Oct 3 (Reuters) - The Texas attorney general has sued

leading insulin manufacturers and pharmacy benefit managers

(PBMs), accusing them of collaborating to inflate the cost of

insulin.

Texas Attorney General Ken Paxton's office said on Thursday

it had sued insulin makers Eli Lilly ( LLY ), Novo Nordisk

and Sanofi.

The office had also sued PBMs, including CVS'

Caremark, Cigna's ( CI ) Express Scripts, and UnitedHealth's ( UNH )

OptumRx, who act as intermediaries in negotiating drug

prices and coverage.

WHY IT'S IMPORTANT

The lawsuit targets both insulin manufacturers and PBMs. The

previous action by U.S. antitrust regulators only targeted PBMs.

The U.S. Federal Trade Commission, in September, sued the

same PBMs, accusing them of steering diabetes patients towards

higher-priced insulin in order to secure millions of dollars in

rebates from pharmaceutical companies.

At that time, the FTC had not sued the insulin

manufacturers, but had criticized their role in what it called a

broken system.

CONTEXT

In the Texas lawsuit, Paxton accused that manufacturers

artificially raised the prices of insulin and then paid a

significant, undisclosed portion back to the PBMs for

preferential treatment in return.

The PBMs subsequently awarded preferred status to the

manufacturer with the highest list prices, while excluding

lower-priced drugs, the press release from the attorney

general's office said.

KEY QUOTE

"Big Pharma insulin manufacturers and PBMs worked together

to take advantage of diabetes patients and drive prices as high

as they could," said Paxton.

"Allegations that we play any role in determining the

prices charged by manufacturers for their products are false,

and we intend to vigorously defend against this baseless suit,"

said CVS in an emailed statement.

"Novo Nordisk believes that the allegations in the lawsuit

are meritless, and we intend to vigorously defend against these

claims," a company spokesperson told Reuters.

The other companies did not immediately respond to a request

for comment.