Texas Attorney General Ken Paxton has filed a lawsuit against Eli Lilly and Co. (NYSE:LLY), accusing the pharmaceutical giant of bribing medical providers to promote its most profitable drugs, including the widely used GLP-1 medications Mounjaro and Zepbound for diabetes and weight loss.
Paxton alleges the company’s conduct violated state fraud prevention laws and defrauded taxpayers through improper Medicaid claims.
According to the complaint, Eli Lilly provided illegal incentives to healthcare providers in Texas, such as “free nurses” and reimbursement support services, to steer prescriptions toward its products.
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These inducements allegedly compromised medical decision-making and resulted in millions of dollars in Medicaid claims for prescriptions tainted by unlawful marketing practices.
The lawsuit filed on Tuesday asserts that Lilly’s actions led pharmacies, pharmacy benefit managers, and other intermediaries to submit claims that violated Texas Medicaid policy.
As a result, the state’s Medicaid program allegedly disbursed millions of dollars in unauthorized reimbursements under the Texas Health Care Program Fraud Prevention Act.
In his statement, Paxton accused the company of putting “corporate greed over people’s health” by manipulating the healthcare system to boost profits at taxpayer expense.
The allegations span a wide range of Lilly’s prescription products, from cancer and migraine treatments to diabetes and obesity drugs.
Medications cited in the lawsuit include Alimta, Basaglar, Ebglyss, Emgality, Forteo, Humalog, Humulin, Jaypirca, Mounjaro, Retevmo, Rezvoglar, Taltz, Verzenio, and Zepbound.
Paxton claims these products were promoted through quid pro quo arrangements that improperly influenced prescribing patterns.
In October 2024, Paxton filed a lawsuit against several major insulin manufacturers and pharmacy benefit managers (PBMs), alleging a conspiracy to inflate insulin prices.
The lawsuit targeted pharmaceutical companies such as Eli Lilly and PBMs, accusing them of using an unlawful scheme to raise insulin prices.
According to the lawsuit, insulin manufacturers artificially raised the prices of their drugs while paying PBMs a significant, undisclosed portion in return for preferred placement in PBM offerings.
Recently, a federal appeals court revived a proposed class action accusing four major drugmakers, including Eli Lilly, of conspiring to restrict a government-mandated drug discount program, allegedly driving up costs for safety-net hospitals and clinics serving low-income patients.
According to plaintiffs, the firms lobbied the federal government, sometimes through shared lobbying firms and industry groups, to curb the program’s scope for diabetes medications. When those efforts failed, they each announced similar discount limits within months of one another.
Price Action: LLY stock is trading higher by 1.26% to $647.49 premarket at last check Wednesday.
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