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Illinois attorney general sues over sky-high insulin prices

Eli Lilly and other pharma companies are accused of artificially inflating the price of insulin for decades.

CHICAGO (CN) — A vial of insulin can cost as little as $2 to manufacture. Yet at the pharmacy counter, people with diabetes often end up paying hundreds for the life-saving medicine. Progressives have long pointed to the gulf between insulin's production costs and its consumer price tag as proof that America's privatized health care system hurts all but the exceedingly rich.

On Friday afternoon, the office of Illinois Attorney General Kwame Raoul seemed to agree.

In a 125-page fraud lawsuit filed in Cook County Circuit Court on Friday, the office accused Eli Lilly, CVS Pharmacy, Novo Nordisk and several other pharmaceutical companies of artificially inflating the cost of insulin by over 1,000% since the late 1990s.

"Today, insulin has become the poster child for skyrocketing and inflated drug prices," the suit states.

The complaint singles out Eli Lilly in particular, noting the price for a dose of its analog insulin Humalog rose by 1,527% between 1997 and 2018.

"Remarkably, nothing about these medications has changed," the complaint states. "Today's $350 insulin is the exact same drug defendants originally sold for $20."

The Canadian scientists who developed the first insulin treatments – Frederick Banting, James Collip and Charles Best – intended for the medication to be readily available. After filing for a U.S. patent on their insulin extraction technique in 1923, they then sold it to the University of Toronto for $1, equivalent to about $15 today.

"Insulin does not belong to me. It belongs to the world," Banting reportedly said after making the sale.

Their move to sell the patent to the university was in fact specifically meant to defend against proprietary monopolies on the technique. In a letter to then-University President Robert Falconer, the scientists explained that “when the details of the method of preparation are published anyone would be free to prepare the extract, but no one could secure a profitable monopoly.”

Despite the scientists' intentions, in the 21st century several companies do hold an effective monopoly on the manufacture and sale of insulin. A 2020 study by the Mayo Clinic found that three manufacturers - Novo Nordisk, Sanofi-Aventis, and Eli Lilly - control about 90% of the global insulin market. Similarly, three pharmacy benefit managers, companies that negotiate the price of medications with retail pharmacies, control about 75% of their own market.

Those three PBM companies - CVS Caremark, OptumRx and Express Scripts - are all named as defendants alongside Eli Lilly and Novo Nordisk in the Friday suit. It accuses the companies, and several others, of deliberately conspiring to fix insulin prices for the sake of billions in profit. In 2021 alone, Eli Lilly reported over $48 billion in total assets.

"In the last decade alone [the] manufacturer defendants have in tandem increased the price of their insulins up to 1000%, often down to the decimal point within a few days of each other," the suit alleges.

The suit also notes that 13% of Illinoisans, about 1.3 million people, live with diabetes, making the pharma companies' alleged monopoly scheme a public health threat.

"Unable to afford defendants' price increases, many diabetics in Illinois have begun to to engage in highly risky behaviors such as rationing their insulin, skipping their refills, injecting expired insulin, re-using needles and avoiding doctors' visits," the complaint states.

Besides seeking an end to the pharma companies' insulin price-gouging, Raoul's suit also asks the court to levy steep fees on them: $50,000 for each "deceptive or unfair act or practice," as well as a disgorgement of all the profits the companies gained through the alleged price-fixing scheme.

Illinois is not the first state to attempt to rein in insulin prices, nor the first to try and punish pharmaceutical corporations for fixing them. New Jersey diabetes patients filed a RICO class action against insulin manufacturers in 2017, and Harris County, Texas filed a similar suit in 2019. The companies have also fought back, such as when a pharma lobby group waged a yearlong court battle in Minnesota in 2020, hoping to overturn the state's insulin price-cap program for low-income residents.

The price of insulin also recently came into public focus when on Nov. 10, a mock Eli Lilly Twitter account declared that insulin was free. The tweet, later revealed to have been sent by a writer for the left-wing labor publication More Perfect Union, cost Eli Lilly $22 billion and a 4% fall in its stock.

When Eli Lilly's actual Twitter account posted a tweet apologizing for the false proclamation later the same day, it prompted hundreds of users to criticize the company over its insulin prices.

The company has not tweeted since then.

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