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AG Nessel: Let My Department Investigate Prescription Drug Prices
February 12, 2022
LANSING - Michigan Attorney General Dana Nessel is sharing additional reasoning behind civil action against Eli Lilly, which she initiated at the end of January and seeks to use the Michigan Consumer Protection Act to investigate the role some drug companies play in charging grossly excessive prices.
The opinion piece, which originally ran in the Detroit News earlier this week, can be read below:
"No Michigan resident should have to choose between their health and their home. The skyrocketing price of prescription drugs in Michigan puts some residents in a perilous position of having to choose between buying medications or paying rent. Many Michigan residents put their health at risk by rationing insulin, because they cannot afford to pay the expensive price tag for this life-saving drug.
"As attorney general, it is my duty to investigate instances of potential price gouging to ensure Michigan consumers are not being taken advantage of. Past interpretations of the Michigan Consumer Protection Act (MCPA), however, make it nearly impossible for me to use it to hold pharmaceutical companies accountable.
"Consumer protection is one of the chief functions of my department and is made possible by the MCPA. It enables my department to both investigate and pursue legal action against businesses for unfair, unconscionable and deceptive practices. For example, the MCPA makes it illegal to charge "a price that is grossly in excess of the price at which similar property or services are sold."
"Thanks to scientific discoveries over one hundred years ago, diabetes is treatable. Successful treatment for many diabetics, however, requires access to affordable insulin. Unfortunately, the price of insulin has skyrocketed. According to a study published by the National Institutes of Health in 2020, participants reported monthly out of pocket insulin costs between $75 to over $2,000 depending on the individual's insulin dosage requirements and insurance coverage.
"I applaud Gov. Gretchen Whitmer's efforts to curb prescription drug costs through the creation of the Prescription Drug Task Force housed within the Michigan Department of Health and Human Services.
"I also support efforts to cap prescription costs with legislation; but introducing a bill every time pharmaceutical companies raise the price of a particular drug does not address the root of the problem.
"My department must be able to properly investigate instances of grossly excessive pricing in order to both hold companies accountable and ensure drug costs are an accurate reflection of the marketplace.
"In January, my department took steps to launch an investigation into the price of insulin supplied by Eli Lilly. It is my sincere hope that this investigation will proceed, but our efforts are further complicated by two Michigan Supreme Court rulings, Smith v. Globe Life Insurance Company and Liss v. Lewiston-Richards, Inc.
"Rulings in Smith and Liss have watered down the MCPA's otherwise powerful enforcement mechanisms. Those rulings give an absurd reading to broaden an exception in the MCPA stating it does not apply to 'a transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States.'
"Under those rulings, any industry licensed or regulated by another government agency will argue it falls outside the protections of the MCPA - even if the government agency has no specific authority to remedy any unfair, unconscionable or deceptive conduct covered by the MCPA.
"In some instances, the government agency may have authority to suspend or revoke a license; but consumers, who have been taken advantage of by bad actors, are often likely to find that remedy inadequate.
"This interpretation under Smith and Liss creates significant barriers for consumers faced with unfair business practices and seems to contradict the purpose of the MCPA. It turns the act into what former Michigan Attorney General Frank Kelley referred to as 'a cruel hoax on the many legislators and others who sought to give Michigan consumers protection in the marketplace.'
"Without the ability to wield the full authority provided by the act, my department is hobbled in its ability to investigate and hold accountable many regulated entities that may be ripping off Michigan consumers.
"In order for the Department of Attorney General to be the people's watchdog when it comes to investigating the costs of prescription drugs, we must breathe life back into the MCPA and revive the law's original purpose to protect consumers.
"My department is eager to initiate our investigation on behalf of the people of Michigan."
The press release announcing the Eli Lilly action can be read on the Department of Attorney General website.