CVS, Abbott, Others Accused of Price Fixing Blood Sugar Tests

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By Carmen Castro-Pagan

The three largest U.S. pharmacy benefit managers and four leading pharmaceutical companies are accused in a new proposed class action of colluding to fix prices for glucose test strips ( Prescott v. CVS Health Corp. , W.D. Wash., No. 2:17-cv-00803, complaint filed 5/24/17 ).

CVS Health Corp., Express Scripts Holdings, and OptumRx violated federal and state laws by allegedly engaging in extortion to unlawfully obtain ever-larger payments from the top four makers of blood glucose test strips—Roche Diagnostics Corp., Bayer Healthcare LLC, Abbott Laboratories, and Johnson and Johnson, according to a lawsuit filed May 24.

The four test-strip producers have provided the PBMs increasingly large rebates and kickbacks by inflating the list prices of test strips, according to the lawsuit filed in federal court in Washington state. The producers also conspired with the PBMs and their insurer clients to prevent disclosure of net prices to consumers in violation of the Racketeer Influenced and Corrupt Organizations Act, the Employee Retirement Income Security Act, and other consumer protection laws, the lawsuit said. The scheme has caused consumers to overpay for life-saving blood sugar monitoring tests, the lawsuit alleged.

The lawsuit “grossly mischaracterizes” how price discounts work and incorrectly alleges that CVS Caremark plays any role in determining the prices charged by manufacturers for their products,” Mike DeAngelis, senior director of corporate communications at CVS, told Bloomberg BNA in an email May 24. CVS intends to vigorously defend against this baseless lawsuit, DeAngelis said.

Express Scripts denies the allegations and will defend itself, company spokesman Henry Brian told Bloomberg BNA May 24.

Diabetes Test-Strip Market

To properly treat diabetes, patients must monitor their blood glucose throughout the day. In 2015, the global glucose monitoring and diabetes management market was valued at over $10 billion, according to the lawsuit. U.S. diabetes patients spend close to $4 billion on the disposable strips each year.

PBMs make outsized profits by exploiting the U.S.'s complex prescription distribution systems, according to the lawsuit. Although PBMs and manufacturers keep the details of the test strip pricing scheme a secret, in unrelated pending lawsuits, Abbott and Roche allegedly admitted that the list price for test strips is inflated to account for “rebates,” the lawsuit alleged.

The 64-count lawsuit seeks class treatment for millions of persons in the U.S. who have purchase blood glucose test strips with or without health insurance.

Attack Against the Diabetes Care Market

The lawsuit comes almost three months after a similar lawsuit was filed against the same PBMs and drugmakers Eli Lilly, Sanofi-Aventis, and Novo Nordisk for allegedly colluding to fix prices for insulin.

In the past 24 hours, two additional lawsuits were filed. One lawsuit, filed May 23, alleges that Novo Nordisk artificially inflated the price of Victoza—an injectable prescription drug to treat diabetes—to subsidize the payment of illegal kickbacks to OptumRx. A second lawsuit, also filed May 24, alleges the same leading PBMs allegedly colluded with Eli Lilly and Novo Nordisk to increase the price of injectable glucagon.

These lawsuits alleged that the financial costs of living with diabetes—a disease suffered by nearly 30 million people in the U.S., and the country’s seventh leading cause of death—have ballooned recently.

“These type of lawsuits continue to be built on a false premise about the role of PBMs,” CVS’s DeAngelis said. Pharmaceutical companies alone are responsible for the prices set in the marketplace for the products they manufacture, he added.

Roche, Bayer, Abbott, Johnson and Johnson, and OptumRx didn’t immediately respond to Bloomberg BNA’s request for comment.

Keller Rohrback represents the proposed classes in the recently filed lawsuits.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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