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Sanofi, Novo Insulin Price Suit Advances With Trimmed Claims

July 12, 2021, 8:34 PM

Three major drugmakers persuaded a federal judge to drop antitrust claims in a case accusing them of overcharging for insulin while paying insurers kickbacks, but organized crime allegations are moving forward in court.

Claims under the federal racketeering law can proceed against Eli Lilly & Co., Novo Nordisk Inc., and Sanofi-Aventis because the plaintiffs plausibly alleged schemes of unlawful bribery and mail and wire fraud, which are predicate offenses covered under that law, Judge Brian R. Martinotti of the U.S. District Court for the District of New Jersey said in an unpublished opinion.

Express Scripts, CVS Health Corp., and UnitedHealth Group Inc.—pharmacy benefit managers which help decide how a drug will be covered by insurance—are also defendants in the case and failed to evade the racketeering claims as well, according to the July 9 opinion.

The decision came the same day President Joe Biden issued an executive order aimed at deterring anticompetitive conduct and driving down prescription drug prices. Democratic lawmakers have been pushing for legislation that would direct the government to negotiate the price of insulin and other pharmaceutical products.

Lilly, Novo Nordisk, and Sanofi are accused in the lawsuit of inflating the official list price of insulin while the actual prices negotiated by pharmacy benefit managers remained flat due to massive rebates from drug companies.

The lawsuit, brought by drug distributors including FWK Holdings LLC, alleges that those companies use the widening spread between insulin’s list and market prices as cover for the rebates because insurers reimburse PBMs based on a drug’s list price.

The court rejected claims under the federal Sherman Act because the plaintiffs failed to plausibly allege the drugmakers entered into an agreement to fix the prices of insulin drugs. The court also rejected claims under the Robinson-Patman Act, an anti-price discrimination law, because it said the plaintiffs aren’t competitors and don’t have standing to bring the claims.

NastLaw LLC is representing the plaintiffs.

Lilly is represented by Reed Smith LLP and Covington & Burling LLP. Novo Nordisk is represented by Gibbons PC. Sanofi is represented by Walsh Pizzi O’Reilly Falanga LLP.

Express Scripts is represented by Faegre Drinker Biddle & Reath LLP. CVS is represented by Marino, Tortorella & Boyle PC. UnitedHealth is represented by O’Toole Scrivo LLC.

The case is In re Direct Purchaser Insulin Pricing Litig., D.N.J., No. 3:20-cv-3426, 7/9/21.

To contact the reporter on this story: Lesley Torres in California at ltorres@bloombergindustry.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Alexis Kramer at akramer@bloomberglaw.com