Drugmaker accused of fraud and illegally inflating the price of autoimmune drug over last 20 years
A nationwide class of consumers sued AbbVie, alleging the pharmaceutical company engaged in a fraudulent scheme to inflate the cost of the highest-grossing drug in the world, Humira, by 470% over the last two decades, according to attorneys at Hagens Berman and Carella Byrne Cecchi Brody Agnello.
The lawsuit was filed April 25, 2023, in the U.S. District Court for the Northern District of Illinois, and accuses AbbVie of engaging in a scheme to artificially inflate the cost of Humira to levels far out of step with manufacturing costs and in violation of consumer protection laws.
The suit alleges that AbbVie repeatedly raised the publicly listed price paid by consumers, while offering pharmacy benefit managers (PBMs) lower, undisclosed net prices for Humira. PBMs distribute drugs to pharmacies, and then pocket a portion of the difference between publicly listed prices and the private net price they pay for a drug. The larger that spread between prices, the more PBMs profit, and the lawsuit alleges that AbbVie exploited this covert arrangement to charge consumers outrageously high prices for Humira.
“A Poster Child for Excessive and Anticompetitive Drug Pricing”
Humira is approved to treat various autoimmune conditions, including rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn’s disease and plaque psoriasis. It is the largest selling prescription drug in the world, according to the complaint.
The lawsuit cites a U.S. House Committee on Oversight and Reform investigation into Humira, which found that AbbVie charges approximately $77,000 for a year’s supply of Humira and has increased prices 27 times since the drug’s introduction, with total price increases amounting to a 470% hike since 2003.
The lawsuit states that in 2020 alone, Humira generated $16 billion in U.S. net revenue for AbbVie, and the House investigation also found that senior executive bonuses at AbbVie were directly tied to Humira’s net revenue, allowing them to profit personally from the price hikes. Over the last five years, executives at AbbVie made over $340 million.
AbbVie did not initially cooperate with the House investigation into Humira, and only provided requested documents to the Committee under threat of subpoena, according to the complaint. The lawsuit states, “…the industry’s excessive prices and anticompetitive practices are not justified by the need for innovation and have been used to enrich company executives and shareholders; the pricing of Humira is a poster child for this problem.”
How AbbVie Games the System
According to the lawsuit, AbbVie was able to make record-breaking profits from Humira by exploiting the U.S. healthcare system. The pharmaceutical company has reduced the price of Humira internationally, the complaint states, even as prices have spiraled out of control in the U.S., where the government cannot negotiate directly with drug companies to lower prices.
The complaint alleges that AbbVie deliberately widened a secret gap between the list price of Humira—the price that patients and their insurance companies pay for a drug—and the undisclosed net price, which is paid by the PBMs. PBMs retain a percentage of the list price plus some rebates. In exchange, PBMs confer Humira with formulary status, a designation which makes insurance companies more likely to pay full price for a drug.
The wider the difference between these two figures, the more the PBMs profit, and this arrangement in no way benefits drug purchasers, or reflects the real cost of manufacturing the prescription. Rather than paying for the medication at competitive net rates that are offered to PBMs, consumers are left to pay the artificially inflated rates, according to the lawsuit.
A named plaintiff in the suit, Edward Camargo, started taking Humira at age 19 to treat his psoriatic arthritis and psoriasis. By age 26, he was no longer covered by his father’s insurance, and his new insurance refused to pay for Humira due to its high cost.
Faced with the prohibitively high price of Humira, Camargo had to quit taking the drug, and he experienced tremendous pain as a result, the lawsuit says. He developed dry scaley skin that cracked and bled. Camargo is now on a different prescription which helps alleviate some symptoms but says he would prefer to take Humira if he could afford it, according to the complaint.
“It is unfortunate that executives at AbbVie are profiting hand over fist while people all over the country can’t afford the medication they need to live happy and healthy lives.” Said Berman.
The lawsuit brings 38 counts against the pharmaceutical company, including violation of the Illinois and other state consumer protection laws.
Hagens Berman is a global plaintiffs’ rights complex litigation law firm with a tenacious drive for achieving real results for those harmed by corporate negligence and fraud. Since its founding in 1993, the firm’s determination has earned it numerous national accolades, awards and titles of “Most Feared Plaintiff’s Firm,” MVPs and Trailblazers of class-action law. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.
About Carella Byne
Carella Byrne is one of the leading law firms in the New Jersey – New York metropolitan area, serving a diverse clientele ranging from small businesses to Fortune 500 corporations. Carella Byrne has led - or been part of the leadership team - in many of the nation’s most complex and important consumer class actions effecting consumer rights. More about the law firm and its successes can be found at www.carellabyrne.com.