Health Law Daily Wrap Up, PRESCRIPTION DRUGS—D.N.J.: Montana insulin pricing claims against PBMs survive motion to dismiss in all respects, (Sep 12, 2025)

By Justin Marcus Smith, J.D.

As with the insulin manufacturers, the court found Montana’s allegations of PBM deceptive and unfair practices tacked an enumerated regulatory list.

Pharmacy benefits managers (PBMs) defending a State of Montana action for alleged misconduct in the pricing if insulin drugs failed to justify dismissal of the claims against them, held the federal district court in Newark, New Jersey, in an unpublished opinion. Montana’s claims were timely where the court had already fixed the limitations period for all tracks in this multidistrict litigation. The Montana Unfair Trade Practices and Consumer Protection Act (MCPA) claims satisfied Fed. R. Civ. P. 9(b) pleading requirements. The disputed PBM statements in connection with drug list prices were more than mere puffery. They were facially misleading. The alleged PBM conduct fell squarely under an enumerated regulatory list of deceptive or unfair acts pertinent to Montana’s Unfair Trade Practices and Consumer Protection Act (MCPA). PBM arguments challenging Montana’s parens patriae standing were unavailing. Montana established the requisite underlying wrong for civil conspiracy. Montana also pleaded PBM corporate parents or affiliates were directly involved. The court denied the PBMs’ R. 12(b)(6) motion to dismiss for failure to state a claim in all respects (The State of Montana, ex rel. Knudsen, Attorney General v. Eli Lilly and Co., No. 2:23-cv-04214 (D.N.J. Sept. 5, 2025)).

Background. In this multi-district action about insulin pricing, the State of Montana challenged the allegedly unfair and unconscionable insulin pricing practices of drug manufacturers Eli Lilly and Company, Sanofi-Aventis US LLC, and Novo Nordisk Inc. (collectively, the manufacturers) under the Montana Unfair Trade Practices and Consumer Protection Act (MCPA). Montana also sued PBMs including Evernorth Health, Inc.; Express Scripts, Inc., Express Scripts Administrators, LLC, ESI Mail Pharmacy Service, Inc., Express Scripts Pharmacy, Inc., and Medco Health Solutions, Inc. (collectively, Express Scripts); CVS Health Corporation, CVS Pharmacy, Inc., Caremark Rx, LLC, Caremark PCS Health, LLC, and Caremark, LLC (collectively, CVS Health); and UnitedHealth Group Inc., OptumRx Inc., and OptumInsight, Inc. (collectively, the PBMs). The court recently denied discrete manufacturer and PBM motions to dismiss broadly similar State of Illinois claims asserted under the Illinois Consumer Fraud Act (ICFA) (see Illinois ICFA claim against insulin manufacturers survives motion to dismiss in all respects, Sept. 9, 2025; Illinois insulin pricing claims against PBMs survive motion to dismiss in all respects, Sept. 10, 2025)., and a manufacturer motion to dismiss Montana claims (see Montana MCPA claim against insulin manufacturers survives motion to dismiss in all respects, Sept. 11, 2025).

Montana alleged the manufacturers engaged in an unfair and unconscionable pricing scheme by artificially inflating the list prices for their insulin analog products so they could offer secret rebate payments to certain PBMs for preferred placement on the PBMs’ formularies. Montana contended this caused it and its constituents to overpay for insulin. Montana further alleged the PBMs used their own mail-order and retail pharmacies to induce diabetics to pay artificially inflated insulin prices, resulting in higher PBM profits. As in the Illinois matter, Montana said the alleged pricing scheme caused insulin list prices to become so completely detached from actual prices that the list prices were unlawfully misrepresentative. As in the Illinois matter, Montana asserted an unjust enrichment claim in addition to its MCPA claim. Unlike Illinois, Montana also asserted civil conspiracy claim.

As in the Illinois action, Judicial Panel on Multidistrict Litigation (JPML) transfer and consolidation of Montana’s action with Arkansas, Illinois, Kansas and Mississippi actions in the District of New Jersey delayed disposition of the instant motion to dismiss. The PBMs originally moved to dismiss Montana’s complaint in 2023 for failure to state a claim. After transfer to the District of New Jersey, the parties re-filed their respective briefings in 2024 pursuant to case management order.

Limitations period. The PBMs contended Montana’s claims were all time-barred because Montana should have been aware of the alleged scheme no later than February 2017, more than 5 years before it filed its complaint in September 2022. The parties agreed the applicable Montana limitations periods were two and three years, respectively, for unfair trade practices and unjust enrichment. Montana invoked the discovery rule. Regardless, the court had already ruled across all tracks in this In re Insulin Pricing Litigation that the date of constructive notice for all plaintiffs was January 14, 2021. That was the date the Senate Finance Committee released the results of its bipartisan investigation into the rising price of insulin (see Illinois insulin pricing claims against PBMs survive motion to dismiss in all respects, Sept. 10, 2025). Montana’s claims were timely.

MCPA claims. The court declined to dismiss Montana’s MCPA claims. First, as in the Illinois matter, the court found Montana’s allegations sufficiently satisfied Fed. R. Civ. P. 9(b). The PBMs said Montana engaged in impermissible group pleading, but the state denied that and countered R. 9(b) did not even apply to MCPA claims. The court ruled R. 9(b) did apply, but the state’s allegations sufficiently satisfied the R. 9(b) heightened pleading standard anyway.

Specifically, the first amended complaint (FAC) alleged the PBMs, defined as CVS Caremark, Express Scripts, and Optum RX, profited from the inflated list prices generated by the alleged insulin pricing scheme by retaining a significant percentage of manufacturer payments or rebates; using the inflated list prices to generate profits from in-network pharmacies; and relying on those same inflated list prices to drive up PBM profits through their own pharmacies. The FAC asserted other things about preferred status on standard formulary offerings, “at-issue” drugs like Humulin N., Trulicity, Ozempic, and others, and alleged the state bought those drugs from 2003 to the present. The state said the PBMs alleged misrepresentations about list prices damaged the state by affecting the health of diabetics and increasing healthcare costs. These allegations were sufficient to satisfy R. 9(b), and the court denied the PBMs’ motion to dismiss the MCPA claims on that basis.

The PBMs argued next that Montana MCPA claims failed because (1) the Montana legislature has recognized PBM-negotiated rebates as a “standard industry practice”; (2) the alleged statements were non-actionable on their own; (3) Montana did not sufficiently allege unfair practices; and (4) the PBMs disputed statements were not made in the course of any trade or commerce.

As for what the Montana legislature did or did not recognize, the court observed that it enacted the MCPA to protect the public from unfair or deceptive practices. And again, as in the Illinois matter, the court distinguished that the disputed statements were more than mere puffery. For example, taking the allegations of the complaint as true, the statement that Express scripts saved its clients more than $3 billion was facially misleading and therefore actionable. Other statements also involved specific alleged representations that were neither general nor subjective. Disputed statements were sufficiently specific to be facially actionable misrepresentation under the MCPA. Noerr-Pennington arguments were premature, but it appeared some statements were not made during the course of congressional testimony.

The court also found, more definitively than it did in the Illinois matter, that the manufacturers’ alleged conduct fell within the scope of unlawful acts or practices as listed non-exhaustively in Montana regulations. See Mont. Admin. R. 23.19.101(1). The court was therefore able to more easily dispose of the PBMs’ argument that Montana did not point to any established constitutional, statutory, or regulatory provision to support a claim of an unfair practice.

The FAC alleged the PBMs made knowingly false representations about the characteristics or benefits of insulin products in connection with list prices. The court concluded the PBMs’ alleged actions fell “squarely under the enumerated list recognized as an unlawfully deceptive or unfair act or practice.” The court had reached the same conclusion about the manufacturers when they made essentially the same argument that Montana failed to identify an established unfair practice (see Montana MCPA claim against insulin manufacturers survives motion to dismiss in all respects, Sept. 11, 2025).

As to whether the alleged unfair acts fell outside the scope of the MCPA because they did not occur in the course of commerce, Montana said the PBMs waived that argument by failing to cite any legal authority. Given the emphasis on broad interpretation of the MCPA, the court said it was not convinced, at least for now, that statements the PBMs allegedly made during Congressional testimony did not fall under the MCPA’s definition of “trade” or “commerce.” For all of the above reasons, the court declined to dismiss the MCPA claims.

Unjust enrichment. The court concluded it could proceed to analyze the sufficiency of Montana’s unjust enrichment claim because the PBMs recognized there was no express contract governing this dispute.

The court found the PBMs’ argument about the state’s parens patriae standing unpersuasive. The state had to allege interests beyond the individual interest of the parties. The PBMs cited three non-binding cases. The state responded that none of the cases supported the parens patriae argument. The state distinguished each one. The state further contended the MCPA specifically granted parens patriae statutory power to the Montana Attorney General.

The court noted other 9th Circuit courts have failed to find legal support for framing parens patriae uncertainty as a R. 12(b)(6) issue. Courts generally considered it in connection with standing, or else decided cases on the merits, as in the three cases the PBMs cited. The court accordingly found the PBMs’ arguments unavailing and denied their motion to dismiss Montana’s unjust enrichment claim.

Civil conspiracy. The PBMs contended Montana failed to establish an underlying unlawful act or a plausible meeting of the minds for the civil conspiracy claim. The state naturally disagreed, but the court also disagreed specifically because the state pleaded its other claims with sufficient particularity and concomitantly established the requisite underlying wrong for civil conspiracy.

The court also found the state alleged a sufficient meeting of the minds, as asserted in the FAC, based on a mutual understanding between the manufacturers and the PBMs based on the PBMs’ enormous influence over drug pricing. The state’s theory was that of a quid pro quo: formulary access allowed the manufacturers to raise their list prices and then pay rebates back to the PBMs. The FAC alleged the PBMs routinely communicated through direct interaction with their competitors and the manufacturers at PBM trade associations and industry conferences. Montana pleaded a sufficient claim for civil conspiracy, and accordingly, the court denied the PBMs’ motion to dismiss it.

Corporate affiliates. The PBMs argued the court ought to dismiss corporate parents Evernorth Health, Inc.; CVS Pharmacy, Inc.; OptumInsight; and UnitedHealth Group, Inc. The court agreed with Montana that it brought direct allegations against the corporate parents based on their own conduct. For example, Manufacturer CEOs purportedly met with Evernorth to discuss coordinated efforts related to the at-issue drugs. Montana listed specific examples, among other details. The court therefore declined to dismiss the corporate affiliates from the case.

The case is No. 2:23-cv-04214.

Judge: Martinotti, B.

Attorneys: Anna Schneider, Office of Consumer Protection, and Jennifer Marie Studebaker (Forman Watkins & Krutz, LLP) for The State of Montana. William W. Mercer (Holland & Hart LLP) for Eli Lilly and Co. Andrew Yaphe (Davis Polk & Wardwell LLP) for Novo Nordisk Inc. Elizabeth Worth Lund (Berg Lilly, PC) for Sanofi-Aventis U.S. L.L.C. Chad E. Adams (Browning Kaleczyc Berry & Hoven) for Evernorth Health Inc. F/k/a Express Scripts Holding Co.

Companies: The State of Montana; Eli Lilly and Co.; Novo Nordisk Inc.; Sanofi-Aventis U.S. L.L.C.; Evernorth Health Inc. f/k/a Express Scripts Holding Co.

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