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Eli Lilly CEO Hits Back At Elizabeth Warren, Blames PBMs, Insurance For Blocking Affordable Insulin

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Eli Lilly CEO Hits Back At Elizabeth Warren, Blames PBMs, Insurance For Blocking Affordable Insulin

Eli Lilly And Co (NYSE: LLY) CEO David Ricks said Tuesday that U.S. Sen. Elizabeth Warren’s criticism of the cost of the drugmaker's insulin is “nonsense.”

Warren Says Eli Lilly Broke Promise On Insulin

In a Monday Facebook post, the Democratic presidential candidate denounced Eli Lilly for its narrow distribution of generic insulin. In a survey of nearly 400 pharmacies, Warren said that 83% did not stock the generic alternative and 69% of the unstocked shops said they could not access the product.

"This report shows that pharmaceutical giant Eli Lilly has not lived up to its promise to provide a lower-priced insulin to patients who need it," Warren said.

"With rising prescription drug costs squeezing families in every part of the country, Congress must bring drug prices down for consumers, hold drug companies accountable for needless price hikes, and encourage more competition in the prescription drug market."

Eli Lilly Launched Half-Price Insulin, CEO Says 

Warren challenged Eli Lilly to “take meaningful steps” to widen access to its generic Humalog. CEO Ricks said the company already has.

“Many lawmakers encouraged us to just lower the price of insulin. We did that,” he said Tuesday on CNBC. “We launched a half-price of our best-selling product … we could argue whether half-price is enough. It’s a pretty big difference. We made that available this spring. It’s distributed widely.”

The problem, he said isn’t Eli Lilly. It’s the “middlemen” and a distribution infrastructure reliant on high-priced sales.

“One of the three major national wholesalers has chosen not to cover it,” the CEO said. “Some pharmacies have chosen not to carry it. Why? Because this exposes the underlying economics in our system ... which is that the middle men, both in the supply chain as well as PBMs and insurance companies, prefer high-list priced products with a lot of rebate. This has a lower list price and less rebate.”

UnitedHealth Group Inc (NYSE: UNH) and Anthem Inc (NYSE: ANTM) have covered the product, "but only one out of four Americans with part D coverage and commercial coverage next year will have access to this," Ricks said. 

"This doesn’t show that we didn’t try. We did try. You can order this product today in your pharmacy. This shows what’s broken in the rest of the pharmaceutical system."

Warren has sponsored a bill to empower the Department of Health and Human Services to make generic drugs to increase competition. If Ricks is right and the middlemen really are at fault, then the senator’s proposal may prove ineffective.

Morgan Stanley Upgrades Eli Lilly 

The Street doesn't seem to take her threats very seriously. On Wednesday, Morgan Stanley analyst David Risinger upgraded Eli Lilly to Overweight on expectations for strong margin expansion, revenue growth and pipeline optionality.

"We are bullish on Lilly's diabetes franchise prospects, and we model total diabetes growing from $11 billion in 2019 to $15 billion (including pipeline candidates) in 2023," Risinger said in the upgrade note. Morgan Stanley raised its price target for Eli Lilly from $116 to $150.

Eli Lilly Price Action 

Eli Lilly shares were trading 3.06% higher at $129.17 at the time of publication. 

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Benzinga file photo by Dustin Blitchok. 

Latest Ratings for LLY

DateFirmActionFromTo
Feb 2020MizuhoInitiates Coverage OnNeutral
Dec 2019Argus ResearchMaintainsBuy
Dec 2019JP MorganMaintainsOverweight

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