PHILADELPHIA, PA — The City of Philadelphia has launched a sweeping lawsuit against some of the nation’s largest pharmacy benefit managers and insulin manufacturers, accusing them of orchestrating a pricing scheme that drove the cost of a life-saving drug to staggering heights while misleading the public about efforts to control prices.
City officials said the lawsuit, filed last week, targets CVS Caremark, Express Scripts, and OptumRx, along with drugmakers Eli Lilly, Novo Nordisk, and Sanofi. The complaint alleges the companies conspired to inflate insulin list prices over decades, boosting profits for both PBMs and manufacturers while forcing employers, governments, and patients to pay sharply higher costs.
Philadelphia contends the scheme caused the City to significantly overpay for insulin as the payor of health benefits for roughly 30,000 municipal employees and their families, as well as for union-operated plans and city health centers that purchase the drug directly.
According to the City, insulin that costs manufacturers as little as $2 per vial to produce has climbed from about $20 per vial in the 1990s to between $300 and more than $700 today, even as production costs declined. The lawsuit argues that those price increases have had devastating consequences in Philadelphia, where an estimated 14 percent of adults live with diabetes.
City attorneys allege the PBMs used their control over drug formularies, or covered drug lists, to reward manufacturers that raised list prices with favorable placement, while steering patients away from lower-cost or generic alternatives. In exchange, the manufacturers allegedly paid large rebates, allowing both sides to extract higher profit margins while increasing costs for insurers and consumers.
Philadelphia operates a self-funded health insurance plan and relies on PBMs to administer drug benefits, giving those companies significant influence over which medications are covered and how much the City ultimately pays. The lawsuit claims that PBMs now control more than 80 percent of drug benefits for over 270 million Americans, giving them outsized power over drug pricing and access.
“No one should have to worry whether they will have to go without life-saving medication due to high costs,” Mayor Cherelle L. Parker said. She said the City is seeking to ensure residents can access essential medications and to hold companies delivering health services to a high standard.
City Solicitor Renee Garcia said the defendants prioritized profits over patients. She accused the companies of misleading residents and draining public resources through inflated prices, adding that the City intends to recover damages tied to what it says were fraudulent practices.
Health Commissioner Palak Raval-Nelson said the stakes are especially high in Philadelphia, where diabetes rates are among the highest in the nation and disproportionately affect Black and brown communities. She warned that when patients cannot afford insulin, they may ration doses or go without treatment entirely, leading to severe health consequences and higher long-term costs for the City.
Through the lawsuit, Philadelphia is seeking restitution, compensatory and punitive damages, and a court order barring the defendants from continuing the alleged pricing scheme. The City is also asking the court to find that the companies violated the federal Racketeer Influenced and Corrupt Organizations Act and Pennsylvania’s Deceptive and Unfair Trade Practices Act.
The case is part of a broader national insulin pricing multidistrict litigation pending in the U.S. District Court for the District of New Jersey. More than 550 self-funded payers, including state and local governments, unions, and private employers, have joined the consolidated action.
Philadelphia is represented by Dilworth Paxson LLP, Baron & Budd, Levin Papantonio Rafferty Proctor Buchanan O’Brien Barr & Mougey, Kozyak Tropin & Throckmorton, and Seeger Weiss.
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