As any diabetic patient is painfully aware, insulin can be incredibly expensive — and that’s particularly true for Americans. But why is a drug that was discovered a century ago so costly?
Insulin is the definite poster child of drug price gouging. If people wonder why ‘Big Pharma’ is so hated across the world, look no further than the ridiculous pricing for insulin and the suspicious policies of the handful of companies that manufacture it.
Over the past decade, the cost of insulin had tripled in the United States, and the out-of-pocket prescription costs that patients have to pay have doubled just in the last five years.
How much is a bottle of insulin?
The cost of a single vial of insulin varies depending on the type of insulin and whether or not it is covered by insurance. Each insurance plan can cover insulin products differently.
In 2012, the average cost of insulin per diabetes patient was $2,864 per year. By 2016, just four years later, it had risen to $5,705.
Today, one vial of insulin can cost $250 and a pack of pens ranges from $375 to $500. Most patients require two vials of insulin per month or 1-2 packs of insulin pens, but some people need up to six vials per month.
Besides insulin, diabetic patients need other types of medication, which also tend to be high priced. According to a 2016 study, the total average out-of-pocket pharmacy and medical costs for patients with diabetes reached $18,500 in 2016 — a surge of $6,000 from 2012 costs, half of which are accounted for by spending on insulin.
As a result of these exorbitant prices, one in four patients say that they ration their insulin because they can’t afford full proper doses. In some cases, this practice can cost lives. For patients with type 1 diabetes, just a single day without insulin is enough to send them to the emergency room.
There are nearly 30 million people suffering from diabetes in the United States, 5% of whom — or about 1.5 million — suffer from type 1 diabetes, hence they require insulin to literally survive. Although people with type 2 diabetes can control their blood sugar with diet and exercising, many still need insulin shots, especially as their condition deteriorates.
The market is dominated by only a few manufacturers
Only three pharmaceutical giants — Novo Nordisk, Sanofi-Aventis, and Eli Lilly — produce 90% of the global insulin supply. Basically, these big three control the market. They also tend to mirror each other’s prices.
Here’s the thing though: insulin was invented in 1923 by Frederick Banting who immediately gave away the patent after it was clear that the drug would save millions of lives each year. Along with co-inventors James Collip and Charles Best, the patent was sold to the University of Toronto for a symbolic $1. Soon after, insulin from pigs and cattle was being produced and sold on a massive scale around the world.
“Insulin does not belong to me, it belongs to the world,” Banting once said.
Now, nearly 100 years later, insulin is inaccessible to thousands of Americans because of its high cost. Usually, when a drug has been on the market for decades, its patent expires, which means any manufacturer can produce a generic version that should drive the prices down by a high margin. But this expectation falls apart in the case of insulin — if anything, the reverse is true.
Part of the reason for this is something called ‘evergreening’, the practice involving various techniques to extend the protection on a drug and block competition that might lead to price reductions.
Early insulin was not ideal, requiring multiple injections for some patients. Some even developed potentially dangerous allergic reactions. Over the decades, manufacturers have introduced all sorts of new processes and technologies that vastly improved insulin, making the drug purer and safer.
In the 1970s, manufacturers stopped making insulin from animals. Instead, everyone now uses a technique based on recombinant DNA technology that basically produces human insulin from genetically modified bacteria.
That was great news for animals, but kinda bad news for patients. Although there’s no clear reason why a company would stop producing the animal-version of insulin, this cheap, older alternative has disappeared from the market — at least in the U.S. (you can still find animal-derived insulin in other countries, such as in Canada).
And by making minor modifications to their manufacturing process or packaging, manufacturers were also able to extend patent protections, thereby discouraging competitors and promoting a cartel-like business environment. This strategy is a win-win for big business but a lose-lose for patients who require life-saving therapy.
Unlike aspirin or adderall, which are chemical drugs which contain the same ingredients every time, insulin is a biologic drug. This means that the manufacturing is a lot more complicated since you have to work with live cells. It also means that the rules for generic drug patents don’t apply. For instance, the generic equivalent of a biologic drug is called a ‘biosimilar’.
In the US, there are only 17 FDA approved biosimilars for insulin. Many of these biosimilars are manufactured by one of the ‘big three’ manufacturers, which doesn’t help to bring the price down.
When asked how they explain the high price of insulin, manufacturers often cite the “complexity of the supply chain” as a reason high up their list. That may be true, but that doesn’t explain why cheaper, easy to manufacture animal-derived insulin isn’t offered as an alternative.
There is some progress but prices are still ‘too damn high’
Due to public outrage surrounding the prices of insulin and pressure from some members of Congress to keep prices under control, some insurance and pharmaceutical companies have taken measures to lower the monthly cost.
According to Singlecare, some of these measures include:
- Cigna and Express Scripts capped the monthly out-of-pocket cost at $25/month, with an estimated 700,000 people with diabetes being eligible. However, employers must opt into this program. Cigna covers less than 1% of the millions of people with diabetes in the US.
- Sanofi has a program for cash payers that costs $99/month and provides either 10 vials, 10 boxes of pens, or a combination of the two. People with Medicare, Medicaid, or other federal and state programs are not eligible for this program, however.
- Eli Lilly developed a generic version of Humalog that is priced at half the normal rate, at $137.35/vial. They also launched their Insulin Value Program in April, which offers a $35 copay card for the uninsured or those with commercial insurance.
- In April 2020, Novo Nordisk announced that it would offer a free 90-day supply of insulin to patients who had lost their health insurance as a result of the pandemic.
- The state of Colorado has taken the unusual route of capping the price of the drug. People with diabetes in Colorado don’t have to pay more than $100/month copay for their insulin.
Such programs, although welcomed, don’t help every patient. For instance, you can’t use these discounts if you have Medicare and most often than not they’re capped at $100-$150.
The bottom line is that insulin is expensive because manufacturers control its price and since competition (or the competitive spirit) is almost non-existent. In other words, insulin is expensive because it can be.