Major drug manufacturers and distributors suspected of colluding to inflate profits at consumers’ expense

Several drug manufacturers, suppliers and pharmacy benefit managers have reportedly been caught colluding to fix prices for insulin.

In what’s believed to be efforts to allegedly inflate profits, companies reportedly worked together to set consistently high prices for the drugs. This way, no matter where consumers purchased their insulin from, they’d be paying high prices. By price-fixing, no company undercuts the other by offering a cheaper price, which is anti-competitive behaviour that can be extremely harmful for competition and for the consumer.

These are the accusations being brought by those bringing a legal action.

Without fair competition, the consumer is often unable to shop around and cannot benefit from competitive pricing. The drug manufacturers involved included drug mammoths Sanofi-Aventis, Novo Nordisk and Eli Lilly. These three companies combined are reportedly worth over $270 billion.

The U.S’s three largest pharmacy benefit managers are also reportedly involved: CVS Health, Express Scripts and OptumRx. These three entities are a force to be reckoned with, controlling 80% of the industry. The pharmacy benefit managers act as a third party administrator; a middleman between the manufacturers and health programs. CVS Health, Express Scripts and OptumRx provide this service for 180 million people.

With the scale and power these six companies have over the medical drug industry, the suspected collusion has not come as a surprise to some.

Legal action initiated

According to the lawsuit being brought against the companies, the pharmacy benefit managers would allegedly seek out and target health plans for specific drugs like insulin. The drug manufacturers would then allegedly sell the drug for these health plans and drug companies at a much inflated price, and the profits were then allegedly shared between those involved in the collusion.

The drug prices saw a steep hike of over 150%. With the industry seemingly so fiercely controlled, consumers had little choice but to pay up. This of course has a significant impact on the patients and their ability to access affordable healthcare. Insulin treatment is vital for diabetic patients, so hiking prices on such an important drug for profits is simply not acceptable.

“Crushing” costs

Four people have stepped forward to bring the lawsuit against these giant companies. These four individuals pay for their own health insurance plans, and one is a Type-1 diabetic. Within the lawsuit, those who pay for their insulin have reportedly suffered “crushing” out of pocket expenses.

The defendant companies have spoken out against the accusations, disagreeing and denying with the alleged anti-competitive behaviour.

U.S. Senator Bernie Sanders has asked the Department of Justice and the Federal Trade Commission to investigate the matter. In his his joint letter with Representative Elija Cummins it says:

“Not only have these pharmaceutical companies raised insulin prices significantly – sometimes by double digits overnight – in many instances the prices have apparently increased in tandem.”

Whilst companies are free to adopt methods to increase their profits, they are legally restricted from doing so at the consumers’ expense. These type of actions can hugely hinder those who cannot afford basic healthcare.

Consumers have every right to challenge companies like Sanofi-Aventis and CVS Health. It would not be surprising if the four claimants are joined by many more individuals and other consumers to demand accountability and financial compensation if the suspected collusion transpires to be true.