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February 16, 2018

Out-of-Pocket Costs for Insulin Are a Problem. Litigants in Case Disagree on Who Is at Fault

Mary Caffrey
A case filed more than a year ago has taken many turns, landing in a federal court in Trenton, where it has been shaped by a difference of opinion over how to address the role of pharmacy benefit managers (PBMs).
A Year of Delays
For people living with diabetes who use insulin, going to court promised a window into pricing—something that Congress tried to achieve without success. During a protest in 2017 at Eli Lilly headquarters, a company spokesperson called insulin pricing “a complex problem to solve” and said that with rebates, net prices have actually gone down. Financial reports have portrayed all 3 insulin manufacturers as under intense pricing pressure in recent years, and the companies laid off thousands of employees in 2016 and 2017.

Days after the Massachusetts filing, the suit was refiled in the US District Court of New Jersey, where it is now assigned to US District Judges Lois H. Goodman and Brian R. Martinotti. Asked about the move, Hagens Berman spokesperson Ashley Klann said in an email the most important reason was a related investors’ suit against Novo Nordisk that was being heard in Trenton. A February 2017 statement from Hagens Berman said filing the insulin case in the same jurisdiction as the existing investors’ suit helped avoid a multidistrict litigation petition, “which would have slowed the case’s progress.”

Berman and James Cecchi of New Jersey–based Carella Byrne refiled the insulin case, while Cecchi was simultaneously representing investors who were suing Novo Nordisk over disappointing earnings, alleging that earlier reports had been inflated through “collusive price fixing” of the company’s insulin with PBMs.

Despite the jockeying for control, Serna said this decision by Berman prevented an even longer delay. Besides Keller Rohrback, both Weitz & Luxenberg, which has ongoing litigation involving sodium-glucose cotransporter-2 inhibitors, and Berman DeValerio also made bids to control the case. The latter 2 firms claimed Berman’s representation of a drug wholesaler, FWK Holdings, against Sanofi in Massachusetts represented a conflict of interest; they said Berman would have to argue that Sanofi had kept the price of insulin artificially high through wholly different behavior than it used to harm consumers during the same time frame. That argument was rejected, and in September 2017, the various insulin cases were consolidated, with Berman and Cecchi named interim co-lead counsel.

A Dispute Causes a Stay
Records show that Keller Rohrback’s efforts to collaborate with Hagens Berman ended when Berman would not agree to include the PBMs as defendants. In fact, Keller Rohrback attorneys told the court this strategy was one reason the firm should be named lead counsel: “We have no objection to working with Hagens Berman in this case, but [Keller Rohrback] and its clients strongly believe that the PBMs play a central role in the conspiracy and must be named defendants.”

Keller Rohrback also brought in one of New Jersey’s best-known trial attorneys, Michael Critchley, as local counsel; his recent cases include a major patent ruling involving pembrolizumab (Keytruda). He remains counsel to several plaintiffs in Insulin Pricing.

As outlined in their January 30, 2018, letter, Berman and Cecchi are using a legal mechanism called a tolling agreement that allows them “to include one or more of the PBMs as party defendants” as long as this is done “within 180 days after this court has adjudicated all motions to dismiss in Insulin Pricing.” The letter says they can gather evidence from PBMs during the Insulin Pricing suit. The MSP Recovery suit uses a tolling mechanism as well.

But in an email to AJMC®, Fournier wrote that he and Boss had hired Keller Rohrback specifically because they disagreed with this approach. Berman and Cecchi’s filings reveal the strain over this issue. Accounts differ on how much the disagreement caused Boss to part ways with Keller Rohrback, which, having not been named colead counsel, ultimately signed on with the tolling strategy. Berman and Cecchi filed a consolidated complaint on December 26, 2017, that left Boss out. While they acknowledged that Boss has a child with diabetes, Berman and Cecchi wrote, “The opinion of one individual with limited experience in the pharmaceutical industry and no proffered experience with complex civil litigation should not dictate the litigation strategy for the entire class.”

The MSP Recovery case runs parallel to the patient claims. After initially filing suit in Texas, on February 15, 2018, MSP Recovery refiled in New Jersey. The insulin filing alleges that defendants and “unnamed co-conspirators” caused prices to increase through a scheme similar to that outlined in the other suits, citing the False Claims Act and the Anti-Kickback Statute. The case reads, “The Affordable Care Act provides that ‘a person need not have actual knowledge…or specific intent to commit a violation.’”

The MSP Recovery Law Firm is the first to certify class actions and reach settlement under the Medicare Secondary Payer Act identifying thousands of potential cases of healthcare reimbursements where a primary payer was responsible. Spokesperson Diana Diaz said in an interview that the act allows health plans to seek damages from groups like auto insurers, who neglected to pay medical claims they were required to pay.

Meanwhile, Keller Rohrback continues to represent other plaintiffs in related cases that involve pricing for glucagon and test strips. Prescott v. CVS Health alleges that Abbott, Johnson & Johnson, Bayer, Roche, and Ascensia, along with the PBMs, took part in a pricing scheme tied to CMS’ competitive bidding program for test strips, which a study in Diabetes Care found put Medicare beneficiaries at risk. As of March 2, 2018, Boss was listed as a pro se litigant on those cases as well.

Asked to comment on the split with their attorney, Fournier wrote in an email, “During our initial case assessment, we identified payers as key actors in that control the allocation of manufacturer rebates,” and that this and other issues had to be explored.
Despite the pro-consumer pitch of the announcement that UnitedHealthcare will directly pass rebates on to consumers—which Gottlieb referenced in his AHIP remarks—Fournier said this development only shows that payer–PBM nexus has everything to do with what is paid at the pharmacy counter. “In light of defendant UnitedHealth’s announcement…on rebate pass-through, our own counsel’s refusal to proceed on our rebate pass-through claims against PBM/insurer defendants makes no sense,” he wrote.

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