The city of Providence is accusing major drug manufacturers and pharmacy companies of price fixing and racketeering violations in a federal lawsuit filed Wednesday.
The city’s complaint alleges insulin makers including Eli Lilly and Novo Nordisk and pharmacy benefit management companies including those operated under CVS and United Healthcare inflated the price of the diabetes treatment to make money.
The lawsuit accuses the companies of a pricing scheme that is “unconscionable, deceptive, and unfair and it is immensely lucrative for Defendants.”
The city, which operates its own health insurance and benefit plan for employees, argues it was hurt by being overcharged for prescription drug purchases.
The lawsuit is seeking unspecified damages and penalties.
It claims insulin costs manufacturers as little as $2 a vial to produce but is priced from $300 to more than $700.
The lawsuit argues the prices “were false, excessive, and untethered to any legal, competitive, or fair market price.”
“Payors and their beneficiaries have been overcharged substantial amounts of money during the relevant period as a direct result of the Insulin Pricing Scheme,” the city’s lawsuit claims.
The city states it “has spent significant amounts on the at-issue diabetes medications.”
The lawsuit alleges pharmacy benefit management companies, like CVS Caremark which the city uses also benefited from the alleged pricing scheme.
“CVS Caremark failed to adhere to principles of good faith and fair dealing,” the lawsuit claims.
In a statement to NBC10, CVS Caremark writes, “Pharmaceutical companies alone are responsible for the prices they set in the marketplace for the products they manufacture. 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.”
In a statement from Providence Mayor Brett Smiley’s office, spokesman Anthony Vega wrote to NBC10, “Mayor Smiley understands that our neighbors in Providence are overpaying for lifesaving medications like insulin. Over the past two decades, the cost of insulin has increased significantly, affecting families and household budgets across our city. Ensuring that these medications are affordable and accessible for the people who depend on them is critical and that is why the City joined this lawsuit alongside municipalities across the country.”