Eli Lilly CEO Slams PBM 'Rent Taking', Says They Drove Insulin List Prices To $275: 'We Can Disintermediate Them Easily'

Dave Ricks, CEO of pharmaceutical giant Eli Lilly and Co. (NYSE:LLY), delivered a scathing critique of pharmacy benefit managers (PBMs), accusing the industry’s “middle actors” of “rent taking” and creating a “terrible incentive” structure that caused insulin list prices to skyrocket.

Check out LLY’s stock price here.

PBMs Kept Inflating Prices Despite LLY’s Low Net Price

Speaking on the “Cheeky Pint” podcast, Ricks explained how list prices for Lilly’s insulin ballooned to $275, even as the company's actual net price remained around $40.

He blamed a system where PBMs profit from the “spread” between a high list price and a low net price, rewarding manufacturers for inflating the sticker price.

“We kept raising the list price and modestly lowering our net price,” Ricks said, describing how the market evolved. “After 10 years, you had this huge bubble… and who was paying? The person who walked in the pharmacy with no insurance. That’s outrageous. That should not exist.”

Ricks Recounts PBM Backlash To Lower Insulin Prices

Ricks revealed that when Lilly tried to fix this by launching its own low-priced “shadow generic” insulin, PBMs and pharmacies pushed back. “They called me and said, ‘Why’d you do this?’… ‘This is a threat to our model.'”

This frustration, Ricks said, directly led to the creation of LillyDirect, the company’s new direct-to-consumer platform, as a way to bypass the “rent-taking” system. “We cannot be beholden to this,” Ricks stated, adding, “We can disintermediate them easily.”

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Mark Cuban Blames PBMs For Controlling Healthcare Costs

Ricks’ comments echo a growing chorus of criticism against PBMs from industry disruptors like billionaire Mark Cuban. Cuban, founder of Cost Plus Drugs, has also described PBMs as having a “stranglehold” on pricing, using  Rep. Jake Auchincloss‘ (D-Mass.) $400 “bagel” analogy to describe the same list-versus-net price distortion Ricks highlighted with insulin.

Both Ricks and Cuban describe an opaque system built to reward middlemen. The alignment between the world’s most valuable pharma company and a vocal industry disruptor signals a significant, multi-front challenge to the PBM business model, which both argue ultimately inflates costs for the most vulnerable patients.

Price Action

Eli Lilly shares closed 2.27% higher at $988.62 apiece on Tuesday. It rose by 1.20% in premarket on Wednesday. The stock has advanced 27.06% year-to-date and 20.73% over the year.

LLY maintains a stronger price trend over the short, medium, and long terms, with a poor value ranking. Additional performance details, as per Benzinga’s Edge Stock Rankings, are available here.

Here is a list of the firms that operate PBMs and a few pharma exchange-traded funds for investors to consider.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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