that higher prices are continually needed to offset the ever-increasing rebate payments to PBMs. In 2020, a by the USC Schaeffer Center found that every $1 increase in rebates is associated with a $1.17 increase in list price.

Legislative and Legal Actions

Concerns over these high insulin prices have received much attention in the past several years. Various lawsuits and pending legislation aim to promote change leading to lower insulin prices. In some cases, the attention itself led to drug manufacturers changing their pricing due to peer pressure.   

The U.S. House of Representatives passed the Affordable Insulin Now Act, which caps cost-sharing for a 30-day supply of select insulin products at the lesser of $35 or 25% of a plan’s negotiated price. Though passed by the House, this bill was never enacted into law; however, the 2023 Inflation Reduction Act included a similar provision, but only for the Medicare Part D program.

In late 2023, class action lawsuits against insulin manufacturers and PBMs were consolidated into a multi-district litigation (MDL) pending in the United States District Court of New Jersey. The judge in this case declined to certify the class the first time around, and this led to law firms across the country searching for potential class members like employers and plan sponsors to bolster the class for certification. The lawsuit is still in its early stages.

The District Court Judge in New Jersey established three litigation tracks:

• Self-Funded Payer Track: This track is for self-funded healthcare plans that have overpaid due to artificially inflated insulin prices.
• State Attorney General Track: This track involves state Attorney Generals seeking injunctive relief to halt predatory pricing practices and protect self-funded plans and their members from further harm.
• Third-Party Payer Class Track: This track is for third-party payers seeking reimbursement for overpayments, seizure of illicit revenues amassed by PBMs and manufacturers, and punitive damages to deter similar misconduct in the future.

Employers/plan sponsors interested in joining the class action lawsuit should contact their attorney.

In September of 2024, the FTC it would “sue� PBMs. The FTC launched an in-depth probe into the PBM industry to evaluate the impact of vertically integrated PBMs on the access and affordability of prescription drugs. Additionally, the FTC filed an insulin price complaint against the PBM arms of CVS (Caremark), Cigna (Express Scripts), and UnitedHealth (Optum Rx). As of the date of this writing, the administrative complaint process is on hold due to Trump layoffs. The FTC complaint process ends with a hearing before an administrative law judge and final decision; however, if or when the process progresses remains to be seen.

In the latest battle advocating for lower insulin pricing, President Trump issued an on April 15, 2025. The order is extensive and covers many areas with the goal of lowering drug prices. In particular, Trump orders the Secretary of HHS, within 90 days, to restrict future grant money under section 330(e) of the Public Health Service Act to only those health care centers that are taking specific steps to make insulin available at or below the discounted price paid under the 340B Prescription Drug Program for “individuals with low incomes…�.

The Executive Order also targets PBMs by ordering, within 180 days, the DOL to propose regulations for ERISA plans that will improve transparency with regards to PBM fees, including both direct and indirect compensation.  

Summary

The insulin pricing lawsuits in America underscore the urgent need for pharmaceutical reform. These legal battles offer hope for millions of Americans who depend on insulin. The outcomes could lead to more affordable and accessible insulin, improving countless lives.

Readers should stay tuned for new developments.

obÌåÓý will continue to monitor regulator guidance and offer meaningful, practical, timely information. This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.

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