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Everyone is talking about insulin these days. Insulin prices have shamefully and exponentially risen over the last many years. Too many diabetic patients cannot afford their monthly insulin, whether insured or not. Their whole lives, including their monthly income and budgeting, are centered around making sure they can purchase the insulin they would die without.
Some readers might find our use of the word profiteering too subjective. But then, it’s also hard to swallow these insulin market factoids:
The prices of insulin products have tripled over the last few decades.
Commonly prescribed insulin products cost $1000+ per month per patient.
Only three companies, Novo Nordisk, Sanofi, and Eli Lily, supply insulin in the US, despite the availability of a range of global manufacturers.
Canadian inventors patented insulin for $1 a century ago. Today Big Pharma players sustain market forces to keep the prices inhumanely high for profits.
Several activists have protested against the outrageous costs of insulin outside headquarters of US manufacturers. In February 2019, the Congress even launched a bipartisan probe on the subject. Insulin was discovered by Banting, Best, and MacLeod at the University of Toronot in 1921. They refused to patent it for more than $1 since it was a life-saving drug made to help millions.
How then the current state of affairs was reached for the same insulin? Let us take a look.
Pharmaceutical executives faced criticism from lawmakers of both parties on the rising costs of insulin. Photo: C-Span.
Insulin Profiteering: What Are Costs Like for the Patients?
According to the recommendations of the American Diabetic Association, the monthly dosage of insulin needed in Diabetes Type 1 amounts to 2-3 vials of insulin on average. The table below shows the prices for the products available in the markets.
Analysis by Diane Lee, research manager at GoodRx Health.
Now consider the change in these prices (at the per unit level) over the last several years.
Analysis by Diane Lee, research manager at GoodRx Health
The change in prices since 2000 is even more shocking. A NovoLog vial was up by 353% between 2001 and 2016. For a NovoLog FlexPen, the increase for the same duration was 270%. Humalog, another insulin product raised its price by 585% between 2001-2015.
Why a huge difference in the prices, both today and over time?
GoodRx Health offers one explanation for the huge variation in the pricing:
“Average retail prices of Novolin and Humulin (traditional short- and intermediate-acting insulins) have gone down, or held steady, while prices of modern rapid- and long-acting insulins continue to go up. On average, traditional insulins now cost less than half of what modern insulins cost.”
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Doctors say, there is nothing in the production of the insulin molecule or its analogs to make it this pricey.
It’s the modern, analog, long-acting insulins that are more commonly prescribed today. According to a review by Ryan Knox, a senior research fellow at the Solomon Center for Health Law and Policy, Yale Law School, analogues are more popular, due to:
“perceived novelty and superiority”
predictable action profiles making it easier for users to plan their meals
Actual research on the relative benefits of analog versus human insulins, however, is inconclusive and the analogs’ superiority is still debated, according to Knox. The clincher is this: analog insulin products cost 2-10 times the cost of human insulin.
“NYinsulin4all protest in front of Eli Lilly, New York City, September, 2019” Photo: Diabetes Voice.
Insulin Profiteering Means Catastrophic Spending for the Patients
In July 2022, the journal, Health Affairs, published: Catastrophic Spending On Insulin In The United States, 2017–18. This study relied on data from the nationally representative samples of the 2017 & 2018 Medical Expenditure Panel Surveys. They narrowed the sample to out-of-pocket spenders on insulin, who were beneficiaries of either Medicaid or Medicare. Over the course of one year, 14% of this sample had reached catastrophic spending on insulin. That is, at least 40% of their income left after food and housing essentials went on insulin.
It means this was true for 1.2 million people in both years. The chances of reaching catastrophic spending on insulin were significantly less (61% difference) for people on Medicaid compared to Medicare, probably because Medicaid is a benefit program for low-income families and usually caps insulin prices for beneficiaries.
Insulin-related deaths are a reality for people who waited to buy the next costly dosage for a week too long. Image by Rhodora O. using AI image generator engine Midjourney.
Consequences of Insulin Profiteering – Desperate Measures by Desperate Patients
NBC News consulted Krutika Amin, Associate Director of the Affordable Care Act program, at Kaiser Family Foundation. She reports that rationing of insulin dosages is increasingly common, especially among diabetics without insurance. To help cover the cost, they will skip some of the dosages to make purchases of supplies last longer.
Another study at Harvard Medical School confirmed that 1 in every 5 diabetic adults rationing insulin by skipping, delaying, or otherwise using less than needed dosages of insulin. The purpose was always to save money. The data came from the 2021 National Health Interview Survey performed by the Centers for Disease Control and Prevention on tens of thousands of nationally representative adult Americans. Not surprisingly, the rationing spread was uneven across races. It was more common among Black Americans (23%) compared to other groups (16% for both Whites and Hispanics).
Rationing is just a desperate solution for desperate times. Over time, it does not help save money at all. Patients often end up hospitalized due to intermittent intake and then bear emergency healthcare costs.
“In the ICU, I have cared for patients who have life-threatening complications of diabetes because they couldn’t afford this life-saving drug… Universal access to insulin, without cost barriers, is urgently needed.”
Dr. Adam Gaffney, Critical Care Physician, Cambridge Health Alliance, Massachusetts
More severe consequences are fatal, literally.
In 2017, Alec Smith-Holt was 26 years old and diabetic. The caveats of his parents’ insurance health policy left him out of coverage. He was $300 short of the $1300 he needed to get his insulin supplies. He decided to wait for his next payday a few weeks away. Of course, he had to ration the insulin dosages he had left until then, taking a few and skipping mostly.
Unfortunately, he didn’t last to see that payday. He was found dead three days before.
Rationalizing Insulin Profiteering – What Explains the Cost
Several medical scholars, critics, and researchers have tried to disentangle how necessary are the high costs of insulin…
Is the More Costly Analog Insulin Really Superior in Diabetes Treatment?
In a 2019 study at Harvard Medical School, researchers provided financial incentives to Type II Diabetes patients in switching from analog insulin to human insulin products. Treatment for both groups, switchers, and non-switchers, continued according to the regimen recommended for both insulins. After two years of this treatment these were the conclusions:
Glycohemoglobin A1C, an estimate of average blood glucose, was higher by 0.14% for those who switched compared with non-switchers.
It means poor diabetic control among the switchers but only to a little extent.
For most people such a small difference over two years is negligible.
There was no difference in terms of severe hyperglycemia or hypoglycemia incidents for the two groups.
Switchers to human insulin paid 50% less than non-switchers during the two years.
In reporting on this study, Dr. Elizabeth Bashoff draws the following conclusions:
“Overall, this study supports the idea that it is possible for certain older individuals with type 2 diabetes to safely change from expensive analogue insulin to more affordable human insulin. The findings should readily extend to some younger patients as well. However, there are many people, including most of those with type 1 diabetes, for whom this kind of change would not be appropriate and could destabilize blood glucose control.”
Research reviewed by the American Diabetes Association finds some superior benefits from analog insulins among Type 1 patients with a high risk of hypoglycemia. However, analog benefits for Type 2 patients are only little to none, as more studies have also shown.
The question then becomes: why is the more costly insulin prescribed far more often than the less costly options? Another question of interest which is becoming relevant is this:
Which risks hang heavier for Type 1 patients? Is it the risk of switching to human insulins with a slightly greater risk of hypoglycemia? Or, is it the risk of life-threatening damage from rationing insulin due to lack of affordability? David Nathan, a professor at Harvard Medical School reminds us that Type 1 Diabetes patients die within a week without their insulin.
Insulin Profiteering – Market and Commodity
You will not find another example of a life-saving drug of such widespread use which is treated more ruthlessly as a mere commodity.
A. Pharmacy Benefit Managers (PBMs) and the Rebate Games
In the Congressional hearing in 2019, insulin manufacturers reported that net prices, reflecting production costs, have fallen over time. So what drives the prices so high? It’s the rebates negotiated by Pharmacy Benefit Managers. For every vial sale, manufacturers pay back some of the cost to PBMs who split it with medical insurers.
“The United States does not negotiate prices with drug manufacturers. The for-profit companies who are supposed to negotiate, PBMs, do so in their own interests and not the interests of patients. Patients are left powerless, and are shamed publicly for their weakness.”
The rebate games began in the 1990s when manufacturers and insurers began using PBMs as middlemen. In the past two decades, PBMs have exacted huge rebate amounts for insulin with the rationale that it saves health systems money over time. The only party who does not benefit in this game is the patient.
How did such a twisted system come to pass for such a life-threatening condition?
B. The Insurer Pay Day and the Full List Price Advantage from the Uninsured
In theory, the rebate advantage received by the insurers is meant “to lower overall member benefit cost.” But there is no system to actually enforce this benefit. As a result, even the insured patient pays for the drug in full, without ever receiving any rebate.
Insulin Profiteering has trapped both insured and uninsured patients in a struggle to afford their monthly insulin. Art by Nora Mokate. Check more art here.
The upshot? For every insulin vial sale to an insured patient, the patient pays the full $300 per vial, while the healthcare system splits the $200+ rebate between the insurer and the PBM.
If the patient is uninsured, the three US manufacturers “take home the inflated list price in full.” Price relief programs do exist to deliver direct advantages from manufacturers to patients. But the patients are typically unaware of them.
So, from the patient’s POV, there are only two choices, Drew Pendregrass writes. They pay $1300 for their monthly insulin and it’s split between the manufacturer, insurer, and PBM. Or they pay the whole price tag to the manufacturer alone.
Per the comments of Julia Boss, president of the Type 1 Diabetes Defense Foundation, this goes back to the trend of prescribing higher-priced insulin products. Insurers have a huge incentive in the rebate system to persuade practitioners and hospitals to prescribe the products with higher list prices, she says. Because the Pharmacy Benefit Managers are negotiating higher rebates for the more costly products.
“There hasn’t been a molecule changed in them. There hasn’t been a bit of change in terms of their synthesis, their manufacturing, and yet the costs have gone up extraordinarily. There are no adults in the room to tell the companies they can’t charge whatever they feel like.”
Artist Appleton perfectly captures the run for insulin in the Insulin Profiteering era. See more art at Diabetes Voice.
C. The Special Insulin Charm for the Pharma Profiteers
Although the rebate system works for all medication classes, insulin has become an extreme case. Why?
There are no generic drugs for diabetes.
Generic drug manufacturers produce the same drugs as brand-name manufacturers but at remarkably low costs. The FDA determines that the “generic medicine works in the same way and provides the same clinical benefit as the brand-name medicine” and approves it for prescription. This restricts the market pool of drugs available for a certain disease, with limited branded options available for rebates.
For insulin, however, no generic products are available. Insulin is a naturally occurring substance, an essential hormone secreted in organisms. It is not a drug. It is a biologic, and the FDA rules exclude biologics from generic manufactureship.
That means, the PBMs in the diabetes business have no option to sustain their profit levels but to negotiate higher list prices to accommodate higher rebates.
In Sum, Insulin Profiteering is a Blatant Weighing of More Money Against Patients’ Lives
The next time this column returns to insulin, we explore more factors sustaining this twisted market. We will also look at what attempts are being made to make insulin more affordable, and their success.
No matter how we look at the issue, one conclusion remains clear:
Insulin profiteering proves that Big Pharma is in it for money… and not for health or life.
Insulin Profiteering proves it’s money, not health or life, that motivates the industry.
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We independently assess all our recommendations. Purchases through our links may earn us a commission.
Great job! – a T1D