Why is insulin so expensive? It's the 'Wild West' in drug pricing, expert says
Download mp3 (13.14 MB)Arizona Attorney General Kris Mayes late last month sued a number of pharmaceutical manufacturers and pharmacy benefit managers, accusing them of artificially inflating insulin prices, as well as those of other diabetes drugs. This follows other efforts this year to make insulin more affordable for patients who need it.
The U.S. represents a little more than 15% of the global insulin market, but generates about half of the pharmaceutical industry’s insulin revenue.
That, said Swapna Reddy, a clinical associate professor in Arizona State University's College of Health Solutions, makes this county an outlier in terms of how much money we spend on insulin.
But, insulin is not the only potentially life-saving medication on the market — think meds for heart conditions or blood pressure, among others. Nor is insulin the only medication some patients struggle to afford.
Reddy joined The Show to talk more about the issue.
Interview highlights
Why is it that we hear so much about the price of insulin relative to the prices of other important potentially life saving medications?
SWAPNA REDDY: Yeah. Well, insulin is certainly not the only medication as you just mentioned that people rely on to stay alive and that lots of folks in the U.S. are relying on, you know, to stay alive and healthy. I think why insulin is receiving so much attention ,and has been for a little while now, is it serves as kind of a prime example of this narrative around runaway drug prices, right? It ends up being almost a case study in how drug pricing has just gotten so out of hand and ... is not in relation to the cost of innovation, is not in relation to the cost of inflation. And also something that is in relation to a disease which is diabetes that is only exploding in our society. So we need, we have more and more people that actually need this drug, and it is just becoming more and more out of the reach of so many folks that need it, especially lower-middle-income and lower-income folks. And so I think it ends up being this, kind of, prime case study in problems that we have in our larger U.S. health care system around affordability for drugs and treatments.
Is insulin more expensive relative to the cost of producing it than other medications?
REDDY: You know, there's not. There's not great evidence or much evidence at all to justify the cost of insulin as it sits now. And where there's really no evidence is to justify the exploding costs of insulin. You know, insulin in just the last 20 years has exploded in terms of cost ... by order of like 20 times more expensive. While there's been advances in insulin, you know, in small changes, whether it's to the actual medication, more often there's been changes to kind of the delivery mechanisms for insulin, etcetera. We haven't seen a 20-fold improvement in the drug.
How did we get to this point? Especially with insulin, where the price is so far out of line with what it actually costs to make.
REDDY: Yeah, you know, it's a great question. And I think again, we kind of come back to — it ends up being a little bit of a case study in that historically, in this country, we are not regulating the cost of medication. We actually, we allow pharmaceutical companies and we allow drug manufacturing to really exist in what feels somewhat like a free-market approach, historically.
And I think insulin is, kind of, a great example of how and why that approach doesn't always work. And I think it's really important to note that I think often in this discussion, there's a narrative that makes the drug manufacturers like the big bad enemies here. And I think what we have to be very realistic with ourselves about is they're not really doing anything that we're not allowing them to do.
I think what's really important when we think about the history of insulin, for example. And it's pretty fascinating is that, you know, this was the original kind of insulin was created in the early 1920s at the University of Toronto. And the folks that actually invented it did not actually want to make money off of it. And ... the three of them sold their patent to the University of Toronto for $1 each.
So, we're 100 years later on and it's basically inaccessible for thousands of Americans because of its high cost. So how did we get that way? I think largely because we, you know, it's kind of existed in this, in this Wild West free market approach of pharmaceutical companies. And also I will say it's not just the manufacturing companies that keep the prices high, but also their agreements with pharmacy benefit managers, which are kind of like the middle man, right? Insulin is just, again, one of those great examples. The EpiPen is another one of those great examples of just things that, you know, within a system where the cost of drugs have gotten higher as a whole, they just exploded and also the need for them have exploded as well.
If that Wild West mentality, as you described, it is starting to maybe be corralled a little bit in the sense that the federal government is capping the price for for seniors on Medicare. And then Eli Lilly seemingly has decided that it would follow suit for many other insurance holders to cap the price of insulin. Is this maybe the beginning of this poster child maybe getting more under control?
REDDY: Yeah. So, you know, a lot has happened. I'll say two things even in the last few years, I think a lot has happened in our, sort of, societal ethos around this. We know at the top of the year, President Biden and through the Inflation Reduction Act capped out-of-pocket costs for seniors 65 and up on Medicare for insulin. And that was really important, but it's important to note that that still left about 20 million people that were not included in that.
And so then we then we, kind, of look at what's happening on the private market, which is, as you mentioned with Eli Lilly and not just Eli Lily, but also Nova Nordisk and Sanofi, who are really important players here, because those three manufacturers control 90% of the world's insulin supply, right? And they have over the course of the year, they value the cap insulin co-pays at about $35 a month for commercial health insure insurance plans and the uninsured, which is actually a pretty important move. And that doesn't really change the cost for people that have set co-pays, but it will help people with high-deductible plans with high cost-share plans instead of co-pays and also the uninsured.
What's really also notable is there's a lot happening at the state level. And that's where maybe the most movement is happening, is really at the state level. So, 25 states have moved to cap monthly co-pays on commercial insurance plans that ... they help regulate in the state. We have states like Virginia and Arizona that are now, you know, that have filed lawsuits against manufacturers and pharmacy benefit managers. So, there's a lot going on at the state level. So, yes, there's a lot happening. I think what, how this is sort of seen in the health policy world is maybe all of this can help stop the bleeding a little bit for out-of-pocket costs, but they kind of don't answer that larger question, which you've asked earlier, which is: Why don't we just have cheaper insulin? Like why is this so expensive in the first place? And I think until we address both situations, it's going to be really difficult to rein in costs.
