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Contact: The Type 1 Diabetes Defense Foundation Files

Lawsuit to Compel Disclosure of Manufacturers
(541) 257-8878 Effective Net Realized Prices for Insulin
For immediate release: March 30, 2017
Summary: The Type 1 Diabetes Defense Foundation has filed a
Issues: lawsuit in federal court seeking disclosure of manufacturers net
Drug pricing, insulin, realized prices on insulin and now calls for support to expand its
discrimination, patient
campaign to make insulin affordable again. The lawsuit alleges that
advocacy organizations,
for years insulin manufacturers and PBMs have conspired to hide the
diabetes standard of
actual U.S. price of insulinthe heavily rebated prices that PBMs and
insurers actually pay, instead of the artificially inflated list prices used
by PBMs to calculate consumer pre-deductible and coinsurance
Documents: payments. T1DF separately observes that the American Diabetes
Association has continued to fundraise off the staggering cost of
diabetes and engaged in behind-the-scenes meetings with insulin
manufacturers, but has failed to take direct action to expose the
exploitative dual-pricing scheme and protect people with diabetes
from artificially high insulin prices and cost-related stigma. T1DF now
seeks to fill the crucial role of U.S. diabetes watchdog that the ADA
has thus surrendered.

March 30, 2017 - Eugene, OR. The Type 1 Diabetes Defense Foundation has retained
class-action law firm Keller Rohrback and on March 17, 2017, filed a lawsuit against the
nations three largest pharmacy benefit managers, Express Scripts, OptumRx, and CVS
Caremark, and the three major insulin manufacturers, Sanofi-Aventis, Novo Nordisk, and
Eli Lilly (Boss v. CVS Health Corp, 3:17-cv-01823). Learn more about Keller Rohrback's
insulin overpricing case.

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The lawsuit alleges that PBMs, insurers and insulin manufacturers have conspired to hide
from consumers their dual pricing scheme and to mislead consumers to believe that
unrebated list pricesassessed at the pharmacy point of sale and used by PBMs to
calculate pre-deductible or coinsurance paymentsrepresented the actual costs PBMs
and insurers paid for insulin, while hiding the increasingly large kickbacks received from
manufacturers (kept by PBMs and insurers), and thus the much lower effective net prices
realized by manufacturers on analog insulins.

The following is a statement from the Type 1 Diabetes Defense Foundation:

Contrary to statements by the American Diabetes Association, the insulin pricing process
is not mysterious: as PBMs have demanded ever larger rebates, manufacturers have
exponentially increased analog insulin list prices to preserve their profit margins. Nor is
price inflation new: Truven Health Analytics data reported last September by Business
Insider shows list prices for Novolog and Humalog had already increased by 150%
between 2000 and 2010, in the run-up to overall price increases of over 300%. By early
2016, the out-of-control "gross-to-net" pricing bubble, warped rebate-driven channel
incentives and related wasteful costs had been thoroughly documented. Restrictive
formulary manipulationscritical for extracting rebates from manufacturershad become
so prevalent that Express Scripts described these in their April 2016 answer to an Anthem
lawsuit (Anthem, Inc. v. Express Scripts, Inc. (16 Civ. 2048)) as standard industry practice
consistent with modern benefit designs. By the close of 2016, just one crucial missing
piece remained to be exposed: the actual net prices realized by manufacturers, after
delivering rebates on analog insulins potentially as high as 75% off public list prices.

Journalist David Lazarus wrote on insulin pricing late in 2016, Drug companies respond
only to the public embarrassment of being caught exploiting the misfortunes of the sick.
Charles Fournier, T1DFs Director of Legal Advocacy, notes that drug companies also
respond to lawsuits. But nearly a year after Yale endocrinologist Kasia Lipskas Break Up
the Insulin Racket was published in The New York Times, first bringing PBM rebating on

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insulin to public attention, PBMs, manufacturers and insurers had neither been
embarrassed into ending PBM-controlled

When people are dying because they dual pricing for insulin nor sued to disclose

cant afford insulin, it is no longer time manufacturers effective net prices.

for continued dialogue across the
Throughout 2016, despite increasing social
diabetes marketplace. Its time to
media pressure from activists inside and
compel disclosure of manufacturers net
realized pricing. Charles Fournier, outside the U.S. (including T1Internationals

T1DF Director of Legal Advocacy #Insulin4All campaign) and attention from

investigative journalists, industry-financed
patient advocacy organizationsincluding the ADA and JDRFthe Endocrine Society, and
sponsored diabetes news outlets instead engaged in evasive action. They called for
conciliatory continued dialogue across the diabetes marketplace, endorsed
manufacturer Patient Assistance Programs that charge patients almost twice
manufacturers apparent net realized prices, and misleadingly blamed insulin price
increases on unspecified government-protected monopolies. The ADA and the
Endocrine Society even suggested walking back the analog standard of care. Following a
November 2016 meeting with insulin manufacturers, the ADA claimed only a
Congressional investigation could reveal why analog insulin prices had skyrocketed, and
then launched a public petition campaign and online hub for insulin affordability
advocates that made no mention of pricing mechanisms, thus effectively leaving Pharma
lobbyists in control of proposing solutions to Congress.

For years, the ADA and JDRF have contributed to stigma against people with diabetes
by fundraising for research off the staggering cost of diabetes in America, indirectly
blaming people with diabetes for costing U.S. taxpayers in excess of $200 billion annually
in Medicare dollars alone, says Fournier. Yet as the exploitative nature of the dual
pricing scheme has become increasingly clear, these diabetes PAOs have taken no
concrete action to bring down that artificially inflated staggering cost. When people are
dying because they cant afford insulin, it is no longer time for petitioning and behind-

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the-scenes meetings. It is time to publicly embarrass PBMs, manufacturers, and insurers
for exploiting people with diabetes, time to embrace price transparency lawsuits, to
campaign for the end of rebate-driven dual pricing, and to demand immediate full
disclosure of the effective net price for analog insulins actually realized by

For the pharmaceutical industry, the stakes are high. The stakes are even higher for
patients. With the 2016 issuing of the CMS Final Rule on Medicaid pricingand its best
price available mandatethe industrys current challenge is to anchor all prices,
including Medicaid reimbursement prices, at the highest possible point. T1DF retained
Keller Rohrback and filed Boss v. CVS Health in pursuit of the opposite goal: to make
insulin affordable again. Net price transparency and cost-based pricing will also benefit
people with other costly chronic conditions including HIV/AIDS and hemophilia. We are
now asking individuals and philanthropic organizations who care about U.S. drug
affordability to lend their vocal support and to fund T1DFs fight for pricing transparency.

About T1DF. The Type 1 Diabetes Defense Foundation is an Oregon-based nonprofit

501(c)(3) dedicated to advancing equal rights and opportunities for people who need
insulin to live. T1DF accepts no industry funding.

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