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AG Nessel Launches Investigation into Excessive Insulin Prices, Intends to Challenge MSC Decisions Impacting Consumer Protection
January 26, 2022
LANSING - Michigan Attorney General Dana Nessel launched an investigation into Eli Lilly this week - one of the three largest drug companies that manufactures nearly all the insulin in the United States. This action seeks to use the Michigan Consumer Protection Act (MCPA) to investigate the role some drug companies play in charging grossly excessive prices. In order to ensure proper accountability, Nessel's filings will also pursue a reconsideration of two rulings from the Michigan Supreme Court (MSC) that hinder the Department's ability to take action under the MCPA.
"Nearly a million Michiganders need insulin to survive and for too long, drug companies have been skyrocketing prices," Governor Gretchen Whitmer said. "I support Attorney General Nessel's efforts to use the Michigan Consumer Protection Act to put Michiganders first by investigating the role drug companies play in raising prices. I also look forward to working with legislature to cap the cost of insulin. Too many Michiganders are forced to ration insulin or forgo it, putting their lives at risk. Some families spend thousands of dollars a year on insulin and prices keep going up-they've tripled from 2009 to 2019. Together, we can lower the cost of insulin, hold drug companies accountable, and save lives."
The Centers for Disease Control estimates that there are 34.2 million Americans with diabetes. In Michigan, the American Diabetes Association estimates that 865,000 people, or 11.2% of the adult population, have diabetes, and that those with diabetes have medical expenses approximately 2.3 times higher than those who do not.
"The average out-of-pocket cost of a single vial of insulin is nearing $100," AG Nessel said. "No Michigander should have to face that kind of cost for life-saving medicine. While drug companies profit off of people's health, they also benefit from a current market in which they control the pricing. Enough is enough. Our Consumer Protection Team, through our Corporate Oversight Division, is ready to devote its full resources to ensure that the proper entities are on the hook for these egregious prices, but we cannot fully protect consumers with one hand tied behind our backs. That is why this action will also pursue reconsideration of the rulings in Smith and Liss."
Smith v. Globe Life and Liss v. Lewiston, decided in 1999 and 2007 respectively, interpret an exemption contained in Section 4(1)(a) of the MCPA as applying whenever the general transaction is specifically authorized by law, regardless of whether the specific misconduct alleged is prohibited. Under this interpretation, members of any industry that is "generally regulated" are deemed "specifically exempt" from the MCPA, thereby providing a free pass for misconduct under the MCPA, regardless of how egregious.
A brief filed last year asking MSC to reconsider the cases is available online. The MSC ultimately declined to revisit the issue at that time.
"Nearly 40 years ago, former Attorney General Frank J. Kelley explained to this Court: 'If every person or business which engages in an activity authorized by some statute or regulation were exempt from the Michigan Consumer Protection Act, . . . then the [MCPA] would be a cruel hoax on the many legislators and others who sought to give Michigan consumers protection in the marketplace,'" the Feb. 2021 filing cited in part. "Smith and Liss transformed what should be a narrow exemption under the MCPA into a broad shield for regulated entities-resulting in the protection of businesses over consumers."
Those two decisions will hold significant weight in Nessel's ability to pursue action against Eli Lilly.
As stated in the petition filed in Ingham County to initiate the investigation, "these opinions have served to end many consumer cases, and have prevented countless others from ever beginning. Both were wrongly decided."
Nonetheless, given those two decisions are current MSC precedent, the Department anticipates Eli Lilly will cite Smith and Liss in its defense against accountability. For that reason, the Department is prepared to follow the appellate track, should the court initially decide not to allow the investigation. That process will afford the Department's pursuit of seeking to rectify the harm created by the Smith and Liss decisions. A Complaint for Declaratory Judgment teeing up the Smith and Liss issue was filed contemporaneously with the Petition Tuesday afternoon.
Those who wish to share their experience with the high cost of insulin are asked to fill out a consumer complaint form on the Attorney General's website. The Attorney General is interested in perspectives from consumers, pharmacists, and health professionals. If your concerns relate to the cost of a particular medication, please tell us the brand, product and what (if anything) is covered by insurance.