Iowa Attorney General Accuses Insulin Makers and PBMs of Deceptive Pricing Practices

Iowa Attorney General Brenna Bird has filed a sweeping lawsuit against major insulin manufacturers and pharmacy benefit managers (PBMs), alleging a coordinated, years-long scheme to artificially inflate the prices of insulin and other diabetes medications at the expense of Iowa patients, employers, and public payors. The case targets Eli Lilly, Novo Nordisk, and Sanofi, along with PBMs CVS Caremark, Express Scripts, and OptumRx, asserting violations of the Iowa Consumer Fraud Act, unjust enrichment, and civil conspiracy.

The lawsuit closely follows a growing wave of state enforcement actions scrutinizing PBM-manufacturer relationships, including a recent high-profile insulin pricing case brought by Oregon’s attorney general that similarly alleged coordinated conduct among manufacturers and PBMs.

Allegations of an “Insulin Pricing Scheme”

According to the complaint, the defendants engaged in what Iowa calls the “Insulin Pricing Scheme,” a system in which manufacturers allegedly raised list prices for insulin and diabetes drugs while paying large, undisclosed payments to PBMs in exchange for preferred formulary placement.

The state alleges that:

• Insulin products that once sold for approximately $20 per vial in the late 1990s now carry list prices between $300 and $700, despite minimal changes to the drugs themselves and declining production costs.
• PBMs allegedly rewarded higher list prices and larger manufacturer payments with preferred or exclusive formulary status, while excluding lower-priced or biosimilar alternatives.
• Rather than passing these payments through to patients or payors, PBMs allegedly retained significant portions as profit, including through affiliated rebate aggregators.

Market Power and Formulary Control

The petition emphasizes the concentrated nature of the PBM market, noting that CVS Caremark, Express Scripts, and OptumRx collectively control approximately 80% of the PBM market nationwide and in Iowa.

Because these PBMs also own or are affiliated with major insurers and pharmacy chains, the state alleges they exert near-total control over:

• Drug availability through formulary inclusion
• Patient out-of-pocket costs through tier placement
• Pharmacy reimbursement rates
• Manufacturer access to insured patient populations

The lawsuit claims that exclusionary formularies introduced around 2012 further intensified price increases by allowing PBMs to demand ever-higher manufacturer payments in exchange for access.

Impact on Patients, Pharmacies, and Payors

Iowa alleges that the scheme has caused widespread harm across the healthcare system. According to the complaint, Iowa diabetics and payors have been overcharged millions of dollars annually, with patients facing higher deductibles, coinsurance, and full list-price costs when uninsured.

The state further claims that unaffordable prices have driven dangerous patient behaviors, including insulin rationing, skipped doses, and use of expired medication, leading to avoidable complications and hospitalizations.

Independent and non-affiliated pharmacies are also alleged to be harmed through spread pricing, post-sale fees, and patient steering toward PBM-owned mail order and retail pharmacies.

Legal Claims and Requested Relief

The lawsuit asserts multiple causes of action, including:

• Deceptive and unfair practices under the Iowa Consumer Fraud Act
• Unjust enrichment
• Civil conspiracy 

Iowa seeks injunctive relief, restitution, disgorgement of profits, civil penalties, and attorneys’ fees.

Broader Enforcement Trend

The Iowa case adds to mounting scrutiny of insulin pricing and PBM practices nationwide. It follows similar allegations raised in the Oregon Attorney General’s $900 million lawsuit accusing insulin manufacturers and PBMs of price-fixing and deceptive conduct—highlighting a growing multistate focus on rebate structures, formulary design, and vertical integration in the drug supply chain.

Key Takeaways

• State scrutiny of PBM-manufacturer relationships is intensifying, with Iowa joining other states in alleging coordinated insulin price inflation.
• Formulary control and rebate practices are central legal risks, particularly where higher list prices allegedly drive preferred placement.
• Pharmacies, payors, and patients may all be affected, as enforcement actions increasingly examine spread pricing, patient steering, and affordability impacts.

Reference

The State of Iowa ex rel. Brenna Bird, Attorney General of Iowa v Eli Lilly and Company, Novo Nordisk Inc., Sanofi-Aventis US LLC, et al. Iowa District Court for Polk County. Filed January 29, 2026.  https://www.iowaattorneygeneral.gov/media/cms/1_C65E9DAAB18DC.PDF