The Michigan Supreme Court heard oral arguments Wednesday in the state attorney general’s case against insulin-maker Eli Lilly and Company.
The attorney general’s office is trying to investigate Eli Lilly’s pricing practices when it comes to insulin, a vital drug for diabetics. To do so, it asked the lower court for subpoena power under the Michigan Consumer Protection Act (MCPA) in 2022.
The lower court turned down the request after Eli Lilly claimed the actions in question were covered by a part of the MCPA that exempts “[a] transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States.”
The company argued its legal authority to make and sell insulin under state and federal law qualified it for the exemption.
Both Eli Lilly and the attorney general agreed the exemption would apply under two state Supreme Court rulings that interpreted the law as granting a broad exemption, but they disagree on whether those rulings were correct. The company wants the rulings to stand, and the AG wants them overturned.
In 2023, the Michigan Court of Appeals sided with Eli Lilly again. The court declined to overturn those past rulings despite the state’s argument that they were wrongly decided.
On Wednesday, Paul Novak, an attorney with the Michigan Association for Justice, argued alongside the state attorney general’s office.
Novak argued broadly reading the MCPA allows the insulin maker to wrongly claim a specific exemption as a general one. He told the state Supreme Court that would create a slippery slope.
“The consequence of that is that all types of conduct that goes well beyond what the (U.S. Food and Drug Administration) authorized in its 1996 approval letter is now characterized as exempt,” Novak said.
Novak claimed interpreting the exemption broadly would allow the company to pay out kickbacks to industry members, fix prices, and advertise its insulin for off-label uses.
Eli Lilly, however, rejects those claims and says its authorization to sell insulin is not “general.” Beyond that, the company argued in court that the attorney general’s investigation was flawed for several reasons.
Attorney John O'Quinn, representing Eli Lilly and Co., accused the attorney general of “putting the cart before the horse.”
“The department has declined to show any legally viable violation has been alleged in the first place,” O’Quinn said.
Michigan Supreme Court Chief Justice Megan Cavanagh and others pushed back on that point, however, suggesting the circuit court found probable cause for the subpoenas, if not for the law’s exemptions. She said Eli Lilly could have challenged that aspect of the ruling at the time but didn’t.
“It seems a little bit to me like you’re wanting to have your cake and eat it too,” Cavanagh said.
O’Quinn, however, argued the attorney general’s office was doing that by pursuing the case knowing that it would be rejected because of the state Supreme Court precedent.
When it rules, the court will need to decide four questions.
First, it’ll need to rule whether the state effectively claimed Eli Lilly broke the MCPA. Then it will decide whether that's something the state needs to claim for the court to rule on the exemption question.
The third question is whether the previous state Supreme Court cases were rightly decided. Finally, the court will figure out whether to let the rulings remain either way under the principle of stare decisis, which essentially lets settled matters remained settled.
