New Haven Sues Major Insurers and Drug Companies Over Alleged Insulin Price-Fixing Scheme

The City of New Haven has filed a sweeping lawsuit against major insurance companies and pharmaceutical manufacturers, alleging they operated a coordinated scheme to artificially inflate insulin prices over nearly a decade.

The lawsuit, filed January 8 in federal court, targets insurance giants Cigna, CVS Health, and UnitedHealth Group, along with insulin manufacturers Eli Lilly, Novo Nordisk, and Sanofi-Aventis, according to court documents. New Haven alleges the companies violated federal racketeering and antitrust laws through what the city calls the “Insulin Pricing Scheme.”

The city operates self-insured health plans for its employees and eligible retirees, and claims it paid artificially inflated prices for diabetes medications as a result of the alleged conspiracy, according to the filing.

At the heart of New Haven’s allegations is a system that allegedly operated from at least 2010 to 2019, in which drug manufacturers set inflated list prices and provided secret rebates and undisclosed payments to pharmacy benefit managers (PBMs). In exchange, the PBMs allegedly gave those higher-priced drugs preferred placement on their formularies, according to court documents.

The lawsuit describes a deliberate effort to keep insurance payors uninformed about the true costs and financial arrangements. PBM contracts allegedly defined “rebates” narrowly while labeling payments for formulary placement as “administrative fees,” placing them beyond clients’ contractual audit rights, according to the filing. The PBMs also allegedly profited from the spread between what they charged payors and what they actually paid pharmacies.

The pricing coordination described in court documents appears systematic and precise. Between 2009 and 2015, Sanofi and Novo Nordisk allegedly raised insulin list prices together thirteen times, matching each other’s increases down to the decimal point within days or sometimes hours, according to the lawsuit.

Internal communications from Eli Lilly referenced in the filing show company executives tracking competitors’ price moves and matching 9.9% price increases. The financial scale of these arrangements grew substantially over time, according to the court documents.

A Pew Charitable Trust study cited in the lawsuit estimated that administrative and other fees flowing from manufacturers to PBMs tripled between 2012 and 2016, reaching over $16 billion. Sanofi’s rebates to CVS Caremark for preferred formulary placement allegedly increased dramatically from between 2% and 4% in 2013 to as high as 56% by 2018, according to the filing.

New Haven brings claims under multiple laws, including the federal Racketeer Influenced and Corrupt Organizations Act (RICO), the Sherman Antitrust Act, the Connecticut Antitrust Act, and the Connecticut Unfair Trade Practices Act, according to court documents. The city seeks treble damages, disgorgement of profits, punitive damages, and injunctive relief.

The defendants named in the case include Cigna Health and Life Insurance Company and its Evernorth Health subsidiary (formerly Express Scripts), CVS Health Corporation and its Caremark subsidiaries, and UnitedHealth Group through its Optum and OptumRx operations, along with the three insulin manufacturers and their affiliates.

The case, docketed as City of New Haven, Connecticut v. Eli Lilly and Company, et al., Case No. 2:26-cv-01542, represents New Haven’s effort to recover costs from what it alleges was a systematic manipulation of the diabetes drug market that harmed both the city’s finances and its employees’ access to affordable medications.

No determination on the merits of the case has been made, according to court records. The lawsuit adds New Haven to a growing list of municipalities and organizations challenging pharmaceutical pricing practices in federal court.