In a dramatic legal showdown, nine states are raising objections to a potentially game-changing $13.5 million settlement that pharmaceutical giant Eli Lilly has put forth to resolve a contentious lawsuit surrounding its insulin product, Humalog. The states, including Arizona, Mississippi, and Minnesota, are challenging the settlement’s approval, asserting that it’s a calculated move by Lilly to preemptively shield itself from future lawsuits filed by US states.
The unfolding legal drama saw its latest development with a Tuesday filing in a New Jersey federal court, where the aforementioned states made a compelling case for delaying approval of the deal. They’re demanding modifications to ensure that states retain the right to file their own lawsuits pertaining to insulin pricing issues.
This coalition of states has united with Illinois, Nebraska, Utah, Arkansas, Kansas, and Montana to voice their opposition to the settlement this week. The six-state group has presented an argument centered on the contention that the proposed settlement undervalues the claims at stake, estimating them to be worth approximately $1 billion. They assert that Eli Lilly is attempting to resolve these claims by offering price reductions that are, in fact, already mandated by existing law.
Eli Lilly initially sought judicial approval for this settlement in May, aiming to put to rest a legal battle that traces back to 2017. As part of its proposal, the company not only committed to paying $13.5 million but also pledged to limit monthly out-of-pocket insulin expenses to $35 for a span of four years.
However, the challenge mounted against this settlement hinges on the fact that the recently passed Inflation Reduction Act already imposes a $35 cap on out-of-pocket insulin costs for beneficiaries of the Medicare program. This detail was emphasized by the coalition of six states in their Monday filing.
Adding another layer to the unfolding narrative, Tuesday’s filing by Arizona, Mississippi, and Minnesota contended that the settlement represents a bold maneuver to curtail future litigation opportunities. These states argue that the proposed deal poses a direct threat to their sovereign interests.
Eli Lilly’s response to these recent developments remains to be seen, as the company did not provide an immediate comment on the ongoing situation. The original lawsuit, which spans multiple insulin manufacturers including Sanofi and Novo Nordisk, was initiated by individuals who alleged that the companies inflated Humalog’s list price while extending substantial discounts to pharmaceutical intermediaries that play a role in determining insurance coverage. After years of legal battles, Eli Lilly agreed to this settlement in May, marking a significant shift from its earlier defense strategy.
It’s noteworthy that in the same year, Eli Lilly launched an aggressive campaign to slash insulin prices, notably reducing the cost of its widely prescribed insulin products by an impressive 70%. Additionally, the company expanded its Insulin Value Program, effectively capping the out-of-pocket expenses for patients at $35 or less per month.
While the impending 70% price cut on Humalog, set to take effect in the fourth quarter of 2023, signals a significant shift in approach, the current cost structure remains substantial. A five-pack of Humalog pens is listed by Lilly at $530.40 before factoring in discounts, and a vial of insulin commands a price of around $274.
This situation takes on broader dimensions in the context of healthcare legislation. While the Inflation Reduction Act has established the $35 monthly cap for out-of-pocket expenses for Medicare beneficiaries, congressional lawmakers have put forth proposals to extend this cap to encompass all individuals grappling with diabetes across the United States. As the legal tug-of-war continues, the outcome of this high-stakes battle will inevitably shape the landscape of pharmaceutical pricing, healthcare policy, and legal precedent for years to come.
