Eli Lilly, Novo Nordisk, and Sanofi Sued for Insulin Price-Fixing Conspiracy as Prices Rise 300%+

In January 2017, diabetes patients filed a federal antitrust class action lawsuit alleging that the three pharmaceutical manufacturers controlling 99% of the U.S. insulin market—Eli Lilly, Novo Nordisk, and Sanofi—conspired to raise insulin prices in near-lockstep coordination, increasing prices by over 300% in some cases between 2010-2017. The lawsuit exposed how pharmaceutical oligopolies use parallel pricing to extract maximum profits from patients dependent on life-sustaining medications, while regulators failed to intervene despite obvious anticompetitive conduct.

Market Concentration: Three Companies, 99% Control

The insulin market exemplifies pharmaceutical industry consolidation and monopoly power:

Market Dominance:

• Eli Lilly, Novo Nordisk, and Sanofi control 99% of the insulin market by value
• 96% control by volume of all insulin sold in the United States
• No meaningful competition from other manufacturers
• Effective oligopoly with coordinated pricing behavior

Barriers to Entry:

• FDA approval process creates multi-year delays for biosimilar insulins
• Manufacturing complexity requires specialized facilities and expertise
• Existing manufacturers’ patent thickets block competitive entry
• Pharmacy benefit manager (PBM) formulary control limits market access for new entrants

This concentration gave three companies unchallenged power to set prices for a medication millions of Americans require daily to survive.

Coordinated Price Increases: The Lockstep Pattern

The lawsuit documented systematic parallel price increases that suggested coordination:

Price Escalation (2010-2017):

• Sanofi’s Lantus: 168% increase (2010-2015)
• Novo Nordisk’s Levemir: 169% increase (2010-2015)
• Eli Lilly’s Humulin R U-500: 325% increase (2010-2015)
• Industry-wide: Over 150% average increase across all insulin products

Timing Coordination: The three manufacturers raised benchmark prices in near-lockstep, with increases announced within days or weeks of each other, suggesting price signaling and coordination rather than independent business decisions.

No Cost Justification: Companies provided no evidence of increased production costs, research investments, or other factors justifying 300%+ price increases for decades-old drugs, some of which were invented in the 1920s.

Human Cost: Rationing Life-Saving Medication

Insulin price increases forced millions of diabetic Americans into impossible choices:

Patient Deaths from Rationing: Multiple documented cases of diabetic patients dying after rationing insulin due to unaffordable costs:

• Alec Raeshawn Smith, age 26, died in 2017 after rationing insulin when he aged out of his mother’s insurance
• Josh Wilkerson, age 27, died in 2019 after trying to stretch insulin supplies
• Jada Louis, age 21, died in 2020 from diabetic ketoacidosis while rationing insulin

Rationing Prevalence: Studies found:

• 1 in 4 diabetic patients rationed insulin due to cost
• Patients skipped doses, used expired insulin, or reduced dosages below prescribed levels
• Rationing led to hospitalization, complications, and deaths
• Low-income and uninsured patients faced highest rationing rates

Financial Burden:

• Annual insulin costs exceeded $5,000-7,000 for many patients
• Out-of-pocket costs averaged $450-550/month for uninsured patients
• Many patients chose between insulin and food, rent, or other necessities
• Medical debt and bankruptcy increased among diabetic patients

Pharmacy Benefit Manager Complicity

The lawsuit named not only manufacturers but also the three largest pharmacy benefit managers (PBMs)—CVS Caremark, Express Scripts, and OptumRx—as co-conspirators in the pricing scheme:

PBM Role in Price Inflation:

Rebate System Perversity:

• PBMs negotiated “rebates” based on percentage of list price
• Higher list prices generated larger rebate payments to PBMs
• PBMs profited from price increases and thus had no incentive to negotiate lower prices
• Rebates rarely passed to patients, instead enriching PBMs and insurers

Formulary Control:

• PBMs granted preferred formulary placement to manufacturers offering largest rebates
• Preferred placement drove market share to high-priced branded insulins
• Lower-cost biosimilar alternatives excluded from formularies despite availability
• PBM-manufacturer relationships blocked price competition

Vertical Integration:

• CVS Caremark, Express Scripts, and OptumRx controlled both PBM operations and pharmacy/insurance businesses
• Vertical integration created conflicts of interest and profit opportunities from high prices throughout the supply chain
• No entity in the chain benefited from lower insulin prices

Racketeering (RICO) Claims

The lawsuit included RICO (Racketeer Influenced and Corrupt Organizations Act) claims, alleging:

Pattern of Racketeering Activity:

• Systematic coordination of price increases over years
• Misrepresentation of pricing justifications to patients and regulators
• Fraudulent schemes involving manufacturers and PBMs
• Conspiracy to restrain trade and fix prices

Enterprise Allegations: The six defendants (three manufacturers + three PBMs) allegedly operated as an associated-in-fact enterprise to:

• Coordinate insulin price increases
• Maintain artificially high list prices
• Structure rebate systems to prevent price competition
• Exclude lower-cost alternatives from the market

RICO claims, if proven, would allow for treble damages—triple the actual damages suffered by class members.

Regulatory Capture: Federal and State Failures

Despite obvious price-fixing patterns, regulators failed to act:

FTC Inaction:

• Federal Trade Commission has authority to investigate anticompetitive pricing
• No FTC investigation launched despite coordinated price increases
• No enforcement action against manufacturers or PBMs
• Industry lobbying and political influence prevented regulatory intervention

Congressional Theater:

• Senator Amy Klobuchar and others held hearings on insulin pricing (July 2017)
• Manufacturers testified but provided no justification for price increases
• No legislation passed to regulate insulin prices or require cost justification
• Pharmaceutical industry lobbying blocked all proposed regulatory reforms

State Attorney General Investigations:

• Washington and New Mexico AGs launched investigations (2017)
• Multiple states joined insulin pricing investigations
• Few prosecutions or settlements resulted
• State-level action insufficient to address national pricing conspiracy

FDA Limitations:

• FDA has no authority to regulate drug pricing
• Can only approve biosimilar alternatives, not compel reasonable pricing
• Biosimilar approval process slow and complex, delaying competition
• Regulatory barriers protected existing manufacturers’ market power

Legal Outcomes: Dismissals and Settlements

Despite strong evidence of coordinated pricing, legal challenges faced significant obstacles:

Antitrust Dismissals: Federal judges dismissed some antitrust claims, ruling that:

• Plaintiffs lacked standing because they didn’t directly compete with manufacturers
• Parallel pricing alone insufficient to prove conspiracy without direct evidence of agreement
• Pharmaceutical pricing allowed under existing regulatory framework

Continuing Litigation:

• RICO and consumer protection claims continued in some jurisdictions
• State attorneys general pursued separate investigations and lawsuits
• Litigation continued for years with limited success

Minimal Accountability: By 2024, no significant antitrust penalties or pricing reforms resulted from the 2017 lawsuits, demonstrating the pharmaceutical industry’s effective immunity from antitrust enforcement.

International Comparison: U.S. Exceptionalism in Insulin Prices

International insulin prices exposed the U.S. regulatory failure:

Price Comparisons (2017):

• United States: $300-400+ per vial for branded insulin
• Canada: $30-40 per vial for identical insulin
• Europe: $20-50 per vial depending on country
• Manufacturing cost: Estimated $3-6 per vial

Regulatory Differences: Countries with lower insulin prices employed:

• Government price negotiation or regulation
• Reference pricing based on cost or international benchmarks
• Bulk purchasing through single-payer systems
• Compulsory licensing allowing generic production

The U.S. was the only developed nation allowing unlimited insulin price increases without government intervention, reflecting pharmaceutical industry regulatory capture.

The Insulin “Arms Race”: Evergreening and Minor Modifications

Manufacturers defended high prices by claiming newer insulin formulations justified costs:

Incremental Modifications:

• “Improved” insulin analogs offered marginal benefits over older formulations
• Minor molecular modifications allowed new patents, extending monopolies
• “Evergreening” strategies prevented generic competition
• Patients and insurers forced to pay premium prices for minimal improvements

Therapeutic Equivalence:

• Many newer insulin formulations therapeutically equivalent to older versions
• Price differences not justified by clinical superiority
• Older, cheaper formulations forced out of market through PBM formulary exclusion
• Patients unable to access affordable alternatives even when medically appropriate

R&D Justification Myth: Manufacturers claimed high prices funded research and development, but:

• Most “new” insulins were minor modifications of decades-old drugs
• Fundamental insulin discovery occurred in 1920s with public funding
• Companies spent more on marketing and lobbying than R&D
• Stock buybacks and executive compensation exceeded R&D investment

Follow-On Insulins: Blocking Biosimilar Competition

Even when biosimilar insulins gained FDA approval, manufacturers used anti-competitive tactics to limit market access:

Regulatory Delays:

• FDA approval process for biosimilar insulins slower than traditional generics
• Manufacturers challenged biosimilar applications, creating litigation delays
• First biosimilar insulin not approved until 2015 (Basaglar), with limited market impact

Market Access Barriers:

• PBMs excluded biosimilars from formularies in favor of branded products offering rebates
• Manufacturers offered PBMs larger rebates to maintain biosimilar exclusion
• Switching costs and physician reluctance limited biosimilar adoption
• Patient assistance programs for branded insulins undermined biosimilar price competition

Patent Thickets:

• Manufacturers maintained hundreds of patents on delivery devices, formulations, and methods
• Patent litigation threatened biosimilar manufacturers with years of legal costs
• Settlement agreements included delayed market entry for biosimilars
• “Pay-for-delay” deals kept cheaper alternatives off the market

Political Donations and Lobbying

The three manufacturers and three PBMs spent hundreds of millions ensuring regulatory inaction:

Federal Lobbying (2016-2017):

• Eli Lilly: $4+ million annually
• Novo Nordisk: $3+ million annually
• Sanofi: $6+ million annually
• Express Scripts: $2+ million annually
• CVS Health: $7+ million annually
• UnitedHealth (OptumRx parent): $5+ million annually

Lobbying Objectives:

• Oppose Medicare drug price negotiation
• Prevent insulin price controls or regulation
• Maintain PBM regulatory exemptions
• Block drug importation from lower-cost countries
• Defeat biosimilar approval streamlining

Campaign Contributions:

• PACs and executives contributed to members of health committees
• Contributions to both parties ensured bipartisan protection
• Recipients included key House and Senate health committee leaders
• Donations correlated with opposition to drug pricing reform

Patient Advocacy: Grassroots Organizing Against Corporate Power

The insulin pricing crisis catalyzed patient organizing:

Advocacy Organizations:

• T1International advocated for insulin affordability
• #insulin4all campaign highlighted patient deaths from rationing
• Patients traveled to Canada for affordable insulin
• Grassroots pressure forced some manufacturer responses

Limited Corporate Responses:

• Manufacturers introduced patient assistance programs as public relations measures
• Assistance programs addressed individual cases while maintaining systematic high prices
• Eligibility restrictions excluded many patients in need
• Programs cost manufacturers little compared to continued high pricing profits

Political Impact: Patient advocacy succeeded in:

• Raising public awareness of insulin pricing crisis
• Forcing congressional hearings and state investigations
• Creating political pressure for reform
• Shaming manufacturers through media attention

However, actual price reductions and regulatory reforms remained minimal.

State-Level Responses: Partial Solutions

Some states attempted to address insulin pricing:

Price Cap Legislation:

• Colorado (2019) capped insulin copays at $100/month for insured patients
• Other states passed similar copay cap laws
• Caps applied only to insured patients, not addressing underlying prices
• Manufacturers and PBMs opposed caps, limiting effectiveness

Importation Programs:

• Some states explored importation from Canada
• Federal approval required but rarely granted
• Pharmaceutical industry challenged importation programs
• Few programs implemented successfully

Emergency Insulin Programs:

• Minnesota (2020) required manufacturers provide emergency 30-day insulin supplies
• Other states considered similar “Alec Smith” laws (named for patient who died)
• Programs addressed acute crises but not systematic affordability

The 2020s: Voluntary Price Reductions Under Political Pressure

After years of litigation and political pressure, manufacturers announced partial price reductions:

2023-2024 Announcements:

• Eli Lilly announced 70% price cuts on some insulin products (March 2023)
• Novo Nordisk announced price reductions on some insulins
• Sanofi announced price cap programs

Limitations:

• Reductions still left U.S. prices far higher than international prices
• Cuts applied to list prices while rebate structures remained
• Many patients continued facing high out-of-pocket costs
• Voluntary cuts demonstrated companies could have lowered prices years earlier

Admission of Excess: Voluntary reductions proved manufacturers’ earlier claims that high prices were necessary for R&D were false—if companies could profitably sell at 70% lower prices in 2023, the previous decade’s pricing was pure extraction.

Systemic Implications: Pharmaceutical Oligopoly Power

The insulin price-fixing conspiracy exemplified broader pharmaceutical industry practices:

Oligopoly Coordination:

• Concentrated markets enable parallel pricing without explicit collusion
• Pharmaceutical companies signal price increases through public announcements
• Competitors reliably match increases, creating coordinated pricing without written agreements
• Antitrust enforcement inadequate to address oligopoly pricing patterns

PBM-Manufacturer Alignment:

• Vertical integration aligns PBM and manufacturer interests against patients
• Rebate structures incentivize higher prices throughout the supply chain
• No market participant benefits from lower prices
• System designed for extraction, not efficiency

Regulatory Capture Success:

• Despite obvious coordinated pricing, no regulatory intervention occurred
• Lobbying and political donations prevented legislative reforms
• FDA lacks pricing authority; FTC declined antitrust enforcement
• Patients died while regulators and legislators protected industry profits

The Cost of Inaction: Preventable Deaths

Every year from 2010-2017 that regulators failed to act on insulin price coordination, diabetic patients:

• Rationed life-saving medication
• Experienced preventable complications
• Died from lack of affordable access
• Faced financial ruin from medication costs

These were not unfortunate market outcomes—they were direct consequences of regulatory capture allowing pharmaceutical oligopolies to coordinate prices for maximum profit extraction while millions of Americans depended on their products for survival.

The 2017 lawsuit exposed the conspiracy but failed to break it. The pharmaceutical industry’s political power proved stronger than antitrust law, regulatory authority, or patient advocacy, demonstrating how thoroughly corporate interests have captured the American healthcare system.