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A federal judge dropped allegations that three drug makers engaged in antitrust practices by scheming to overcharge for insulin, but the companies will continue to face racketeering claims in a lawsuit brought by pharmaceutical wholesalers.

In the lawsuit, the insulin makers — Eli Lilly (LLY), Sanofi  (SNY), and Novo Nordisk (NVO) — were accused of inflating prices by paying kickbacks in the form of rebates and various administrative fees to pharmacy benefit managers in exchange for favorable placement on formularies. These are lists of medicines for which coverage is provided by health insurers that hire PBMs to negotiate on their behalf.


In general, drug makers have argued they must raise prices to compensate for rebates, while pharmacy benefit managers maintain pharmaceutical companies raise prices to boost profits. But the wholesalers argued that the fees and rebates create incentives for pharmacy benefit managers to accept higher prices rather than negotiate lower prices on behalf of health insurers and employers.

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