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Michigan Court of Appeals Hears Oral Arguments in AG Nessel’s Case Against Eli Lilly to Clear a Path for Investigation into Excessive Insulin Prices

LANSING Oral arguments in the State’s case against Eli Lilly and Company arising from concerns about excessive insulin prices were held June 6, 2023, before Court of Appeals Judge Michael J. Riordan, Judge Stephen L. Borrello, and Judge Mark T. Boonstra, Michigan Attorney General Dana Nessel announced.

In January 2022, Nessel launched an investigation into Eli Lilly - one of the nation’s three largest drug-manufacturing companies producing insulin. The action sought to use the Michigan Consumer Protection Act (MCPA) to investigate various aspects of Lilly’s pricing practices related to life-saving medications used by diabetics. Nessel also filed a companion Complaint for Declaratory Judgment, asking the court to declare that MCL 445.904(1)(a) does not prohibit an investigation into Eli Lilly’s insulin pricing.

Last July, Ingham Circuit Judge Wanda M. Stokes granted Lilly’s motion for summary disposition, holding that the Smith v. Globe Life Ins. Co. and Liss v. Lewiston-Richards, Inc. decisions preclude application of the MCPA to Lilly’s sale of insulin medications because the general transaction of selling insulin is authorized by the Food and Drug Administration.

A claim of appeal was filed with the Court of Appeals along with a bypass application to the Michigan Supreme Court (MSC). The MSC denied the bypass application but asked the Court of Appeals to expedite the appeal.

“The Smith v. Globe Life Ins. Co. and Liss v. Lewiston-Richards, Inc. decisions have been used to frustrate consumer protection efforts for far too long,” Nessel said. “It is unconscionable for Michigan residents to have to choose between life-saving medicine and food or rent. My Consumer Protection Team stands ready to hold drug companies accountable for their unjustifiable prices, but we can only do so if we are not being hindered by court decisions that misapply the text of a law having a purpose obvious from its name.

Smith (1999) and Liss (2007) interpret an exemption contained in Section 445.904(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 often deemed exempt from the MCPA, thereby providing what is effectively a “free pass for misconduct under the MCPA, regardless of how egregious the misconduct.

The Attorney General’s appeal is not based on the merits of whether Eli Lilly has violated the MCPA, but rather on the Attorney General’s authority to investigate possible MCPA violations under MCL 445.907 when Eli Lilly is generally authorized to sell insulin medications by the Food and Drug Administration (FDA) but is bound by no FDA regulations regarding the pricing of those medications.

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.

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.


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