Diabetes Medication Price Artificially Inflated, Class Action Claims

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A class action lawsuit was filed in California federal court alleging that Novo Nordisk and OptumRx schemed together to keep the price of a type-2 diabetes medication artificially high.

Plaintiff Ruth Johnson alleges in her class action lawsuit that OptumRx received money from Novo Nordisk in exchange for keeping the price of her diabetes medication, Victoza, inflated.

The plaintiff furthers claims that OptumRx also funneled business to Novo Nordisk by including Novo’s products in exclusionary tiered formularies that rank drugs.

“[Pharmacy Benefit Managers (PBMs)] are avaricious middlemen with a stranglehold on the medical supply chain,” the class action lawsuit states. “Their scheme to sell formulary access for rebates drives up the cost of prescription drugs and other medical products for the people who need to use them to stay alive.”

Johnson alleges that since 2009, the price of her medication has doubled to nearly $900. Both OptumRx and Novo Nordisk are responsible, says the plaintiff, because they conspired to “game the system” and keep prices inflated. The plaintiff also points out in her complaint that the price of a competing drug has increased drastically, from about $250 in 2009 to more than $800 currently.

According to the class action, OptumRx and other PBMs are supposed to negotiate lower prices, but for these two diabetes drugs, the pharmaceutical company listed the drugs “as the preferred or even exclusive brands on its formularies because this scheme generates profits for OptumRx without actually requiring manufacturers to lower their prices.”

“To gain formulary access, the manufacturers have inflated their list prices and then ‘rebate’ a significant portion of the list price back to PBMs, such as OptumRx,” the class action lawsuit claims. “The rebates are provided under a variety of labels—discounts, credits, concession fees, etc. Regardless of the term used to describe them, they are a quid pro quo for formulary inclusion or preferential placement. The result of this rebating scheme is a vast difference between the list price reported by manufacturers and the net price obtained by the manufacturers after PBMs have taken their rebates.”

The plaintiff seeks to represent a nationwide Class of individuals who purchased Victoza and were required to pay all or a portion of the purchase price. The class action claims include violations of the Racketeer Influenced and Corrupt Organizations Act, California, Michigan, and New Jersey consumer protection laws as well as claims for fraud and unjust enrichment.

The plaintiff is seeking damages along with an injunction against Novo Nordisk and OptumRx from participating in the alleged price-fixing scheme. The plaintiff is also seeking an order compelling the companies to disclose the amount of the kickbacks and the price list, along with attorneys’ fees.

Johnson is represented by Juli E. Farris, Derek W. Loeser and Gretchen S. Obrist of Keller Rohrback LLP.

The Type-2 Diabetes Medication Price-Fixing Class Action Lawsuit is Ruth Johnson v. OptumRx Inc. and Novo Nordisk Inc., Case No. 8:17-­cv-­00900, in the U.S. District Court for the Central District of California.