How Insurance Companies Drive Up Drug Prices

(Photo: Peshkov / Getty Images)(Photo: Peshkov / Getty Images)

Faced with angry consumers and impending political reforms, the massive corporations that shape the way we pay for medicine are clamoring to preserve their public image, profit margins and political clout — often by pointing the finger of blame at each other. The poster child for the debate is insulin, a hormone replacement drug that many people with diabetes need to stay alive. As Truthout has reported, the market price of popular insulin products has skyrocketed in recent years. Some people with diabetes go broke paying for their medicine. Others have died while attempting to ration dosages.

Despite public outrage over insulin prices, three of the largest insulin manufacturers have refused to seek a settlement in a class action lawsuit filed against them on behalf of diabetes patients. The drug makers Eli Lilly, Novo Nordisk and Sanofi-Aventis asked a federal judge in New Jersey to dismiss the case and suggested that the plaintiffs turn their attention to insurance companies instead, according to briefs filed last Friday.

Court records show that plaintiff attorneys and advocates for people with diabetes have sparred over how to proceed with the case and whether to include insurance companies and their pharmacy benefit managers (who negotiate drug prices) as defendants in the lawsuit. Currently, only manufacturers are named as defendants.

Food and Drug Administration (FDA) Commissioner Scott Gottlieb has also put insurers on notice. In a speech before an insurance industry conference last Wednesday, Gottlieb said that current pharmaceutical pricing agreements between insurers and drug manufacturers have saddled people living with serious or long-term illnesses (such as diabetes) with the cost of keeping premiums lower for everyone else.

“But sick people aren’t supposed to be subsidizing the healthy,” Gottlieb said. “That’s exactly the opposite of what most people thought they were buying when they bought into the notion of having…

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