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Cleveland sues drug manufacturers for alleged insulin price hike

Cleveland sues drug manufacturers over cost of insulin
The city of Cleveland is suing over what it says was a conspiracy to raise insulin costs.

Cleveland is suing nearly 20 drug makers, pharmacy benefit managers and corporate conglomerates, alleging a scheme to overcharge the city millions of dollars for insulin since 2008.

According to the complaint filed Monday, the lawsuit is meant to recover overpayment stemming from what Cleveland calls a “pricing scheme” by companies, including Eli Lilly, Express Scripts and CVS that resulted in a 1,000% increase in insulin costs.

The case, filed in the U.S. District Court for the Northern District of Ohio, will be presided over by Judge Patricia A. Gaughan.

The lawsuit is the first of its kind in the country, the city said in a news release.

Insulin is made by the pancreas and used by the body to convert food into energy. People who have diabetes don't produce enough insulin and those with Type 1 diabetes must take insulin every day to survive. Nearly 17% of adults in Cleveland have been diagnosed with diabetes, the city's filing said.

The drug manufacturers and pharmacy benefit managers "exploit this reality to guarantee their price-fixing scheme, making insulin unaffordable to individuals and resulting in exorbitant costs for prescription benefit sponsors like the City of Cleveland," the city wrote in the release.

Diabetic medications are among the highest costs under its prescription benefit plan provided to employees, according to the city.

The filing alleges defendants were part of an "unfair and deceptive conspiracy" meant to defraud the city and is seeking an injunction against such practices as well as compensatory and punitive damages. These claims are being sought under state and federal laws, including the Ohio Deceptive Trade Practices Act and the federal Racketeer Influenced and Corrupt Organizations Act or RICO, according to the release.

One of the defendants, CVS Health, is rejecting the city's claims against it.

"Pharmaceutical companies alone are responsible for the prices they set in the marketplace for the products they manufacture," CVS Health's spokesperson Mike DeAngelis said in a statement. "Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products, and we would welcome such an action.  Allegations that we play any role in determining the prices charged by manufacturers for their products are false, and we intend to vigorously defend against this baseless suit."

Stephen Langel is a health reporter with Ideastream Public Media's engaged journalism team.