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Two years after Michigan Attorney General Dana Nessel filed an application to appeal an order preventing her department from investigating Eli Lilly and Co.’s insulin pricing practices, her department on Thursday gave oral arguments before the Michigan Supreme Court.
Nessel says a pair of former rulings exempt examination of how insulin is priced, as well as prevent investigating into pricing misconduct with regard to other prescription medications.
The cases being challenged are Smith v. Globe Life, decided in 1999, and Liss v. Lewiston, decided in 2007. Together, the decisions created an exemption to the MCPA, ruling that if alleged misconduct is taking place within a regulated industry then it is not punishable under the law.
‘You can’t win a case you never file’
Nessel has asserted that the rulings are not supported by a plain reading of the law.
“This flawed and broad interpretation of a narrow exemption within the MCPA shields many corporations from any state scrutiny of even the most egregiously unfair alleged business conduct,” stated a press release.
The AG’s office says if the decisions were to be reversed, the state would regain significant authority to defend consumers from deception and price gouging, which it says the Michigan Consumer Protection Act is meant to apply to, as evidenced by the law’s own title.
“Since the Smith and Liss decisions, the Department of Attorney General has often been powerless to use the Michigan Consumer Protection Act to investigate or hold accountable deceptive business agents if they are shielded by professional or occupational licenses,” Nessel said. “This misapplication of the law has left countless consumers without proper recourse against predatory practices, like the surging prices for essential medication. Reversing these decisions would not only enable us to investigate allegations of insulin price gouging but also restore the MCPA’s power to protect Michigan consumers across the marketplace. It is my hope that the Court rules in favor of the many Michiganders who fall victim to deceptive commercial operators.”
John O’Quinn, the attorney for Eli Lilly, noted that while the Michigan Legislature has amended the MCPA 23 times in the last 25 years, it never sought to alter the language barring the state from investigating drug pricing practices.
“It is just about overturning precedent,” The Detroit News quoted O’Quinn as saying. “To be clear, the attorney general has not identified a single patient that cannot access Lilly’s insulin for less than $35 a month, and has rebuffed requests by Lilly to engage on this so, if there were any gaps in Lilly’s insulin affordability program, Lilly could fill them.”
Nessel began her investigation into Eli Lilly, one of the nation’s three largest drug-manufacturing companies producing insulin, in January 2022.
At the time, Nessel expressed concern that the company would cite the Smith and Liss decisions and get the investigation dismissed, which is exactly what happened six months later when Ingham Circuit Court Judge Wanda M. Stokes granted Eli Lilly’s motion for summary disposition, ruling that the MCPA did not apply as the selling of insulin is authorized by the Food and Drug Administration (FDA).
Nessel then filed with the Michigan Court of Appeals along with a bypass application to the MSC, which was denied. The appeals court later upheld the lower court’s decision, leading to the AG’s office filing with the Supreme Court in August of 2023.
The Attorney General’s Office says its arguments are not based on the merits of whether Eli Lilly violated the MCPA, but rather on its authority under the MCPA “when Eli Lilly is generally authorized to sell insulin medications by the FDA but is bound by no FDA regulations regarding the pricing of those medications.”
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