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Insurance Company Sues Over Drug Prices

Excessively priced drugs make for a common headline these days. 60% of adults in the United States take prescription drugs, and spending on those drugs totaled $424 billion in 2014 and rose an additional 10% in 2015. Earlier this year, the executive of Turing Pharmaceuticals, Martin Shkreli testified before Congress about the overnight 5,000% increase of Daraprim, the drug used to treat HIV. Last week, another headline was added when the health insurance company Anthem filed a lawsuit in New York against pharmacy benefit manager, Express Scripts, over drug prices.

Anthem is suing Express Scripts for about $15 billion dollars in damages related to excessive charges and operational problems. Anthem argues that Express Scripts failed to provide drug prices within the “competitive benchmark” of drug prices that Express Scripts is required to follow. Anthem also alleges that Express Scripts stalled and refused talks to negotiate prices, especially prices of off-brand cheaper drugs.

As a pharmacy benefit manager, or PBM, Express Scripts controls prescription drug plans for insurance companies, employers, and government agencies, and has a forceful purchasing power it can use to negotiate drug prices. Anthem provides health insurance coverage for 38.6 million people and is the country’s second-largest health insurer. It sold its pharmacy benefit management to Express Scripts in 2009.

Another group also joined the drug pricing debate this week.The American College of Physicians, a group of over 143,000 internal medicine doctors, recently published a paper calling for the government and other members of health care industry to rein in escalating costs. The group noted that the United States is the only country member of the 34-member Organization for Economic Cooperation and Development (a group that includes almost all advanced economies in the world) that does not have governmental regulation of drug prices.

The American College of Physicians (ACP) offered seven suggestions to help rein in prices, including:

  • Requiring pharmaceutical companies to disclose actual material and production costs
  • Allowing Medicare and other publicly funded healthcare programs to negotiate drug prices (currently, Medicare is not allowed to negotiate)
  • Funding research about better pricing models
  • Reducing current regulations to allow for imported drugs (the FDA currently opposes drug imports and cites safety reasons)
  • Lessening financial burdens on low-income prescription drug users
  • Generally, the ACP hopes to increase transparency in the drug pricing production to find a way to improve the system.

Other healthcare providers are required to justify premium and high prices: insurance companies have to justify rate increases to regulators in the states, hospitals and doctors negotiate treatment costs with insurers, and all groups are increasingly required to report data about the quality and efficiency of care. Pharmaceutical companies do not have to report as much data, and major organizations, like Medicare, are currently powerless to negotiate drug prices with pharmaceutical companies.

Consumers can take on hefty drug prices in their own way by following these steps:

  1. Ask pharmacists if you are getting the best price; there may be discounts and coupons available.
  2. Look online to compare your costs.
  3. Check independent drugstores, they sometimes have lower prices than chain stores.
  4. Don’t always use your insurance, sometimes generic drugs are offered at lower prices out of insurance.

About the Author

Charles GilmanCharles Gilman
Charles Gilman

As managing partner and co-founder of Gilman & Bedigian, it is my mission to help our clients recover and get their lives back on track. I strongly believe that every person who is injured by a wrongful act deserves compensation, and I will do my utmost to bring recompense to those who need and deserve it.


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