More states are taking legal action against major insulin manufacturers and pharmacy benefit managers (PBMs), raising questions about whether the rebate arrangements behind prescription drug pricing are contributing to higher costs for patients.
Some of the companies being sued include Eli Lilly, Novo Nordisk, Sanofi, and major PBMs, alleging that the companies worked together to artificially inflate insulin prices by more than 1,000%, raising concerns about industry rebates and formulary incentives.
In September of this year, Florida sued major insulin manufacturers and PBMs, alleging that high drug list prices and substantial rebates contributed to higher costs for diabetes medications. The complaint cites testimony that approximately 75% of a Humalog vial’s $280 list price was rebated to PBMs in exchange for formulary placement.
The growing legal scrutiny comes as more than 8 million Americans rely on insulin, while new national survey findings highlight the financial pressures facing patients:
41% reported rationing, delaying or skipping insulin or treatment due to cost during the past year.
46% reported spending more than $100 per month on insulin, while 2 in 3 said their out-of-pocket insulin costs had increased compared with 2025.
As more states challenge similar insulin pricing practices, a broader question emerges: Are these isolated disputes, or do they point to deeper financial incentives within the PBM model that may be contributing to higher prescription costs nationwide?
“If we were designing the pharmacy benefit system today, we would not build one where higher drug prices create more revenue for the PBM,” says Paul Pruitt, Co-Founder of SHARx, a procurement management solution for high-cost prescription drugs.
Pruitt says several questions need to be asked and addressed.
What do these insulin lawsuits reveal about the relationship between list prices, PBM rebates and formulary placement?
Why can larger rebates create financial incentives that do not necessarily translate into lower prescription costs?
