AG Nessel is serving her financial paymasters at the Michigan Association for Justice (MAJ), who have been campaigning for the State Legislature to gut the Michigan Supreme Court (MSC)'s Smith v. Globe Life Ins. Co. and Liss v. Lewiston-Richards, Inc. decisions.

https://www.michigan.gov/ag/news/press-releases/2023/08/04/ag-nessel-asks-michigan-supreme-court-to-correct-past-decisions-allow-insulin-investigation

AG Nessel Asks Michigan Supreme Court to Correct Past Decisions, Allow Insulin Investigation

August 04, 2023

LANSING – Michigan Attorney General Dana Nessel this week filed an application seeking leave to appeal an order preventing her from proceeding with an investigation of Eli Lilly and Company’s insulin pricing practices. Lilly has used two past decisions of the Michigan Supreme Court (MSC) to assert the Michigan Consumer Protection Act (MCPA) is inapplicable to its sale of insulin. The Attorney General is asking the Supreme Court to reverse those decisions because they are not supported by a plain reading of the law.

In January 2022, Nessel launched an investigation into Eli Lilly - one of the nation’s three largest drug-manufacturing companies producing insulin. The action sought to use the MCPA to investigate various aspects of Lilly’s pricing practices related to life-saving medications used by diabetics. Nessel also filed a companion Complaint for Declaratory Judgment, asking the court to declare that MCL 445.904(1)(a) does not prohibit an investigation into Eli Lilly’s insulin pricing. But Lilly used the two prior decisions to obtain an order stating that the consumer protection act does not apply to its insulin sales, thus halting the investigation.

“The Smith v. Globe Life Ins. Co. and Liss v. Lewiston-Richards, Inc. decisions have been used to frustrate consumer protection efforts for far too long,” Nessel said. “It is unconscionable for Michigan residents to have to choose between life-saving medicine and food or rent. My Consumer Protection Team stands ready to hold drug companies accountable for their unjustifiable prices, but we can only do so if we are not being hindered by court decisions that misapply the text of a law having a purpose obvious from its name.”

Last July, Ingham Circuit Judge Wanda M. Stokes granted Lilly’s motion for summary disposition, holding that the Smith v. Globe Life Ins. Co. and Liss v. Lewiston-Richards, Inc. decisions preclude application of the MCPA to Lilly’s sale of insulin medications because the general transaction of selling insulin is authorized by the Food and Drug Administration.

A claim of appeal was filed with the Court of Appeals (COA) along with a bypass application to the MSC. The MSC denied the bypass application but asked the COA to expedite the appeal. The COA upheld the lower court’s decision, leading to this week’s filing.

Smith (1999) and Liss (2007) interpret an exemption contained in Section 445.904(1)(a) of the MCPA as applying whenever the general transaction is specifically authorized by law, regardless of whether the specific misconduct alleged is prohibited. Under this interpretation, members of any industry that is generally regulated are often deemed exempt from the MCPA, thereby providing what is effectively a “free pass” for misconduct under the MCPA, regardless of how egregious the misconduct.

The Attorney General’s appeal is not based on the merits of whether Eli Lilly has violated the MCPA, but rather on the Attorney General’s authority to investigate possible MCPA violations under MCL 445.907 when Eli Lilly is generally authorized to sell insulin medications by the Food and Drug Administration (FDA) but is bound by no FDA regulations regarding the pricing of those medications.

The MCPA was enacted in 1976 and Attorney General Nessel is hopeful the legislature will take action to update the statute.

“Without the ability to wield the full authority provided by the act, my department is hobbled in its ability to investigate and hold accountable many regulated entities that may be ripping off Michigan consumers,” Nessel continued.   

“In order for the Department of Attorney General to be the people’s watchdog when it comes to investigating the costs of prescription drugs, we must breathe life back into the Michigan Consumer Protection Act and revive the law’s original purpose to protect consumers. I look forward to working with the legislature to see that these critical changes are made to the statute.”

The Centers for Disease Control estimates that there are 34.2 million Americans with diabetes. In Michigan, the American Diabetes Association estimates that 865,000 people, or 11.2% of the adult population, have diabetes and that those with diabetes have medical expenses approximately 2.3 times higher than those who do not.

Those who wish to share their experience with the high cost of insulin are asked to fill out a consumer complaint form on the Attorney General's website. The Attorney General is interested in perspectives from consumers, pharmacists, and health professionals. If your concerns relate to the cost of a particular medication, please tell us the brand, product, and what (if anything) is covered by insurance.

You can read a retired trial lawyer's perspective on the Smith v. Globe Life Ins. Co. and Liss v. Lewiston-Richards, Inc. decisions here.