From the day they introduced it to the day it passed the Minnesota Legislature, backers of a bill to provide insulin to diabetics who can’t afford the hormone said it wouldn’t draw a lawsuit from drug makers.
Citing assurances from unnamed industry executives, those proponents of the bill, which relies on the companies’ existing patient assistance program charities instead of substantial fees on drug companies, was less of a lawsuit magnet. In April, the DFL-controlled Minnesota House approved the bill by 111-22. The Senate responded with a vote of 67-0.
They were wrong.
On Tuesday night, just hours before the Alex Smith Insulin Affordability Act was to take effect, the Pharmaceutical Research and Manufacturers of America — the industry trade group better known as PhRMA — filed suit to get the new law declared unconstitutional. “A state cannot simply commandeer private property to achieve its public policy goals,” states the suit, which names the Minnesota Board of Pharmacy and MNsure as defendants. “Because the Act takes private property for public use without paying just compensation, it is unconstitutional and should be enjoined.”
Walz’s reaction: ‘What the hell?’
Minnesota’s plan, brokered by Republicans in the state Senate, relies on existing patient assistance programs run by pharmaceutical companies like Eli Lilly, Sanofi and Novo-Nordisk. Only if the companies refused to participate in the program do they face fees or fines: $200,000 per month for six months, and increasing to $400,000 per month for the next six. After a year of non-participation, fines go to $600,000 a month.
The suit does not ask for a temporary injunction against the act taking effect, and Gov. Tim Walz and Lt. Gov. Peggy Flanagan stressed at a press conference on Wednesday that the program was still available for those who need it. A 90-day supply can be received either through a pharmacy or directly from the manufacturer’s patient assistance program. No more than a $50 copay can be charged for that three month supply. Those same diabetics can then apply for longer-term supplies by verifying income eligibility through MNsure.
Walz called Wednesday “one of the most enjoyable days” as governor because the new law resulted from the advocacy of diabetics and their families. The law is named for Alec Smith, who died three years ago after rationing his insulin after aging off his parent’s health insurance. Walz declared Wednesday “Alec Smith Day” in Minnesota. His parents, Nicole Smith-Holt and James Holt, Jr., accepted the proclamation from Walz.
But the lawsuit put something of a damper on the celebration. The plan had been sold as a compromise with the industry, and advocates had to swallow hard to accept it, making the news of the suit galling to some. Flanagan found out about the suit Tuesday night via social media and told Walz about it the same night. His reaction: “What the hell?”
On Wednesday, Flanagan said of the drug industry: “They may continue fighting, but so will we. And we have the advantage of being right.”
[image_credit]MinnPost photo by Peter Callaghan[/image_credit][image_caption]Gov. Tim Walz called Wednesday “one of the most enjoyable days” as governor because the new law resulted from the advocacy of diabetics and their families.[/image_caption]
[image_caption]State Sen. Matt Little[/image_caption]
And Attorney General Keith Ellison said he will fight the lawsuit. “Today — the very day that our state finally put Minnesotans’ lives ahead of drug companies’ profits — Big Pharma is telling Minnesotans that their obscene profits come before your lives,” he said. “My office and I will defend it with every resource we have.”
Industry: insulin price increases aren’t our fault
The lawsuit challenges the law under both the takings clause and the commerce clauses of the U.S. Constitution. “If Minnesota believes that, despite the insulin manufacturers’ affordability programs, there is a need for further action to help some Minnesota residents obtain insulin, it could have created a state‐run program in which it purchases insulin from PhRMA’s members and distributes it to residents in need,” the suit states. “But instead of using public funds to address a matter of public concern, Minnesota chose to enact a law that effects per se takings of the manufacturers’ property without compensation, so that the state can achieve its policy objectives at no expense to its taxpayers.
“In addition to being forced to give away their insulin for free according to the state’s terms, manufacturers will also incur significant expenses in developing and administering the Continuing Safety Net Program and Urgent Need Program.”
The suit also blames health plans and pharmacy benefit managers for cost increases of insulin and other drugs and seeks to have the industry’s legal costs covered by the state.
Both Democrats and Republicans criticized the industry’s decision to file suit. “PhRMA is missing the mark by wasting time and money on this lawsuit. Minnesotans would be far better off if the pharmaceutical industry would focus on fairness in pricing,” said Sen. Michelle Benson, R-Ham Lake, the chair of the Senate’s Health and Human Services Finance and Policy Committee. “You shouldn’t have to be a powerful government or a special interest group to have access to fair prices. All Minnesotans want to be treated fairly.”
Senate Majority Leader Paul Gazelka also said he was disappointed with the suit. “Senate Republicans remain committed to providing emergency insulin for those in crisis no matter what happens with this poorly timed lawsuit,” the East Gull Lake Republican said.
And Little took issue with one of suit’s key arguments: “The cost of producing insulin is so low that to say this is taking is gonna be really tough for them,” he said.
Did PhRMA mislead lawmakers?
DFL Rep. Mike Howard of Richfield dubbed the industry “soulless” for filing suit and said he thinks PhRMA misled the Senate GOP backers of the compromise that eventually became the law. “Everything about this process has shown that there is ill intent by the pharmaceutical industry,” he said. “They have not been honest; they have not been clear; they have not been straightforward; they have not been willing to come before a committee to show their face. The reason that things are confusing is by design.”
Yet the industry did raise constitutional issues with the program when it testified on the program in March. “The majority of our concerns would be around clarifying any constitutional issues we have,” Sharon Lamberton, deputy vice president for PhRMA, said at the time. “We are concerned with how manufacturers would be compensated for the insulin product, which would be a takings clause of the 5th amendment concern.”
Before that meeting, Sen. Scott Jensen, R-Chaska, said he was comfortable that the industry would let the proposal become law without challenge, largely because it didn’t impose huge licensing fees — around $38 million per year — to fund it, as the version of the program proposed by House DFLers did. “The pharmaceutical manufacturers don’t like the bill, they may even today be opposing the bill,” Jensen said before the first hearing on the compromise bill. “But they will come along and they are saying yes to this. This is not something where we’ll have to say, ‘Oh my stars it’ll end up in court.’”
[image_caption]State Sen. Scott Jensen[/image_caption]
Jensen now thinks the Legislature should look at changing the program to limit its takings clause implications. One idea – which he said on Saturday would be contingent on a negative outcome of the litigation – would be to use other funds for the 30-day emergency program, which now requires the industry to compensate or provide insulin to pharmacies to replace what was distributed to diabetics. Jensen proposed using the health care access fund, which is paid for via a tax on health care providers and said he is asking Senate staff to prepare language.
But such a proposal is unlikely to win support in the DFL-controlled House and Walz, given their belief that any costs should be borne by the industry that made insulin unaffordable.
Lija Greenseid, an advocate who is the mother of a diabetic daughter, said she favors imposing a fee on the industry for that portion of the program.
Greenseid said she believed Jensen and Sen. Eric Pratt, R-Prior Lake, who first proposed using the patient assistance programs as the basis for the state’s plan, when they told her they were convinced the Senate’s version would not be challenged in court. “I think Sen. Jensen needs to be held accountable, either for some miscommunication from PhRMA or that it was all about politics; they needed to sweep this away in an election year,” she said. “If that was the plan, it backfired because this looks very bad.”
Little was even more critical of the Senate GOP’s management of the issue. “I believe there’s a possibility here that we have to face that (PhRMA) told GOP members they wouldn’t sue on this because their argument — that it was unconstitutional — was actually stronger against the Senate version” of the proposal.
The license fee that House DFL members had proposed to fund the program is legal and constitutional, Little said. “They wanted to avoid a license fee because they knew they couldn’t beat that in court,” he said of insulin makers. “I think we have to face the reality that they did this on purpose.”
It is life and death for me that I have food. I want the State legislature to force Byerly’s to sell me food at a price 75% below the retail price. That is my right dammit. (Sometimes life is not fair. That does not mean the State may pay illegal laws.)
Your empathy and sensitivity to the medical conditions of fellow Minnesotans is touching.
This worthless analogy demonstrates a profound ignorance of how drug pricing works.
I can buy food at dozens of different places within a couple miles of my house. I can (and do to a limited extent) grow my own food. The price of food is determined by supply and demand in a basically free market.
That free market does not exist in the drug industry. Often a drug will be made by a single manufacturer, who can set whatever price it wants for desperate customers. Doses of drugs that cost pennies to manufacture can be sold for thousands of dollars.
Life isn’t fair. But artificially marking up the cost of life-saving drugs by exponential amounts is way past unfair. Its cruel and immoral.
Congratulations. This might be the most evil and disgusting – and ignorant (ridiculous analogy) – comment in the history of MinnPost.
I sincerely hope that you are never faced with a medical condition that requires treatment you cannot afford in order to stay alive.
If you can prove that the markup on food at Lund’s and Byerly’s is similar to that of insulin I might listen. It’s a false analogy.
This is one of the reasons we need a national single-payer healthcare system. We are being gouged by pharmaceutical companies. A box of five pens of Tresiba, one of the newer insulins, has a retail price of about $500 in the U.S., while in Spain that same box of pens is 5 Euros (about $6).
Pharma has a point. Perhaps the state should purchase insulin and then resell it to residents who need it. But we should purchase it in Canada. And, while we’re at it, purchase a lot of other drugs that people need.
No, they really don’t have a point. Pharma with their lobbyists throughout the years have played by their own rules, making sure the rules benefit them, making sure they are running the industry without competition at outrageous prices for drugs that are needed to keep people alive. And now they are whining all the way to their Orono mansions.
The fifth amendment is pretty clear. How did the legislature figure they could just ignore it? Even if the pharmaceutical industry were being disingenuous and said they wouldn’t sue, it is still unconstitutional. The legislators knew it did not pass constitutional muster and that there were legal options so why take the route they did?
I am always amazed at internet constitutional experts who limit their analysis to the constitution itself while ignoring the caselaw interpreting the constitution. Its never that simple.
If you actually read the article, you would know that the legislature did not ignore the constitutional implications. Rather, it came up with a bipartisan compromise that everyone involved thought avoided a takings problem.
Finally, don’t assume the fact that they filed suit means that this is a taking. The state intends to fight the suit and, as the article points out, the plaintiffs did not even ask for an injunction. If the law was obviously unconstitutional, they could have shut it down immediately. This one is probably a long way from over.
“Pigs get fed, but hogs get slaughtered” is a lesson pharma needs to learn. Patent rights, the public’s grant of a monopoly, imply a reciprocal duty to market the product widely and at a reasonable price.Instead, those rights are being abused. It’s time to re-examine this relationship.
The pharma industry’s position is clear: corporate property rights can be taken to the extreme of knowingly threatening public health and life, not to mention, imposing vast ‘takings’ against the property of individuals, families, other companies, health care systems and governments.
Price gouging on insulin is clearly barbaric, or should be, but it’s utterly unsurprising given the normalized depravities of corporate America.
It would mark an ethical advance if we could get to the point where price gouging like this–a form of structural killing–would result in long prison sentences for the corporate executives.
At some point–although we should have done this long ago–we should look at state manufacturing of insulin, distributed at cost, along with a permanent ban on corporate manufacturing of same.
The lawsuit suggests that the state should simply be buying insulin–problem solved. But it defies imagination why the public should be subsidizing an obvious price gouging and ripoff scheme whose only purpose is shifting public money into the hands of private shareholders. We already have many unmet public health care needs. Why should we be flushing finite public dollars down the corporate toilet of infinite greed?
Manufacturers are gouging all insulin consumers, pricing it so high that some are dying a result. They did not invent insulin – and their price increases are driven by greed, not cost. is time to set prices based on their manufacturing costs with a reasonable profit. They cannot be treated to be reasonable.
PHARMA exists to promote and protect the rights of drug manufacturers to extort money from the public. There is no reason for our government representatives to make compromises with them. The tool to effectively deal with PHARMA is the RICO statutes. PHARMA needs to be treated as organized crime since that is exactly how it operates.
We lived in Mexico for ten years. Now we winter there and will again when Covid runs its course. My wife is a type 1 diabetic. In Mexico we buy vials of Eli Lilly brand humalog insulin (the same exact vials we buy in MN) for 40USD. What Eli Lilly and other US manufacturers of insulin are doing in the US is criminal, if not by law, certainly by any ethos a fair minded person could possess.
I’m a capitalist, but clearly a free market for many drugs just isn’t working since the Intellectual Property rights are too effective at limiting competition.
I wonder if anyone has considered regulating the delivery and prices within Minnesota as we do for Investor Owned Utilities (electricity) – another industry where real competition doesn’t work (too expensive to duplicate all the capital intensive infrastructure)?
If we don’t fix drug prices and health care so it can work within a competitive market, it won’t be long now before we get single payer governmental health; and frankly even many of us capitalist will be on board with that!
One way of looking at this attempt to get Pharma not to gouge on insulin pricing is that the Minnesota GOP was extraordinarily naive to think that Pharma was telling them the truth when they said, Oh, don’t worry we won’t sue you! When they said that apparently behind closed doors, never in public?
Am I reading this wrong, or wasn’t it the Senate Republicans that thought up this “compromise,” in order to prevent stronger measure from being enacted (by the Democrats)?
We need a national solution (Pharma doesn’t really care about the relatively few Minnesota diabetics) to the gouging.
As someone here has proposed: figure out what it actually costs to produce the insulin products (insulin was NOT expensively developed recently by any Big Pharma company that needs to recoup its research and development costs), add on a fair profit–NOT in double-digits!–and permit them to charge only that amount.
Why would Republicans think up some crazy charity method to address this need? And temporary to boot?
The Pharmaceutical Companies never disclosed the serious dangers of Hormone Replacement Therapy in the 70’s, 80’s, 90’s or the early 2000’s. So many women suffered the consequences with breast cancer, stroke and heart attack. Those dangers didn’t come to light until July 2002 when the Women’s Health Study took all the women off the study because of the very serious side effects caused by these drugs. The disclosures were too late for my wife who suffered a serious stroke and has been confined to a wheelchair for over 20 years now. The Pharmaceutical Companies were well aware of these dangerous side affects for many years before my wife’s doctor recommended the therapy. However, they put profits ahead of the health and lives of so many women all over the world.
PhRMA needs to get a life. In the 80’s we had corporate citizenship that said it’s important to uplift the community in addition to corporate profits. It was very successful. Now we have not now, not ever from our corporate giants. My sister died from diabetes and if they want me to tell her story, just let them know I’m happy to do so.