State of Illinois v. Eli Lilly and Company

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

IN RE: INSULIN PRICING LITIGATION Case No. 2:23-md-03080 (BRM)(LDW)

MDL No. 3080

THIS DOCUMENT RELATES TO: OPINION

The State of Illinois, by Kwame Raoul, Illinois

Attorney General v. Eli Lilly and Co, et al.

Case No. 2:23-cv-04242

MARTINOTTI, DISTRICT JUDGE

Before the Court is a Motion to Dismiss filed by Defendants Eli Lilly and Company’s (“Eli

Lilly”), Sanofi-Aventis US LLC’s (“Sanofi”), and Novo Nordisk Inc.’s (“Novo Nordisk”)

(collectively, the “Manufacturer Defendants”) Motion to Dismiss Plaintiff the People of State of

Illinois’s (the “State”) Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).1 (ECF

1 Pursuant to Case Management Order #7—Order Governing Motions to Dismiss in the State

Attorney General Track (“State AG Track”) (ECF No. 141), the State AGs were directed to refile,

on the master docket, all Fed. R. Civ. P. 12 motions and related exhibits, responses, and replies in

these two State AG Track cases: Illinois ex rel. Raoul v. Eli Lilly & Co. et al., No. 2:23-cv-04242

(the “Illinois Action”), and Montana ex rel. Knudsen v. Eli Lilly & Co. et al., No. 2:23-cv-04214

(the “Montana Action”). Consequently, in addition to this Motion, the following motions were

filed in connection with the Illinois Action: (1) co-defendants Evernorth Health, Inc.’s (ECF No.

190-31), CVS Health Corporation’s (ECF No. 190-33) and UnitedHealth Group Incorporated and

OptumInsight, Inc.’s (ECF No. 190-35) motions to dismiss for lack of personal jurisdiction

pursuant to Fed. R. Civ. P. 12(b)(2), and (2) Manufacturer Defendants’ (ECF No. 190-37) and

motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). The following

motions were filed in connection with the Montana Action: (1) motions to dismiss for lack of

personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2) by Evernorth Health, Inc. (ECF No. 190-

14), UnitedHealth Group Incorporated and OptumInsight, Inc. (ECF No. 190-18), and CVS Health

Corporation (ECF No. 190-16); and (2) motions to dismiss for failure to state a claim pursuant to

Fed. R. Civ. P. 12(b)(6) by Manufacturer Defendants (ECF No. 190-1) and PBM Defendants (ECF

No. 190-12). This Opinion only resolves Manufacturer Defendants’ Motion to Dismiss pursuant

Nos. 190-36, 190-37.) The State filed an Opposition to Manufacturer Defendant’s Motion to

Dismiss (ECF No. 190-43), and Manufacturer Defendants filed their Reply (ECF No. 190-49).

Having reviewed the submissions filed in connection with the Motion, and for the reasons set forth

below and for good cause having been shown, Manufacturer Defendants’ Motion to Dismiss is

DENIED.

I. BACKGROUND

A. Factual History

For the purpose of this Motion to dismiss, the Court accepts the factual allegations in the

Complaint as true and draws all inferences in the light most favorable to the plaintiff. See Phillips

v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008); see also Bielanski v. Cnty. of Kane, 550

F.3d 632, 633 (7th Cir. 2008).2

This action arises out of the State’s challenge to the Defendants’3 allegedly unfair and

unconscionable pricing scheme for their insulin medications. (See generally Compl. (Dkt. No.

to Rule 12(b)(6). (ECF No. 190-36.) The other motions filed pursuant to Case Management Order

#7 will be addressed separately.

2 Because the parties originally filed suit in the Northern District of Illinois, and merely refiled

their Motion to Dismiss papers on the master docket (see ECF No. 141), the parties use Seventh

Circuit law in their arguments. Accordingly, the Court analyzes the parties’ arguments pursuant to

Seventh Circuit law. See In re Johnson & Johnson Talcum Powder Prods. Mktg, Sales Pracs., &

Prods. Liab. Litig., 553 F. Supp. 3d 211, 219 (D.N.J. 2021) (“While in the MDL, the action

generally remains subject to the substantive law and choice of law rules to which it would have

been subject in the transferor court.” (quoting In re Delta Dental Antitrust Litig., 509 F. Supp. 3d

1377, 1380 (J.P.M.L. 2020))).

3 “Defendants” refer to Manufacturer Defendants and PBM Defendants. (ECF No. 190-50 ¶ 213.)

Manufacturer Defendants include defendants Eli Lilly, Novo Nordisk, and Sanofi (“Manufacturer

Defendants”). (Id. ¶ 5.) PBM Defendants include Evernorth Health, Inc. (formerly known as

Express Scripts Holding Company), Express Scripts, Inc., Express Scripts Administrators, LLC,

ESI Mail Pharmacy Service, Inc., Express Scripts Pharmacy, Inc., and Medco Health Solutions,

Inc. (together, “Express Scripts”); CVS Health Corporation, CVS Pharmacy, Inc., Caremark Rx,

2:23-cv-04242, ECF No. 1, Ex. A).) The sole plaintiff in this member action is the State of Illinois,

brought by the Honorable Kwame Raoul, Attorney General of the State of Illinois, who is

authorized to bring such actions to protect the health, safety, and welfare of the citizens of Illinois

and to enforce the provisions of the Illinois Consumer Fraud Act (“ICFA”). (Id. ¶¶ 36, 37.) The

State generally categorizes each defendant into one of two groups: Manufacturer Defendants or

PBM Defendants. (ECF 190-50 ¶¶ 5–6.) The State alleges that Manufacturer Defendants, who

“manufacture the vast majority of insulins and other diabetic medications available in Illinois,”

worked “in tandem” to “artificially and willingly raise their list prices” of insulin medications,

“and then pay a significant, yet undisclosed, portion of that price back to the PBM[ Defendants],”

in order to gain formulary preference. (Id. ¶¶ 5, 10, 15, 20.) The State alleges that: “Over the course

of the last fifteen years, and pursuant to the Insulin Pricing Scheme,[4] Manufacturer Defendants

have persistently raised the prices of their respective diabetes drugs in a lockstep manner despite

the fact that the cost to produce these drugs has decreased during that same time period.” (Id. ¶ 13.)

PBM Defendants are pharmacy benefit managers (“PBMs”), or third-party administrators

that negotiate drug costs and payments between health insurance providers and drug

LLC, Caremark PCS Health, LLC, and Caremark, LLC (together, “CVS Caremark”); and

UnitedHealth Group, Inc., OptumRx Inc., and OptumInsight, Inc. (together, OptumRx”) (together,

with Express Scripts and CVS Caremark, “PBM Defendants”). (Id. ¶¶ 6, 76–213.)

4 The State defines “Insulin Pricing Scheme” as “[t]he unfair and deceptive scheme at the root of

[its] Complaint,” wherein Manufacturer Defendants “artificially and willingly raise their list

prices, and then pay a significant, yet undisclosed, portion of that price back to the

PBM[ Defendant]s “to gain formulary access from the PBM Defendants for their diabetic

treatments.” (Dkt. No. 2:23-cv-04242, ECF No. 1, Ex. A ¶¶ 12, 20.) As the State explains:

“PBM[ Defendant]s then grant preferred status on their standard formularies based upon the largest

Manufacturer Payment and the highest inflated list price, which the PBM[ Defendant]s know to

be artificially inflated and which the PBM[ Defendants] insist that their health plan payor clients

use as the basis for the price they pay for the at-issue drugs.” (Id. ¶ 22.)

manufacturers.5 (Id. ¶¶ 290–92.) Drug manufacturers set the list price for their prescription drugs,

including insulin, which is known as the Wholesale Acquisition Cost (“WAC”). (Id. ¶¶ 281–83.)

WAC is defined as “the manufacturer’s list price for the drug or biological to wholesalers or direct

purchasers in the United States, not including prompt pay or other discounts, rebates or reductions

in price[.]” 42 U.S.C. § 1395w-3a(c)(6)(B). The WAC serves as the reference point from which

PBMs and drug manufacturers negotiate rebates. (Id. ¶¶ 294–300.) The WAC differs from, but is

related to, the Average Wholesale Price (“AWP”), which refers to the “average price that

wholesalers charge[] to providers like doctors and pharmacies.”6 In re Pharm. Indus. Average

Wholesale Price Litig., 252 F.R.D. 83, 87 (D. Mass. 2008). Pharmaceutical manufacturers self-

report the WAC to publishing compendiums such as First Databank, Redbook, and others. (Id. ¶

283.)

Branded prescription drugs in the United States move through a complex distribution chain

where pharmaceutical manufacturers typically sell their products to wholesalers at a negotiated

price. (Id. ¶¶ 279-81.) Wholesalers then supply the medications to various providers such as

pharmacies, hospitals, and clinics, who then distribute the pharmaceuticals to patients with

prescriptions. (Id. ¶¶ 281–84.) Uninsured consumers ultimately pay the full price for medication,

whereas insured consumers pay for a portion of a drug’s price through out-of-pocket costs such as

deductibles, copayments, or coinsurance. (Id. ¶¶ 286–87.) Upstream payments to the

5 More specifically, PBM Defendants “develop drug formularies, process claims, create a network

of retail pharmacies, [and] set [drug] prices in coordination with [m]anufacturers[.]” (ECF No.

190-50 ¶ 291.)

6 “Typically, AWP was a twenty percent markup over WAC.” In re Pharm. Indus. Average

Wholesale Price Litig., 252 F.R.D. at 87. “[M]ost manufacturers continued to report AWPs

consistent with the historic 20 to 25 percent markup, even though they knew that wholesalers were

not actually charging these prices to providers and thus that the AWP relied on by Medicare and

the [third-party payors] was not a true average price charged by wholesalers.” Id.

manufacturers include rebates, administrative fees, inflation fees, pharmacy supplemental

discounts, volume discounts, price or margin guarantees, price concessions, indirect purchase fees

and rebates. (Id. ¶¶ 20–21.)

The industry is unique because the way patients pay for prescription drugs vastly differs

from the way wholesalers, PBMs, and health insurers pay for those same products. (Id. ¶ 281.) The

prices for the products in the distribution chain differ for each participating entity—“different

actors pay different prices set by different entities for the same drugs.” (Id.) Manufacturer

Defendants do not sell medications directly to the consumers and therefore do not set the consumer

price for any particular medication; however, they do set the list price (WAC), and consumers

usually pay for prescription drugs based on the manufacturer’s list price. (Id. ¶ 282.)

Health insurers cover all or a portion of their insured customers’ medications costs, submit

payments to pharmacies on behalf of their members, and receive a reimbursement amount

depending on whether and where the medication falls on their PBMs’ formularies—the ranked list

of approved drugs an insurance plan will cover. (Id. ¶ 7.) When insured patients purchase a

prescription medication from a pharmacy, both the patient and their insurer pay a portion of the

purchase price based on the price negotiated by the PBMs. (Id. ¶¶ 296–300.) Manufacturer

Defendants understand that the PBM’s formularies drive drug utilization: “if Manufacturer[

Defendant]s want their drugs to be prescribed and paid for they must obtain preferrable formulary

position on the PBM Defendants’ formularies.” (Id. ¶ 10.) Drug manufacturers may offer rebates

to an insurer’s PBM to gain formulary access for their prescription drugs. (Id. ¶¶ 21 n.3, 23, 344.)

PBMs determine whether to pass along rebates to the health insurer, who in turn decide whether

to share these cost-saving measures with consumers. (Id. ¶¶ 24–26.)

Here, the State alleges certain Manufacturer Defendants engaged in an unfair and

unconscionable pricing scheme by artificially inflating the list prices for their insulin analog

products so they could offer rebates as a “secret Manufacturer Payment[]” to PBM Defendants in

exchange for preferred formulary placement, which the State contends caused it and its

constituents to overpay for insulin products. (Id. ¶¶ 376–98.) The State maintains these

Manufacturer Defendants artificially inflated the list prices for their insulin products to compete

for preferred positions on the PBMs’ drug formularies by offering increased rebates to PBMs. (Id.

¶¶ 399–404.) The State further alleges that PBMs use their own mail-order and retail pharmacies

to get customers to pay these artificially inflated prices for insulin products, resulting in higher

profits for PBMs. (Id. ¶¶ 405–09.) The State asserts that “Illinois diabetics and payors[7] relied on

the artificially inflated list prices by purchasing diabetic medications at such prices.” (Id. ¶ 412.)

The State attributes this pricing scheme to Manufacturer Defendants’ “list prices for the at-issue

drugs [becoming] detached completely from actual prices,” resulting in the “list prices bec[oming]

increasingly misrepresentative to the point of becoming unlawful.” (Id. ¶ 415.)

According to the State, Manufacturer Defendants allegedly engaged in an unfair and

unconscionable scheme of competing for formulary access of the largest PBMs8 by unjustifiably

raising the list prices for the insulin analog products so they could offer the middlemen-PBMs

bloated rebates—so-called “spreads” between list prices and net prices. (Id. ¶¶ 401–03.) “Net

Prices” refers to the prices PBMs Defendants negotiate and pay for Manufacturer Defendants’

products after subtracting from the list prices the rebate amounts Manufacturer Defendants issued

7 The Court uses “payor” and “payer” interchangeably, as the parties’ briefs, submissions, and

proposed orders use both terms.

8 The State asserts “PBM Defendants have taken over the market in the past decade—controlling

over 80% of the market and managing pharmacy benefits for more than 270 million Americans.”

(ECF No. 190-50 ¶ 310.)

to them to gain formulary placement. (Id. ¶¶ 340, 345.) Net prices may fluctuate as they necessarily

depend on PBM Defendants’ negotiations with a particular manufacturer. (Id. ¶¶ 299, 345 n.10.)

The State contends Illinois diabetics and payors, including the State, suffered monetary losses from

overpaying for their insulin products because of PBM Defendants’ formularies are at the center of

the allegedly unfair and unconscionable insulin pricing scheme. (Id. ¶¶ 335, 340.)

The State claims PBM rebates are part of an industry scheme to inflate the price of insulin

products, whereby PBM Defendants use their leverage to set formularies and increase profits. (Id.

¶¶ 313, 332.) PBM Defendants allegedly: (1) negotiate prices payors pay for prescription drugs,

(2) separately negotiate a different (and often lower) price for in-network pharmacies, (3) set the

amount in fees the pharmacy pays back to the PBM, (4) set the price paid for each drug sold

through mail-order pharmacies, and (5) negotiate the amount manufacturers pay back to the PBMs.

(Id. ¶ 298.) If a drug is excluded from the formularies, consumers may be required to pay a larger

share of the cost, or even the full cost; accordingly, using formularies gives PBM Defendants wide

latitude to extract rebates from manufacturers. (Id. ¶¶ 311, 378–80.) The State argues

manufacturers offer PBM Defendants higher spreads in exchange for preferred positions on their

drug formularies, rather than lower their list prices for their prescription drugs. (Id. ¶¶ 399–401.)

The State contends “[t]hese relationships allow PBM[ Defendants] to exert tremendous influence

over what drugs are available throughout Illinois and at what prices.” (Id. ¶ 297.) Manufacturer

Defendants, “working in coordination with the PBM[ Defendants],” “artificially inflated their list

prices for the at-issue drugs exponentially, while largely maintaining their net prices by paying

larger and larger amounts of Manufacturer Payments back to the PBM[ Defendants],” resulting in

the State and diabetic Illinois residents being “overcharged millions of dollars a year,” which

“caused a substantial injury to Illinois diabetics and the State.” (Id. ¶¶ 29, 340, 490.)

The State brings claims against Manufacturer Defendants for violation of the ICFA, 815

ILCS 505/1, et seq. (Count One) and for unjust enrichment (Count Two). (Dkt. No. 2:23-cv-04242,

ECF No. 1, Ex. A.)9

B. Procedural History

On December 2, 2022, the State, through Attorney General Kwame Raoul, filed a

Complaint in the Circuit Court of Cook County, Illinois. (Dkt. No. 2:23-cv-04242, ECF No. 1, Ex.

A.) The matter was removed to the United States District Court for the Northern District of Illinois,

Eastern Division, on January 11, 2023. (Dkt. No. 2:23-cv-04242, ECF No. 1.) A supplemental

notice of removal was also filed on January 11, 2023. (Dkt. No. 2:23-cv-04242, ECF No. 7.) On

March 6, 2023, Manufacturer Defendants filed their Motion to Dismiss for failure to state a claim.

(Dkt. No. 2:23-cv-04242, ECF Nos. 59, 60.) The State filed its Opposition on April 6, 2023. (Dkt.

No. 2:23-cv-04242, ECF No. 86.) Manufacturer Defendants filed their Reply in support of their

Motion on May 4, 2023. (Dkt. No. 2:23-cv-04242, ECF No. 104.)10

On May 9, 2023, prior to the District Court for the Northern District of Illinois deciding

the pending Motion to Dismiss, the State, along with movants the States of Arkansas, Kansas,

Mississippi, and Montana, filed their motion for transfer of actions pursuant to 28 U.S.C. § 1407

for coordinated or consolidated pretrial proceedings before the United States Judicial Panel on

9 Concerning Count One, the State alleges Manufacturer “Defendants have committed unfair and

deceptive acts and practices in the conduct of trade or commerce within Illinois with the intent that

Illinois diabetics rely on them as prohibited by the [ICFA]”; and, specifically, Manufacturer

“Defendants[‘] conduct in furtherance of the Insulin Pricing Scheme also violates Section 2 of the

[ICFA] because it constitutes deceptive trade practices under the ‘Uniform Deceptive Trade

Practices Act’ (815 ILCS 510/2) (“the IUDTPA”). (Dkt. No. 2:23-cv-04242, ECF No. 1, Ex. A ¶¶

486, 489.)

10 At the direction of the Court, pursuant to Case Management Order #7, the motion and briefs

were refiled on the master docket at ECF Nos. 190-36, 190-37, 190-43, 190-49. See supra n.1.

The Court will use the citations on the master docket unless otherwise indicated.

Multidistrict Litigation (“JPML”). (Dkt. No. 2:23-cv-04242, ECF No. 105.) On August 7, 2023,

the JPML issued a Transfer Order, transferring this matter to this Court in the District of New

Jersey. (Dkt. No. 2:23-cv-04242, ECF No. 110.) Pursuant to Case Management Order No. 7 (ECF

No. 141), the parties re-filed their respective briefings on May 31, 2024 (ECF Nos. 190-36–37,

190-43, 190-49).

II. LEGAL STANDARD

“To survive a motion to dismiss under Rule 12(b)(6), the complaint must provide enough

factual information to state a claim to relief that is plausible on its face and raise a right to relief

above the speculative level.” Haywood v. Massage Envy Franchising, LLC, 887 F.3d 329, 333

(7th Cir. 2018) (quoting Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir.

2014)); see also Fed. R. Civ. P. 8(a)(2) (requiring a complaint to contain a “short and plain

statement of the claim showing that the pleader is entitled to relief”). A court evaluating a Rule

12(b)(6) motion to dismiss must “construe the complaint in the light most favorable to the plaintiff,

accept all well-pleaded facts as true, and draw all reasonable inferences in the plaintiff’s favor.”

Lax v. Mayorkas, 20 F.4th 1178, 1181 (7th Cir. 2021). However, the court “need not accept as true

statements of law or unsupported conclusory factual allegations.” Id. (quoting Bilek v. Fed. Ins.

Co., 8 F.4th 581, 586 (7th Cir. 2021)). “While detailed factual allegations are not necessary to

survive a motion to dismiss, [the standard] does require ‘more than mere labels and conclusions

or a formulaic recitation of the elements of a cause of action to be considered adequate.’” Sevugan

v. Direct Energy Servs., LLC, 931 F.3d 610, 614 (7th Cir. 2019) (quoting Bell v. City of Chicago,

835 F.3d 736, 738 (7th Cir. 2016)).

III. DECISION

A. ICFA Safe Harbor Provision

Manufacturer Defendants argue the ICFA contains an express safe harbor, which bars the

State’s consumer fraud claim. (ECF No. 190-37 at 8–13.) Manufacturer Defendants assert that

their reporting of the WAC falls under the safe harbor, which protects “actions or transactions

specifically authorized by laws administered by any regulatory body or officer acting under

statutory authority of this State or the United States.” (Id. at 8–9.) Manufacturer Defendants argue

both that: (1) they accurately “report[ed] their list prices [a]s specifically authorized—and

expressly prescribed—by federal law,” and (2) manufacturer rebates are “authorized” by federal

and Illinois law, as “the Illinois Legislature chose an entirely different policy solution to address

the State’s stated concerns about the affordability of Manufacturer[ Defendant]s’ diabetes

medications.” (Id. at 9–11.)

The State counters that Manufacturer Defendants cannot rely on the Medicare WAC

definition as a safe harbor because it is not a disclosure statute. (ECF No. 190-43 at 17–18.)

Moreover, the State contends that Manufacturer Defendants’ safe harbor argument “ignore[s] the

principle that where a defendants engages in ‘active and direct’ conduct—such as here where the

Manufacturer[ Defendant]s affirmatively reported and published false list prices—the defendant

must demonstrate that the conduct was ‘affirmatively and specifically authorized’ by the ‘relevant’

regulatory body.” (Id. at 18 (quoting Toulon v. Cont’l Cas. Co., Civ A. No. 15-00138, 2015 WL

4932255, at *5 (N.D. Ill. Aug. 19, 2015), aff’d, 877 F.3d 725 (7th Cir. 2017)); see also id. at 19

(“In essence, the Manufacturer[ Defendant]s argue that, with respect to pricing, they are permitted

to do whatever the law does not prohibit them from doing.”).) Finally, the State posits that “the

Medicare WAC methodology is not relevant to actions which assert the Insulin Pricing Scheme.”

(Id. at 20–21.)

“An action for violation of the ICFA cannot be maintained for ‘[a]ctions or transactions

specifically authorized by laws administrated by any regulatory body.’” Raya v. Mead Johnson

Nutrition Co., 758 F. Supp. 3d 819, 831 (N.D. Ill. 2024) (quoting 815 ILCS 505/10b(1)). “To

trigger the safe harbor, the regulatory body must be operating within its statutory authority and the

challenged conduct must be ‘specifically authorized by laws administered by’ that regulatory

body.” Vanzant v. Hill’s Pet Nutrition, Inc., 934 F.3d 730, 736 (7th Cir. 2019); see Bober v. Glaxo

Wellcome PLC, 246 F.3d 934, 941 (7th Cir. 2001) (“If the parties are doing something specifically

authorized by federal law, section 10b(1) will protect them from liability under the CFA. On the

other hand, the CFA exemption is not available for statements that manage to be in technical

compliance with federal regulations, but which are so misleading or deceptive in context that

federal law itself might not regard them as adequate.”). “Formal rulemaking is not necessary;

informal regulatory activity is enough.” Id. at 736–37 (citation and internal quotation marks

omitted).

42 U.S.C. § 1395w-3a(c)(6)(B) defines WAC as “the manufacturer’s list price for the drug

or biological to wholesalers or direct purchasers in the United States, not including prompt pay or

other discounts, rebates or reductions in price.” As this Court has remarked before, “federal

regulations do not specify how to calculate list prices; list prices are determined by the

manufacturer.” In re Insulin Pricing Litig., Civ. A. No. 23-03080, 2024 WL 5252471, at *11

(D.N.J. Dec. 31, 2024); see Minnesota by Ellison v. Sanofi-Aventis U.S. LLC, Civ. A. No. 18-

14999, 2020 WL 2394155, at *2 (D.N.J. Mar. 31, 2020) (“The approximate price at which a drug

manufacturer sells a drug to a wholesale drug distributor is known as the [WAC]. This price is

generally set by the manufacturer[.]”); see also MSP Recovery Claims, Series LLC v. Abbott

Lab’ys, Civ. A. No. 19-21607, 2021 WL 2177548, at *3 (D.N.J. May 28, 2021) (“The WAC is

established by the manufacturer, generally does not include rebates, and is published in compendia

compiled by independent third parties.” (citations omitted)). As such, this Court cannot find that

Manufacturer Defendants were acting as “specifically authorized” when calculating their list price,

which is what the State claims Manufacturer Defendants artificially inflated as part of the Insulin

Pricing Scheme. (See ECF No 190-50 ¶ 20 (“Manufacturer Defendants artificially and willingly

raise their list prices, and then pay a significant, yet undisclosed, portion of that price back to the

PBMs.); id. ¶ 21 (“The list prices for the at-issue drugs have become so untethered from the net

prices realized by the Manufacturer[ Defendant]s as to constitute a false price.”); id. ¶ 27 (“Because

the price paid by nearly every diabetic and payor is based upon the artificially inflated list prices

generated by Defendants’ scheme, the insulin Pricing Scheme directly harms every diabetic and

payor in Illinois who purchase these life-sustaining drugs.”); id. ¶ 270 (“The timing of the list price

increases reveal that each Manufacturer Defendant has not only dramatically increased prices for

the at-issue diabetes treatment, they have done so in perfect lockstep.”); id. ¶ 338 (“[T]he drug

makers were aware that higher list prices meant higher revenue for PBMs.”).

Moreover, this Court has rejected arguments similar to those made by Manufacturer

Defendants in this litigation. In In re Insulin Pricing Litigation, this Court found that plaintiffs

adequately pled mail and wire fraud where plaintiffs “allege[d] that Defendants committed fraud

by ‘[holding] out their artificially increased AWPs as benchmark prices, fully aware that AWP is

a pricing index intended to approximate the true cost of a drug.’” Civ. A. No. 23-3080, 2019 WL

643709, at *5 (D.N.J. Feb. 15, 2019) (second alteration in original) (citation omitted). This Court

noted “Plaintiffs further contend that the AWP had no reasonable relationship to the actual price

of the drugs, and that Defendants knew of this fraud.” Id; see also Minnesota by Ellison, 2020 WL

2394155, at *14 (rejecting defendants’ argument pointing to “the definition of WAC in the Federal

Medicaid program . . . and argu[ing] it dispelled the deceptiveness of [defendants] non-Medicaid

pricing misrepresentations” and denying defendants’ motion to dismiss plaintiff’s consumer

protection claims) (second alteration in original) (internal citations and quotation marks omitted).

The court in City of Miami v. Eli Lilly & Co. also dealt with an analogous argument, where

“[t]he [d]efendants argue[d] that federal law prohibit[ed] including rebates in a list price for

pharmaceutical products.” Civ. A. No. 21-22636, 2022 WL 198028, at *8 n.8 (S.D. Fla. Jan. 21,

2022). The court rejected the defendants’ argument, holding that the “Manufacturer Defendants

cannot use Section 1395w-3a(c)(6)(B) to avoid the City’s allegations of wrongdoing,” where “the

City’s claim is that the Manufacturer Defendants inflated the price of insulin and other medications

through the use of fraudulent rebates that served as kickbacks to the PBM Defendants.” Id.; see

also In re Pharm. Indus. Average Wholesale Price Litig., 582 F.3d 156, 199 (1st Cir. 2009)

(affirming that the district court’s factual findings were “justified,” and “[t]he evidence supported

a finding that AstraZeneca unfairly and deceptively published an artificial [AWP] for Zoladex that

gave no indication of the actual, substantial discounts and rebates it was providing in the market.

This conduct by [AstraZeneca] was contrary to Congress’s intent in designing the Medicare

program, and it clearly transgressed the expectations of the marketplace.” (emphasis added)).

Indeed, this Court does not find that Manufacturer Defendants were acting as “specifically

authorized” under the Medicaid statute. See Vanzant, 934 F.3d at 736. Congress has not specified

how pharmaceutical manufacturers should set the list price or WAC, and thus, the Manufacturer

Defendants cannot say that their reporting of the WAC was specifically authorized by Congress.

See In re Insulin Pricing Litig., 2024 WL 5252471, at *11. Moreover, “[c]onduct is not specifically

authorized merely because it has not been specifically prohibited.” Price v. Philip Morris, Inc.,

848 N.E.2d 1, 36 (Ill. 2005)); cf. Fed. Ins. Co. v. Binney & Smith, Inc., 913 N.E.2d 43, 51–52 (Ill.

App. Ct. 2009) (“[M]ere compliance with the rules applicable to labeling and advertising is not

sufficient to trigger the exemption created by section 10b(1).”) (quoting Price, 848 N.E.2d at 36);

Bojko v. Pierre Fabre USA Inc., Civ. A. No. 22-06728, 2023 WL 4204663, at *6 (N.D. Ill. June

27, 2023) (“The fact that federal law allows for the omission of benzene from the ingredients list

does not ‘implicitly provide[] specific authorization not to make any additional disclosures.”)

(alteration in original) (quoting Price v. Philip Morris, Inc., 848 N.E.2d 1, 43 (Ill. 2005)).

Manufacturer Defendants’ actions do not fall under the ICFA’s safe harbor provision, and thus,

Manufacturer Defendants’ Motion to dismiss the State’s ICFA claims pursuant to its safe harbor

provision is DENIED.

B. Illinois’s Consumer Fraud Claim

1. Deceptive

Manufacturer Defendants argue this Court should dismiss the State’s ICFA claims because

the State has failed to allege that Manufacturer Defendants’ list prices are deceptive. (ECF No.

190-37 at 13–18.) Manufacturer Defendants contend their list prices cannot be deceptive for four

reasons: (1) the State “never alleges how a reasonable consumer plausibly could be misled by

Manufacturer[ Defendant]s’ list prices”; (2) it would be “contrary to settled Illinois law” to require

Manufacturer Defendants to disclose more information regarding its list prices and profits; (3) the

ICFA “does not require Manufacturer[ Defendant]s to say more about the relationship between

rebates and list price because liability under [the ICFA] exists only when a defendant conceals a

material fact of which is has ‘almost exclusive knowledge’”; and (4) the State’s deception claim

“lacks the heightened specificity required by Rule 9(b).” (Id. (citation omitted).)

The State responds that it has sufficiently pled the elements of an ICFA deception claim,

and that “[t]he only remaining question, which is an issue of fact for a jury, is whether the

Manufacturer[ Defendant]s’ list prices are deceptive.” (ECF No. 190-43 at 6–9.) The State further

retorts that the allegations of its Complaint “far surpass Rule 9(b)’s particularity standard.” (Id. at

5.)

The ICFA prohibits:

Unfair methods of competition and unfair or deceptive acts or

practices, including . . . deception, fraud, false pretense, false

promise, misrepresentation or concealment, suppression or

omission of any material fact, with intent that others rely upon the

concealment, suppression or omission of such material fact . . . in

the conduct of any trade or commerce[.]”

815 ILCS 505/2. To state a claim for deception under the ICFA, a plaintiff must allege: “(1) that

the defendant engaged in a deceptive or unfair practice; (2) with the intent that the plaintiff (or

others) rely on the deception; (3) that the act occurred in the course of trade or commerce; and (4)

that the deception caused actual damages.” Kahn v. Walmart Inc., 107 F.4th 585, 598 (7th Cir.

2024). Under the ICFA, “a statement is deceptive if it creates a likelihood of deception or has the

capacity to deceive.” Bober, 246 F.3d at 938. To determine if deception has occurred under the

ICFA, courts use a reasonable consumer standard, which requires a probability “that a significant

portion of the general consuming public or of targeted consumers, acting reasonably in the

circumstances, could be misled.” Bell v. Publix Super Markets, Inc., 982 F.3d 468, 474–75 (7th

Cir. 2020); Beardsall v. CVS Pharmacy, Inc., 953 F.3d 969, 972 (7th Cir. 2020). Courts must

consider the alleged false statements or omissions in the context of all information available to the

plaintiff. Benson v. Fannie May Confections Brands, Inc., 944 F.3d 639, 646 (7th Cir. 2019).

“Deceptive trade practice claims are generally not suitable for a motion to dismiss unless the

challenged statement was not misleading as a matter of law.” Bruno v. Am. Textile Co., Inc., Civ.

A. No. 22-02937, 2023 WL 6976826, at *3 (N.D. Ill. Oct. 23, 2023) (citing Ibarrola v. Kind, LLC,

83 F. Supp. 3d 751, 756 (N.D. Ill. 2015)).

For deceptive conduct claims, a plaintiff must meet Federal Rule of Civil Procedure 9(b)’s

heightened standard. Vanzant, 934 F.3d at 738; Pirelli Armstrong Tire Corp. Retiree Med. Benefits

Tr. v. Walgreen Co., 631 F.3d 436, 441 (7th Cir. 2011). To establish a claim under Rule 9(b), the

plaintiff is required “to state ‘the identity of the person making the misrepresentation, the time,

place, and content of the misrepresentation, and the method by which the misrepresentation was

communicated to the plaintiff.’” Uni*Quality, Inc. v. Infotronx, Inc., 974 F.2d 918, 923 (7th Cir.

1992) (quoting Bankers Tr. Co. v. Old Republic Ins. Co., 959 F.2d 677, 683 (7th Cir. 1992)). Put

differently, the complaint “must describe the who, what, when, where, and how of the fraud.”

Pirelli, 631 F.3d at 441–42 (internal quotations marks and citation omitted).

The State alleges Manufacturer Defendants engaged in deceptive trade practices by

“report[ing] and publish[ing] artificially inflated prices for each at-issue drug and in doing so

represent[ing] that the reported prices were reasonably related to the net prices for the at-issue

drugs.” (ECF No. 190-50 ¶ 489.) Further, the “Manufacturer Defendants caused the artificially

inflated list prices . . . to be published throughout Illinois through publishing compendia and in

various promotional and marketing materials distributed by entities downstream in the drug supply

chain,” (id. ¶ 416), “such as First DataBank, Redbook, and others who then publish that price” (id.

¶ 283). To be sure, the Complaint explains how the Insulin Pricing Scheme allegedly operated:

Specifically, the Insulin Pricing Scheme works as follows: first, to

gain formulary access from the PBM Defendants for their diabetic

treatments, Manufacturer Defendants artificially and willingly raise

their list prices, and then pay a significant, yet undisclosed, portion

of that price back to the PBMs. These Manufacturer Payments . . .

are provided under a variety of labels, yet, however they are

described, these Manufacturer Payments, along with the inflated list

prices, are quid pro quo for formulary inclusion on the PBMs’

standard offerings.

(Id. ¶ 20.) The State alleges that these actions took place from 2003 through the present. (Id. ¶¶

35, 261.) The Complaint goes as far as to identify the dates and rates of “key at-issue lockstep

price increases” that the State alleges immediately followed private meetings between

Manufacturer Defendants and PBM Defendants. (Id. ¶¶ 328–29.) All in all, the State has alleged

with sufficient particularity the “who” (Manufacturer Defendants), “what” (Insulin Pricing

Scheme), “when” (2003 to the present), “where” (publications such as First DataBank, Redbook,

etc.), and “how” (artificially inflated prices and false and misleading statements regarding the

artificially inflated prices) of the alleged deception. The Court concludes the State satisfied Rule

9(b)’s heightened pleading standard.

Further, the State has plausibly pled that Manufacturer Defendants’ involvement in the

Insulin Pricing Scheme is a deceptive act or practice within the meaning of the ICFA. “Courts

considering whether consumers are ‘acting reasonably’ must ‘take into account all the information

available to consumers and the context in which that information is provided and used.’” Kahn,

107 F.4th at 595 (quoting Publix, 982 F.3d at 275, 477). There is nothing implausible about the

State’s allegations that Manufacturer Defendants concealed their artificially inflated list prices “to

gain formulary access from the PBM Defendants,” causing the State and others to unknowingly

“pay a substantial part of their diabetic drug costs based on the false list prices generated by the

Insulin Pricing Scheme.” (ECF No. 190-50 ¶¶ 282, 285–88, 446, 452.)

Manufacturer Defendants contend “[n]o consumer could have plausibly been misled by

Manufacturer[ Defendant]s’ list prices, which Manufacturer[ Defendant]s said were the list prices,

and that Manufacturer[ Defendant]s reported in a way that complied with the federal government’s

definition of list price.” (ECF No. 190-37 at 14.) However, the State particularly alleges that

Manufacturer Defendants worked with PBM Defendants to “create[] a ‘hide-the-ball’ system

where the consideration exchanged between them (and not shared with payors) is labeled and

relabeled.”11 (ECF No. 190-50 ¶ 380.) See Jamison v. Summer Infant (USA), Inc., 778 F. Supp. 2d

900, 911 (N.D. Ill. 2011) (“[T]he omission or concealment of material facts can constitute the

‘deceptive act or practice’ that causes ‘actual damage to the plaintiff.’” (quoting 815 ILCS 505/2));

see id. (“[T]he ICFA applies to the omission of any material information in the conduct of trade

or commerce[.]” (internal quotation marks omitted)). At this stage, the State has sufficiently

pleaded that Manufacturer Defendants’ statements regarding their list prices are false or

misleading. See Forth v. Walgreen Co., Civ. A. No. 17-02246, 2018 WL 1235015, at *6 (N.D. Ill.

Mar. 9, 2018) (rejecting defendant’s argument that “reliance on any misrepresentations would have

been unreasonable, because information about the [prescription] prices was publicly available”);

Kirkbride v. Kroger Co., Civ. A. No. 21-00022, 2022 WL 2703960, at *4 (S.D. Oh. July 12, 2022)

(“Plaintiffs’ allegation that ‘Kroger made misrepresentations to Plaintiffs and class members each

time it charged them for copays that were calculated based on its inflated [usual and customary]

prices is enough to ground a plausible theory of fraud by direct misrepresentation.”).

Moreover, whether the State’s reliance on Manufacturer Defendants’ reported list prices

“is a fact-intensive question inappropriate for resolution at this stage.” BCBSM, Inc. v. Walgreen

Co., 512 F. Supp. 3d 837, 852 (N.D. Ill. 2021) (denying defendant’s motion to dismiss wherein

defendant argued plaintiff’s reliance on their reported list prices was not reasonable because

11 The Complaint further elaborates that “[a]s more payors moved to contracts that require PBMs

to pass a majority of the manufacturer ‘rebates’ through to the payor, PBMs have begun renaming

the Manufacturer Payments in order to keep a larger portion of this money. Payments once known

as ‘rebates’ are now called administrative fees, volume discounts, service fees, inflation fees or

other industry jargon terms designed to obfuscate and distract from the substantial sums being

secretly exchanged.” (ECF No. 190-50 ¶ 380 (emphasis added).)

plaintiff knew about an existing discount program and its prices and because “years of related

litigation in their industry should have made [p]laintiffs aware of the alleged scheme”); see Forth,

2018 WL 1235015, at *6 (“[R]esolution of such a fact-intensive inquiry is not appropriate at the

motion-to-dismiss stage.”); see Sloan v. Anker Innovations Ltd., 711 F. Supp. 3d 946, 963 (N.D.

Ill. 2024) (declining to grant defendants’ motion to dismiss even though “[d]efendants may

ultimately prove that the statements at issue are true, but at this stage in the case, [p]laintiffs have

sufficiently alleged that the . . . statements may have misled a reasonable consumer”). Thus, the

Moving Defendants’ Motion to dismiss the State’s ICFA claim based on deception is DENIED.

2. Unfair

Manufacturer Defendants contend the State failed to adequately allege any unfair conduct

for three reasons: (1) the State failed to allege Manufacturer Defendants violated public policy; (2)

the State has not sufficiently pleaded that Manufacturer Defendants’ prices are “immoral,

unethical, oppressive, or unscrupulous”; and (3) the State fails to allege a “substantial injury” to

consumers. (ECF No. 190-37 at 18–22.) The State responds that it has sufficiently alleged unfair

conduct pursuant to Illinois standards. (ECF No. 190-43 at 9–13.)

“A plaintiff may allege that conduct is unfair under ICFA without alleging that the conduct

is deceptive.” Siegel v. Shell Oil Co., 612 F.3d 932, 935 (7th Cir. 2010). “To determine whether a

practice is unfair, Illinois courts consider three factors: whether it ‘offends public policy’; is

‘immoral, unethical, oppressive, or unscrupulous’; or ‘causes substantial injury to consumers.’”

Vanzant, 934 F.3d at 738–39 (quoting Batson v. Live Nation Entm’t, Inc., 746 F.3d 827, 830 (7th

Cir. 2014)). “A court may find unfairness even if the claim does not satisfy all three criteria.”

Siegel, 612 F.3d at 935. “A practice may be unfair because of the degree to which it meets one of

the criteria or because to a lesser extent it meets all three.” Robinson v. Toyota Motor Credit Corp.,

775 N.E.2d 951, 961 (Ill. 2002). “[W]hether a practice is unfair depends on a case-by-case

analysis.” Siegel, 612 F.3d at 935. “[A]n unfair-practices claim has no fraud element and therefore

is not subject to a heightened pleading standard.” Vanzant, 934 F.3d at 739.

a. Public Policy

Manufacturer Defendants argue the State failed to allege that they violated public policy

because the State has not sufficiently alleged which public policy Manufacturer Defendants

violated, which is a particularly high bar for unfairness claims “predicated on supposedly high

prices.” (ECF No. 190-37 at 18–20.) Manufacturer Defendants contend the State’s reference to Ill.

Admin. Code tit. 14 § 470.250 should be discredited, as the section states it is an unfair or deceptive

act to claim actual savings from a list price, which Manufacturer Defendants maintain they did not

“claim any fake ‘savings’ from their list prices.” (Id. at 19.)

To state a claim under the ICFA, “the plaintiffs must describe how the [unfair practice] is

oppressive or violates public policy.” Rockford Mem’l Hosp. v. Havrilesko, 858 N.E.2d 56, 65 (Ill.

2006). “A practice offends public policy if it violates a standard of conduct embodied in a statute,

the common law, or otherwise, i.e., if ‘it is within at least the penumbra of some common-law,

statutory or other established concept of unfairness.’” Leszanczuk v. Carrington Mortg. Servs.,

LLC, 21 F.4th 933, 940–41 (7th Cir. 2021) (Elder v. Coronet Ins. Co., 558 N.E.2d 1312, 1316

(1990)). “[D]efendant’s conduct must violate public policy, be so oppressive as to leave the

consumer with little alternative except to submit to it, and injure the consumer.” Robinson, 775

N.E.2d at 961 (citing Saunders v. Mich. Ave. Nat’l Bank, 662 N.E.2d 602, 608 (Ill. App. Ct.

1996)).

“Charging unconscionably high prices is not, by itself, unfair within the meaning of the

[ICFA].” Rockford Mem’l Hosp., 858 N.E.2d at 65 “Where it is alleged that the failure to disclose

prices is unfair, the plaintiffs must describe how the lack of disclosure is oppressive or violates

public policy. Without such a description, the complaint fails to state a cause of action.” Id. (citing

Robinson, 775 N.E.2d at 951; Saunders, 662 N.E.2d at 602).

Here, the State alleges that Manufacturer Defendants’ participation in the Insulin Pricing

Scheme violates public policy in multiple ways, including: (1) “[i]t is a public policy in Illinois

that diabetics and their families should have access to and not be priced out of the at-issue life-

saving medications,” and (2) “it is also against Illinois public policy to claim an actual savings

from a list price or term of similar meaning unless the ‘list price’ is the price at which the product

is offered by a reasonable number of sellers.” (ECF No. 190-50 ¶ 491 (citing ILL. ADMIN. CODE

tit. 14, § 470.250).) The State argues the January 2021 Illinois General Assembly’s Act caps out-

of-pocket insulin costs for insured Illinois consumers “confirms that public policy supports

ensuring that consumers must have affordable access to insulin.” (ECF No. 190-43 at 11 (citing

ECF No. 190-50 ¶ 354).) The State further contends the FTC Act bars fictitious pricing as a

“deceptive practice.” (Id. (quoting Spiegel, Inc. v. F.T.C., 411 F.2d 481, 483 (7th Cir. 1969).)

Manufacturer Defendants respond that the State’s first cited public policy is a mere

recitation of the “[I]CFA’s bar on deceptive conduct.” (ECF No. 190-49 at 8.) They assert both

that this does not support a separate claim for unfairness and that “[t]his ‘unfairness’ claim

collapses with the [State’s] deception claim.” (Id. at 8–9.) Manufacturer Defendants further take

issue with the State’s second proposed public policy (forbidding “‘charging an unconscionably

disproportionate price for little or no services’”) because “there is no dispute that Manufacturer[

Defendant]s do provide insulin, a valuable good.” (Id. at 9 (quoting ECF No. 190-43 at 11).) The

third public policy cited by the State (regarding Illinois’s cap on out-of-pocket insulin costs for

insured consumers) does not apply, as Manufacturer Defendants point out the Illinois “Legislature

did not regulate Manufacturer[ Defendant]s or their prices, but rather imposed price-controls on

insurers.” (Id.)

The Court finds the State has sufficiently pled Manufacturer Defendants’ conduct violated

public policy. While Manufacturer Defendants are correct that the State’s third-cited public policy

does not regulate manufacturers or their prices, this does not negate the underlying public policy

of the statute. See 215 ILCS 5/356z.41 (capping insurer’s price of a 30-day supply of

covered prescription insulin drugs pursuant to the terms of a health coverage plan to

$100). Moreover, the State has pled “[d]iabetes if an epidemic and a public health crises

in Illinois[,]” with approximately 13% of its population have been diagnosed with

diabetes and “[a]n additional 3.6 million Illinois residents have prediabetes[.]” (ECF No.

190-50 ¶ 1.) The State further alleges “[d]iabetes is the leading cause of blindness, kidney failure,

and lower limb amputation and is the seventh leading cause of death in Illinois despite the

availability of effective treatment.” (Id. ¶ 2.) The State contends Manufacturer Defendants’

participation in the Insulin Pricing Scheme have caused the cost of diabetes medication to

skyrocket, leaving Illinois diabetes feeling “the physical, emotional, and financial tolls of paying

such excessive prices.” (Id. ¶ 28–30.) Moreover,

In addition to the immeasurable human costs, the Insulin Pricing

Scheme also adds substantial cost to the Illinois health care system

by increasing preventable complications. For example, one national

model found that all people with diabetes adhering to their diabetes

medications would save $8.3 billion in direct medical costs per year

by averting one million emergency department visits and 618,000

hospitalizations.

(Id. ¶ 31.) Because of the increased price of insulin allegedly due to the Insulin Pricing Scheme,

“many diabetics in Illinois have begun to engage in highly risky behaviors with respect to their

disease,” such as rationing insulin, skipping refills, using expired insulin, reusing needles, and

skipping doctors’ visits. (Id. ¶ 464.) Based on the State’s allegations, it is apparent to this Court

that these allegations assert Manufacturer Defendants actions were “within at least the penumbra

of some . . . other established concept of unfairness.” See Leszanczuk, 21 F.4th at 940–41.

b. Immoral, Unethical, Oppressive or Unscrupulous

Manufacturer Defendants further contend the State has failed to plead that Manufacturer

Defendants’ insulin prices were “immoral, unethical, oppressive, or unscrupulous.” (ECF No. 190-

37 at 20.) They contend “Illinois courts have affirmed plaintiffs cannot premise a claim on high

prices even where defendants are hospitals, health insurers, medical suppliers, and the like.” (Id.

at 20–21.) Manufacturer Defendants further assert the State has not plead sufficient facts to

“support its claim that people with diabetes have no choice about the prices they pay.” (Id. at 21.)

The State generally agrees that “an unconscionably high price, standing alone, is insufficient to

state an unfairness claim,” but contends it “alleges facts sufficient to establish that the

Manufacturer[ Defendant]s’ conduct was immoral, unethical, and oppressive,” as insulin is a

“necessary part of life,” which diabetics require “to ‘survive’ and avoid serious medical

complications such as kidney failures and limb amputation.” (ECF No. 190-43 at 10–13.) The

State further notes “there is no source for insulin other than the Manufacturer[]” Defendants, who

“produce 99% of the insulins sold in the U.S. Market.” (Id. at 12.)

“[C]harging an unconscionably high price generally is insufficient to establish a claim for

unfairness.” Robinson, 775 N.E.2d at 951 (citing Saunders, 662 N.E. 2d at 608). “Seeking a profit

is not inherently immoral, unethical, unscrupulous or oppressive; it is the essence of our free-

market economy.” EBCF Enters., Inc. v. Erie Ins. Exchange, 572 F. Supp. 3d 489, 498 (N.D. Ill.

2021); see Flores, 426 F. Supp. 3d at 531 (“There is nothing immoral, oppressive, unscrupulous

or unethical about charging a consumer a price she is willing to pay.”). “That profit motive is not

unethical, immoral or unscrupulous.” Id.

However, “a practice may be considered immoral, unethical, oppressive, or unscrupulous

if it imposes a lack of meaningful choice or an unreasonable burden on the consumer.” Dolemba

v. Ill. Farmers Ins. Co., 213 F. Supp. 3d 988, 998 (N.D. Ill. 2016) (citation omitted); see

Leszanczuk, 21 F.4th at 943 (“Conduct is oppressive under the ICFA if it ‘leave[s] the consumer

with little alternative except to submit to it.’” (alteration in original) (quoting Robinson, 775

N.E.2d at 943); cf. Flores v. United Airlines, 426 F. Supp. 3d 520, 531 (N.D. Ill. 2019) (“Offering

a choice to a potential customer is not immoral, unethical, oppressive or unscrupulous, which is to

say offering a choice is not unfair for purposes of the ICFA.”). “The rationale for that principle is

that, unless there is some allegation of ‘oppressiveness and lack of meaningful choice,’ the plaintiff

‘could have gone elsewhere’ to purchase the good or service in question if the defendant charged

an unfairly high price.” G.O.A.T. Climb & Cryo, LLC v. Twin City Fire Ins. Co., 548 F. Supp. 3d

688, 700 (N.D. Ill. 2021) (quoting Cohen v. Am. Sec. Ins. Co., 735 F.3d 601, 610 (7th Cir. 2013)).

Here, it is hard to see how the alleged exploitation of Illinois diabetics who require this

life-saving insulin medication and have little to no choice but to purchase insulin from

Manufacturer Defendants would not be considered immoral, unethical, oppressive, or

unscrupulous. The State noted the importance of insulin to Illinois diabetics, stating:

Insulin treatments are a necessary part of life for those who have

diabetes[,] and interruptions to a diabetic’s insulin regimen can have

severe consequences. Missed or inadequate insulin therapy can

trigger hyperglycemia and then diabetic ketoacidosis. Left

untreated, diabetic ketoacidosis can lead to a loss of consciousness

and death within days.

(ECF No. 190-50 ¶ 223.)12 As alleged in the State’s Complaint as well as its opposition papers,

diabetics require insulin to prevent medical complications, such as kidney failures and limb

amputations, as well as death. (Id.; Id. ¶¶ 2, 4, 213; ECF No. 190-43 at 12.) See Eike v. Allergan,

Inc., Civ. A. No. 12-1141, 2015 WL 603196, at *3 (S.D. Ill. Feb. 12, 2025) (finding defendant’s

practice immoral, unethical, oppressive or unscrupulous because “[p]laintiffs cannot simply forego

a prescribed medication”). Moreover, the State has adequately alleged that Illinois diabetics lack

a meaningful choice in purchasing insulin from Manufacturer Defendants, as the State alleges

“Manufacturer Defendants make 99% of the insulins on the market today.” (ECF No. 190-50 ¶

241.)13 Because the State has alleged diabetics had no choice but to purchase Manufacturer

Defendants’ insulin or face the threat of serious injury and/or death, the State has sufficiently

alleged that Manufacturer Defendants’ conduct throughout the Insulin Pricing Scheme was

immoral, unethical, oppressive, and unscrupulous. Cf. Lane v. Direct Energy Servs., LLC, Civ. A.

No. 19-00674, 2020 WL 3211435, at *4 (S.D. Ill. June 15, 2020) (dismissing plaintiffs’ unfair

conduct ICFA claims for price-gouging against an energy company because plaintiff had the

option to cancel its contract and choose a different energy supplier); Sevugan v. Direct Energy

Servs., LLC, Civ. A. No. 17-06569, 2018 WL 2267806, at *7 (N.D. Ill. May 17, 2018) (same)

(“Because [plaintiff] had alternatives and could have reasonably avoided paying the variable rates,

12 (See also ECF No. 190-50 ¶ 262 (“By 2016, the average price per month of the four most popular

types of insulin rose to $450 – and costs continue to rise, so much so that now one in four diabetics

are skimping on or skipping lifesaving doses. This behavior is dangerous to a diabetic’s health and

can lead to a variety of complications and even death.”).)

13 (See ECF No. 190-50 ¶ 453 (“To make matters worse, Illinois diabetics have no choice but to

pay based on Defendants’ artificially inflated list prices because they need these medications to

survive, the Manufacturer Defendants make virtually all of the diabetes medications available in

Illinois, and the PBM Defendants completely dominate the pharmacy benefit services market and

control nearly every Manufacturer Payment paid in the market.” (emphasis added).)

he fails to allege unfair conduct.”); Siegel, 612 F.3d at 937 (affirming dismissal of plaintiff’s

unfairness claims despite defendant charging high gas prices because plaintiff cannot state a claim

under the ICFA “absent proof that but for the defendants’ conduct, he would not have purchased

the defendants’ gasoline”).14

c. Substantial Injury

Manufacturer Defendants lastly argue the State fails to allege a substantial injury to

consumers because it “never alleges that its injuries are not outweighed by any ‘countervailing

benefits.’” (ECF No. 190-37 at 21–22.) Rather, Manufacturer Defendants contend their alleged

conduct has a substantial “countervailing benefit,” by “ensuring that Manufacturer[ Defendant]s’

medications are placed on the PBMs’ formularies, which in turn ensures that patients have

affordable access to those medications.” (Id. at 22.) The State retorts that “[t]o the extent that the

Manufacturer[ Defendant]s argue inflated list prices allow them to ‘make a market’ for insulin, it

is a market dominated by the Manufacturer Defendants in which consumers cannot afford and

product and thus this argument should be soundly rejected.” (ECF No. 190-43 at 13.) The State

further asserts Manufacturer Defendants lack standing to address the alleged benefits of their

14 Manufacturer Defendants rely on Galvan v. Nw. Mem’l Hosp., 888 N.E.2d 529 (Ill. App. Ct.

2008), to support their assertion that Illinois courts have “rejected Consumer Fraud Act unfairness

claims based on the assertion that an uninsured plaintiff ‘had no choice but to accept the medical

services provided to him at [] inflated rates’ relative to the prices insured patients pay.” (ECF No.

190-37 at 21 (alteration in original) (quoting Galvan, 888 N.E.2d at 538–39).) However, in that

case, the court placed great significance on the hospital’s “legitimate reason for charging uninsured

patients more than it charges insured patients,” because the hospital “knows it will be paid

promptly for the services it provided” to insured patients and because the hospital could

“legitimately expect insured members to use its services.” Galvan, 888 N.E.2d at 538. The court

further relied on the hospital’s argument that “the plaintiff’s oppressiveness argument is

unpersuasive because the plaintiff did not and cannot allege he was required to pay anything as a

condition of [the hospital] treating him.” Id. This is starkly different than the allegations here that

diabetics cannot receive their life-saving insulin prescriptions until they make a payment when

they fill their prescriptions. (See ECF No. 190-50 at 286–89.)

Manufacturer Payments because of “their admission that they lack visibility into how PBMs

actually use these payments,” as “[t]here is substantial evidence that these Payments are not being

used for their intended purpose.” (Id.)

“A practice causes substantial injury under the ICFA ‘if it causes significant harm to the

plaintiff and has the potential to cause injury to a large number of consumers.’” Dolemba, 213 F.

Supp. 3d at 998 (quoting Mussat, 2014 WL 3610991, at *3); see Philips v. Double Down

Interactive LLC, 173 F. Supp. 3d 731, 743 (N.D. Ill. 2016) (“A practice causes substantial injury

‘if the injury is (1) substantial; (2) not outweighed by any countervailing benefits to consumers or

competition that the practice produces; and (3) one that consumers themselves could not

reasonably have avoided.’” (quoting Batson v. Live Entm’t, Inc., 746 F.3d 827, 834 (7th Cir.

2014))). “Costs that are imposed on an unwilling consumer can constitute a substantial injury. . . .

Even very small individual harms can be considered substantial, if they are part of a practice that,

in the aggregate, causes substantial losses to the public as a whole.” Centerline Equip. Corp. v.

Banner Pers. Serv., Inc., 545 F. Supp. 2d 768, 780 (N.D. Ill. 2008) (internal citations omitted)).

Manufacturer Defendants contend their actions resulted in countervailing benefits,

including “keeping a business competitive” and “maintaining consumer access to products.” (ECF

No. 190-37 at 21 (cleaned up).) However, it is apparent to the Court that any supposed

“countervailing benefits” have been negated by the alleged Insulin Pricing Scheme. The State has

sufficiently alleged that Manufacturer Defendants’ actions and corroboration with PBMs ensured

that the market for insulin remained noncompetitive. (See ECF No. 190-50 ¶ 241 (“[D]ue in large

part to their ability to stifle all competition, Manufacturer Defendants make 99% of the insulins in

the market today.”); id. ¶¶ 271–72 (“In thirteen (13) instances since 2009, competitors Sanofi and

Novo Nordisk raised the list prices of their insulins . . . in tandem, taking the same price increase

down to the decimal point within a few days of each other. This practice of increasing drug prices

in lockstep with competitors is known as ‘shadow pricing,’ and, as healthcare expert Richard

Evans from SSR Health recently stated, ‘is pretty much a clear signal that your competitors does

not intend to price-compete with you.’”); id. ¶ 419 (“Manufacturer Defendants knew that their

artificially inflated list prices were not remotely related to the net price they received for the at-

issue drugs and were not based on transparent or competitive factors such as the cost of production

or research and development.”).) Significantly, the State alleges that this lack of competition

actually hurt the consumer, as Manufacturer Defendants’ anticompetitive behavior both hindered

any further research and development and drove up prices for consumers. (See id. ¶ 354 (“A lack

of meaningful competition allows the [M]anufacturers to set high [list] prices and continually

increase them which is odd for a drug that is nearly 100 years old and which has seen no significant

innovation in decades. These price increases have a real impact on consumers in the form of higher

out-of-pocket costs.” (alterations in original))

Further, the State explicitly alleges that Manufacturer Defendants’ involvement in the

Insulin Pricing Scheme made insulin less affordable and thus less available to diabetics who need

this medication. The State specifically alleges that “[t]here is substantial evidence that [the

Manufacturer] Payments [we]re not being used for their intended purpose.” (ECF No. 190-43 at

13 (citing ECF No. 190-50 ¶ 360 (“I think the system became complex and rebates generated

through negotiations with PBMs are being used to finance other partes of the healthcare system

and not to lower prices to the patient.” (emphasis added))).) Rather, the State alleges Manufacturer

Defendants used their positions to ensure consumers had no choice but to pay exorbitant prices for

a medically required drug. (See ECF No. 190-50 ¶ 262 (“By 2016, the average price per month of

the four most popular types of insulin rose to $450 – and costs continue to rise, so much so that

now one in four diabetics are skimping on or skipping lifesaving doses.”); id. ¶ 444 (“Contrary to

their representations that they work to promote the health of diabetics as a result of the Insulin

Pricing Scheme many diabetics have been priced out of these life-sustaining medications. As a

result, many of these diabetics are forced to either ration their insulin or skip doses. This behavior

is dangerous to a diabetic’s health and can lead to a variety of complications and even death.”

(emphasis added)); id. ¶ 464 (“Unable to afford Defendants’ price increases, many diabetics in

Illinois have begun to engage in highly risky behaviors with respect to their disease such as

rationing their insulin, skipping their refills, injecting expired insulin, reusing needles, and

avoiding doctors’ visits.”); id. ¶ 479 (“Eli Lilly has failed to deliver on its promise to put a more-

affordable insulin product on the shelves. Instead of giving patients access to its generic

alternative, this pharmaceutical behemoth is still charging astronomical prices for a drug people

require daily and cannot live without.”)

Construing the State’s allegations in the light most favorable to the State, the Court finds

that there is a substantial injury to consumers by stifling competition, raising prices, and making

insulin more unavailable to consumers, causing them to turn to alternative and dangerous

measures. (See generally 190-50 ¶¶ 241, 262, 271–72, 354, 444, 464.)

Because this Court finds the State has sufficiently stated a claim for unfairness under the

ICFA, Manufacturer Defendants’ Motion to dismiss the State’s unfairness claim is DENIED.

C. The State’s Unjust Enrichment Claim

Manufacturer Defendants argue the State’s unjust enrichment claim should be dismissed

because it is derivative of the State’s ICFA claim, which Manufacturer Defendants assert should

be dismissed. (ECF No. 190-37 at 22–23.) They further contend the State’s unjust enrichment

claim fails on the merits for two reasons: (1) the State cannot bring an unjust enrichment claim

when it admits it has contracts with some PBM Defendants, and (2) “nothing in the Complaint

alleges that any Manufacturer received any benefit from Illinois or Illinois consumers, must less

unjustly.” (Id. at 23–25.) The State responds that: (1) it has adequately stated a claim under the

ICFA, (2) its ICFA claim is not barred by any relevant contract because Manufacturer Defendants

“admit they have no contractual relationships with Illinois consumers,” and (3) “the [C]omplaint

sufficiently alleges that benefits were conferred upon the Manufacturer[ Defendant]s.” (ECF No.

190-43 at 22–24.)

“Under Illinois law, unjust enrichment is not a separate cause of action. Rather, it’s a

condition brought about by fraud or other unlawful conduct.” Vanzant, 934 F.3d at 740 (internal

citations and quotations marks omitted); see also Cleary v. Philip Morris, Inc., 656 F.3d 511, 516

(7th Cir. 2011). “Unjust enrichment does not stand on its own. Instead, unjust enrichment stands

on the shoulders of some other claim.” Barrientos v. Fitness Member Servs., LLC, 749 F. Supp.

3d 944, 959 (N.D. Ill. 2024); see Vanzant, 934 F.3d at 740 (holding under Illinois law, unjust

enrichment is a “request for relief” that is “tied to the fate” of an independent cause of action).

“So, if an unjust enrichment claim rests on the same improper conduct alleged in another claim,

then the unjust enrichment claim will be tied to this related claim – and, of course, unjust

enrichment will stand or fall with the related claim.” Cleary, 656 F.3d at 511.

Because this Court has determined that the State’s ICFA survives dismissal, the unjust

enrichment claim also survives. See Biffar v. Pinnacle Foods Grp., LLC, Civ. A. No. 16-00873,

2016 WL 7429130, at *6 (S.D. Ill. Dec. 22, 2016); Kahn, 107 F.4th at 606–07 (“Because plaintiff

adequately pled the elements of a deceptive and unfair practice and intent to deceive under both

the ICFA and the UDPTA, we also reinstate [plaintiff’s] unjust enrichment claim.”); Sanchez v.

Walmart Inc., 733 F. Supp. 3d 653, 673 (N.D. Ill. 2024) (“Because plaintiff’s ICFA claim survives,

the request for restitution based on unjust enrichment survives as well.”).

Manufacturer Defendants also argue that the State’s unjust enrichment claim also fails

because the State does not allege the required elements. “To state a cause of action for unjust

enrichment, a plaintiff must establish: ‘(1) the defendant has unjustly retained a benefit to the

plaintiff’s detriment, and (2) the defendant’s retention of the benefit violates the fundamental

principles of justice, equity, and good conscience.’” MetroPCS v. Devor, 215 F. Supp. 3d 626,

634–35 (N.D. Ill. 2016) (quoting HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 545

N.E.2d 672 (1989)).

“Unjust enrichment is a ‘quasi-contract’ theory that permits courts to imply the existence

of a contract where none exists in order to prevent unjust results.” Barrientos, 749 F. Supp. 3d at

959 (quoting Prudential Ins. Co. of Am. v. Clark Consulting, Inc., 548 F. Supp. 2d 619, 622 (N.D.

Ill. 2008)). “When two parties’ relationship is governed by contract, they may not bring a claim of

unjust enrichment unless the claim falls outside the contract.” Utility Audit, Inc. v. Horace Mann

Serv. Corp., 383 F.3d 683, 688–89 (7th Cir. 2004). “The reason for prohibiting a claim of unjust

enrichment between contracting parties is to prohibit a party whose expectations were not realized

under the contract from nevertheless recovering outside the contract.” Id. at 689. “An unjust

enrichment claim may survive a motion to dismiss when the validity or the scope of the contract

is difficult to determine, or if the claim at issue falls outside the contract.” Gociman v. Loyola

Univ. of Chi., 41 F.4th 873, 887 (7th Cir. 2022).

However, as Manufacturer Defendants concede, the contract(s) at issue are between the

State and PBM Defendants.15 (ECF No. 190-37 at 23.) Because Manufacturer Defendants were

not a party to the relevant contract(s), and there was no express contract between the State and

Manufacturer Defendants regarding the same subject matter, the State’s claims fall outside the

contract. See RehabCare Grp. E., Inc. v. SAK Mgmt. Servs., LLC, Civ. A. No. 09-04523, 2010 WL

3307084, at *3 (N.D. Ill. Aug. 18, 2010) (collecting cases and explaining that, where a contract

governs the relationship between two parties, Illinois law does not preclude recovery for unjust

enrichment against a third party); Greenpoint Mortg. Funding Inc. v. Family First Mortg., Inc.,

Civ. A. No. 05-04498, 2007 WL 2608554, at *3 (N.D. Ill. Sept. 4, 2007) (“Absent any alleged

contractual relationship between [plaintiff] and [defendant], [defendant] is not entitled to dismissal

of [plaintiff’s] unjust enrichment claims.” (citations omitted)); People ex rel. Hartigan v. E&E

Hauling, Inc., 607 N.E.2d 165, 177 (Ill. 1992) (“Because unjust enrichment is based on an implied

contract, ‘where there is a specific contract which governs the relationship of the parties, the

doctrine of unjust enrichment has no application.’” (emphasis added) (quoting La Throp v. Bell

Fed. Sav. & Loan Ass’n, 370 N.E.2d 188, 195 (Ill. 1977)); Cohen, 735 F.3d at 615 (“[R]ecovery

for unjust enrichment is unavailable where the conduct at issue is the subject of an express contract

between the plaintiff and defendant.” (emphasis added)). Because there is no express contract

between the State and Manufacturer Defendants, the State is not precluded from bringing an unjust

enrichment claim against Manufacturer Defendants.

15 Manufacturer Defendants subsequently argue the State has not stated a claim for unjust

enrichment because it has not demonstrated Manufacturer Defendants have unjustly retained a

benefit from the State, and the State “cannot rely on fees or payments made by other parties (like

drug wholesalers) to Manufacturer[ Defendant]s.” (ECF No. 190-37 at 24.) In bringing this

argument, Manufacturer Defendants assert: “Manufacturer[ Defendant]s do not have any

relationship or interaction with Illinois, health plans, or any individual consumers,” further

confirming that the State’s allegations fall outside of any contract. (Id.)

Manufacturer Defendants further argue the State’s unjust enrichment claim must be

dismissed because “nothing in the Complaint alleges that any Manufacturer received any benefit

from Illinois or Illinois consumers, much less unjustly.” (ECF No. 190-37 at 24–25.) Manufacturer

Defendants contend the State cannot rely on benefits conferred to third parties—PBM

Defendants—to establish its claim for unjust enrichment. The State responds that it has sufficiently

alleged benefits were conferred upon Manufacturer Defendants, who retained more revenue from

sales as a result of the Insulin Pricing Scheme than it did in the early 2000s, prior to the

inauguration of the Insulin Pricing Scheme. (ECF No. 190-43 at 23–24.)

To state a claim for unjust enrichment, “a plaintiff must allege that the defendant has

unjustly retained a benefit to the plaintiff’s detriment, and that defendant’s retention of the benefit

violates the fundamental principles of justice, equity, and good conscience.” HPI Health Care

Servs., 545 N.E.2d at 678. However:

[A] plaintiff may pursue a cause of action for unjust enrichment

where the benefit was transferred to the defendant by a third party

where (1) the benefit should have been given to the plaintiff, but the

third party mistakenly gave it to the defendant instead; (2) the

defendant procured the benefit from the third party through some

type of wrongful conduct; or (3) the plaintiff for some other reason

had a better claim to the benefit than the defendant.

Apollo Real Est. Inv. Fund, IV, L.P. v. Gelber, 935 N.E.2d 949, 962 (Ill. 2009); see HPI Health

Care Servs., 545 N.E.2d at 679. “[U]njust enrichment does not seek to compensate a plaintiff for

loss or damages suffered but seeks to disgorge a benefit that the defendant unjustly retains.” Blythe

Holdings, Inc. v. DeAngelis, 750 F.3d 653, 658 (7th Cir. 2014) (citation omitted).

Here, the State contends it has sufficiently stated that Manufacturer Defendants retained

benefits “which flowed from the purchase of insulin and diabetes medications by Illinois

consumers.” (ECF No. 190-43 at 23–24.) The State asserts it has satisfactorily alleged that

Manufacturer Defendants procured a benefit from a third party through wrongful conduct and that

the State has a better claim to the benefit than Manufacturer Defendants. (Id. at 24; see Gelber,

935 N.E.2d at 962.)

The Court finds that the State has adequately pled the Manufacturer Defendants procured

a benefit through wrongful conduct. The State alleges Manufacturer Defendants “unjustly

deceived Illinois diabetics and the State,” thereby receiving a “financial windfall” “in the form of

amounts paid for diabetes medications and fees and payments collected based on the artificially

inflated prices generated by the Insulin Pricing Scheme,” “at the expense of the State and Illinois

diabetics.” (ECF No. 190-50 ¶¶ 493–94.) “The ‘unlawful or improper conduct as defined by law,’

. . . is fraudulent misrepresentation. Fraudulent conduct consists of a knowing misrepresentation

made with the intent to deceive the plaintiff.” In re Sears, Roebuck & Co. Tools Mktg. & Sales

Pracs. Litig., Civ. A. No. 05-04742, 2006 WL 3754823, at *4 (N.D. Ill. Dec. 18, 2006) (internal

citation omitted) (quoting Alliance Acceptance Co. v. Yale Ins. Agency, Inc., 648 N.E.2d 971, 977

(Ill. App. Ct. 1995). As explained supra Section III.B.1, the State has met the pleading

requirements under Federal Rule of Civil Procedure 9(b). Thus, Manufacturer Defendants’ Motion

to dismiss the State’s claim for unjust enrichment is DENIED.

D. Time-Barred

Finally, Manufacturer Defendants argue both of the State’s claims are time-barred because

“Illinois indisputably knew well before the five-year limitations period that list prices exclude

rebates,” and that no tolling doctrine or immunity applies. (ECF No. 190-37 at 25–30.)

Manufacturer Defendants contend both of the State’s claims are subject to a five-year statute of

limitations period (id. at 25–26), however, the State asserts there is no statute of limitations on

ICFA claims filed by the State and that the five-year statute of limitations period “does not

expressly apply to the State” (ECF No. 190-43 at 24–26.)

Without determining whether any applicable statute of limitations period applies to actions

brought by the State, the Court finds that the State’s claims under the ICFA and for unjust

enrichment are not time-barred.16 As determined in ECF Nos. 706–07, the date of constructive

notice for all plaintiffs in this Insulin multi-district litigation (Dkt. No. 2:23-md-3080) has been

determined to be January 14, 2021—the date the Senate Finance Committee released the results

and findings of its bipartisan investigation into the rising price of insulin. As this matter was

originally filed on December 2, 2022 (Dkt. No. 2:23-cv-04242, ECF No. 1, Ex. A), the State has

filed this action within any five-year statute of limitations period. Therefore, Manufacturer

Defendants’ Motion to Dismiss the State’s claims as untimely is DENIED.

IV. CONCLUSION

For the reasons set forth above, Manufacturer Defendants’ Motion to Dismiss pursuant to

Federal Rule of Civil Procedure 12(b)(6) (ECF Nos. 190-36–37, 190-49) is DENIED. An

appropriate Order follows.

Date: September 5, 2025 /s/ Brian R. Martinotti

HON. BRIAN R. MARTINOTTI

UNITED STATES DISTRICT JUDGE

16 Though “the statute of limitations for actions arising under the [I]UDTPA and [I]CFA is three

years,” Phillips v. WellPoint, Inc., 900 F. Supp. 2d 870, 880–81 (S.D. Ill. 2012) (citing 815 ILCS

505/10a(e)), the Court’s analysis does not change, as the State filed its Complaint less than two

years after the constructive notice date. The statute of limitations for the State’s unjust enrichment

claim is five years, 735 ILCS 5/13-205; see also Tartan Constr., LLC v. New Equip. Servs. Corp.,

Civ. A. No. 17-5950, 2018 WL 4563079, at *2 (N.D. Ill. Sept. 24, 2018), meaning both claims are

timely.