Michigan Supreme Court Narrows Regulatory Exemption, Clearing Path for Insulin Pricing Investigation Against Eli Lilly
核心洞察
The Michigan Supreme Court overruled two prior decisions (Smith v Globe Life Ins Co and Liss v Lewiston-Richards, Inc) that had shielded regulated businesses from claims under the Michigan Consumer Protection Act.
The ruling establishes a narrower test: courts must examine whether the specific conduct alleged is "specifically authorized" by law, not whether a company's general business is regulated.
The decision stems from Attorney General Dana Nessel's investigation into whether Eli Lilly "artificially increased the list prices of its insulin medications," citing gaps between U.S. and foreign pricing and between branded Humalog and generic Lispro.
The Michigan Supreme Court has narrowed a decades-old legal shield that insurers and other regulated companies used to defeat consumer-protection lawsuits, a ruling that clears the way for the state's investigation into insulin pricing by drugmaker Eli Lilly. The decision, filed July 31, overrules two of the court's own prior rulings—Smith v Globe Life Ins Co and Liss v Lewiston-Richards, Inc—that had allowed regulated businesses to turn aside claims under the Michigan Consumer Protection Act (MCPA).
The case, Attorney General v. Eli Lilly and Company, reverses two prior Michigan Supreme Court decisions that limited the scope of the 1976 Michigan Consumer Protection Act. Michigan Gov. Gretchen Whitmer called the decision "a landmark victory for Michigan consumers."
The Legal Question at Issue
The MCPA bars "unfair, unconscionable, or deceptive" business practices, but carves out an exemption for "[a] transaction or conduct specifically authorized under laws administered by a regulatory board or officer." For years, the Smith and Liss decisions read that exemption generously: if a company's broad line of business was licensed or regulated, it was shielded—even where the specific conduct alleged was banned.
The court said that approach went too far, "judicially immunizing" a "broad range of industries." In Smith, a life insurer had relied on the exemption to defeat a claim that it misrepresented a policy's terms after denying coverage.
The justices set a narrower test. What matters is whether the specific conduct alleged—not the company's general business—is "specifically authorized" by law. The word "general," they pointed out, never appears in the statute.
The Insulin Pricing Investigation
Michigan Attorney General Dana Nessel opened an investigation in January 2022 into Eli Lilly, one of the nation's largest drug manufacturers, over the pricing of insulin. Insulin is commonly prescribed for people who have various forms of diabetes (搜索), as it helps with blood sugar regulation in cases where the body is not producing or using insulin effectively.
The attorney general's office said that while the Food and Drug Administration allows the sale of insulin medications, the FDA does not have regulations governing prices. The Ingham County Circuit Court authorized the attorney general's office to issue subpoenas over the pricing of Eli Lilly's insulin products, and that sparked the litigation.
The investigation centers on whether Eli Lilly "artificially increased the list prices of its insulin medications," citing gaps between Lilly's insulin pricing in Michigan and abroad, and between branded Humalog and cheaper generic Lispro. Those are allegations only; the court noted no MCPA violation has been pleaded and returned the case to the trial court.
Public Health Significance
The American Diabetes (搜索) Association estimates just under 12% of Michigan's population has diabetes, which works out to 1.08 million people. This disease burden underscores the stakes of insulin affordability for a substantial portion of the state's residents.
"I am profoundly relieved that the Michigan Supreme Court finally restored the Consumer Protection Act to its true purpose. What was once rendered toothless can now protect the people of our state who fall victim to predatory commercial operators," Nessel said.
Broader Implications for Insurers
For insurers, the change is direct. Smith, the case that first stretched the exemption this wide, is now overruled. In Michigan, a licensed insurer can no longer set aside an MCPA claim just by citing its regulated status. The question now is whether the specific practice a claimant challenges was itself authorized by law.
The Eli Lilly case had been at the state's highest court since August 2023. In the meantime, Sen. Sam Singh, D-Lansing, sponsored legislation aimed at strengthening the consumer protection law. Senate Bill 134 passed the Senate and is sitting in a House committee.
"This is a major win for our state and our people," Singh said about the Supreme Court decision. "I urge the Michigan House of Representatives to pass my legislation and permanently restore Michigan's Consumer Protection Act and protect our people."