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Seattle Attorney Aims to Expose Big Pharma’s Drug-Pricing Secrets

Companies and PBMs work hand-in-hand to keep prices high, lawyer argues

Class-action attorney Steve Berman is coming after a drug industry that he says is “gouging” the American consumer, according to an article posted on the STAT website. Berman, based in Seattle, sees the current drug-pricing system as a machine for extracting money from patients: Pharma sets a high price for a given medication and then promises big, undisclosed rebates to the pharmacy benefit managers (PBMs) who control which drugs get covered by insurers. As prices go up, so do the secret rebates. 

One of Berman’s recent cases, against Mylan, argued that the company “ran a racket” with its infamous EpiPen, doling out kickbacks to PBMs to ensure that its product led the pack. Another case, against the three biggest makers of insulin––Eli Lilly, Sanofi, and Novo Nordisk––accuses them of mounting an “arms race” of price increases to compensate for escalating rebates.

Berman’s insulin case paints a picture of each drug company sitting at the head of a table like a crime boss, with the three major PBMs—Express Scripts, CVS Caremark, and OptumRx—gathered to carry out its bidding.

The companies and PBMs “functioned as a continuing unit for the purposes of implementing the [insulin] pricing scheme and, when issues arise during the scheme, each agreed to take actions to hide the scheme and continue its existence,” according to the complaint.

In his latest lawsuits, Berman has taken a cue from cases against the Gambino, Lucchese, and Genovese crime families, according to the article. The Racketeer Influenced and Corrupt Organizations (RICO) Act was designed to dismantle organized crime, holding mob bosses liable for the crimes they delegate to middlemen. The act has since been widely applied to mob-like activity elsewhere. To Berman, pharma companies fit the bill.

In his Mylan suit, Berman lumped the company and its associated PBMs into a crime family dubbed “the EpiPen Pricing Enterprise.”

Berman told STAT that his firm is working on “five or six” new cases tied to drug pricing.

“I don’t think these people will ever stop,” he said. “There’s so much money involved that there’s just incentive to try to game the system.”

Source: STAT; April 20, 2017.

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