Insulin Makers’ Profit Seeking Will Keep Killing Diabetics
The three big insulin manufacturers recently announced some reductions in prices. But the price changes didn’t come from corporate beneficence — they came from public and government pressure. And they don’t go nearly far enough.
Insulin pens manufactured by Novo Nordisk. (Joe Raedle / Getty Images)
On March 1, drugmaker Eli Lilly shocked the industry by announcing several new policies to make some of its insulin products more affordable. The pharmaceutical giant is one of three companies, along with Sanofi and Novo Nordisk, that control 90 percent of the world’s supply of insulin — a drug without which I, and many other diabetics, will die within days. Shortly after Eli Lilly’s announcement, both competitors responded with similar plans of their own to lower the financial barrier to insulin.
For the past twenty years, these three corporations have worked in lockstep to raise the price of their insulin products by over 1,000 percent. A single vial of insulin itself costs less than $7 to produce but is priced at more than $315 at my local pharmacy. As a result of these extraordinary costs, nearly one in five Americans who rely on insulin have been forced to ration it. This means 1.3 million Americans skip doses every year, resulting in loss of sight, kidney damage, and even death.
The manufacturers’ announcements that they will, in effect, kill fewer diabetics moving forward is certainly welcome. But the companies’ policy changes wouldn’t have happened without public and political pressure — and they don’t go nearly far enough.
The centerpiece of the new policies is a reduction in the list price of some insulin products. All three manufacturers sell a variety of insulin types under different brand names. By the start of 2024, each company has promised to reduce the price on two or three of their brand name insulins by between 70 and 78 percent. Additionally, all three companies will either expand their offerings of generics or reduce prices on the generics they already sell. Outside of the two to three types outlined in each company’s press release, all brand-name insulins will still cost consumers twenty to forty times the amount they cost to produce.
In addition to the price changes, Eli Lilly and Sanofi have announced expansions of their coupon card programs, where qualified consumers pay the first $35 of the cost of an insulin prescription, then the manufacturer makes up the difference, filling any gap left by the customer’s insurance company. In theory, any patient with commercial insurance will now automatically qualify for Eli Lilly and Sanofi’s coupons, and uninsured diabetics will be able to sign up for them beginning in 2024. Historically, outcomes for patients using these programs have been mixed, with thousands of eligible patients unable to get their pharmacy to honor the coupons. Only time will tell if expanding the program will result in more success for diabetics.
Under Pressure
Insulin manufacturers are likely implementing these price changes now because of a streak of increasingly bad press. Thanks to the work of activists and insulin affordability organizations, the public perception of insulin manufacturers has tanked in recent years. Insulin makers have joined the likes of Martin Shkreli and EpiPen producer Mylan as poster boys for pharmaceutical greed. In the wake of reporter Sean Morrow’s stunt impersonating the company on Twitter last November and saying it would provide free insulin to customers, Eli Lilly especially has needed a way to stem the tide of negative publicity.
Insulin manufacturers are also likely hoping to preempt a number of political and regulatory challenges. Federal Trade Commission chairwoman Lina Khan signaled in June last year that she is willing to pursue antitrust action against both insulin producers and pharmacy benefit managers (PBMs). The state of California recently awarded a contract to Civica Rx to produce generic insulin that the state will sell at cost, and its attorney general recently joined in suing manufacturers for price fixing.
Laws to cap copays for insulin have passed in more than twenty states, and many progressive politicians have long pushed for further cost controls. Even President Joe Biden has signaled his support by castigating insulin manufacturers and calling for cost caps in his most recent State of the Union. By voluntarily lowering a few of their insulin prices, it seems that manufacturers believe they can stave off further government intrusions that threaten their bottom line.
The announcements have been major PR successes for the companies so far, with glowing press coverage from every major news outlet. By being the first manufacturer to announce the changes, Eli Lilly in particular saw a wave of positive headlines and a 6 percent bump in its stock price following its press release. Politicians of all political stripes have publicly lauded the moves, with the president even stating that manufacturers have now recognized “that charging hundreds of dollars for insulin is wrong.”
But all the praise for drugmakers has missed the forest for the trees, for their pricing structures will continue to harm diabetics. Every manufacturer will still charge hundreds of dollars for the majority of their insulin products. None of the price reductions will take effect until late this year at the earliest, and not every patient will be able to treat their diabetes using the cheaper options, leaving them in the same financially precarious position they were before the changes. No one should be celebrated for partially mitigating a problem for which they are responsible.
Some credulous reporters and commentators have floated the idea that this type of corporate goodwill represents a solution to the insulin affordability crisis. A real solution, however, will require taking price-setting power out of Big Pharma’s hands, as there is nothing stopping manufacturers from reversing course tomorrow and raising prices or quietly canceling their cost-capping programs.
One policy option here is to emulate Canada’s Patented Medicine Prices Review Board. In order to receive a patent on a pharmaceutical in Canada, a drugmaker cannot charge an excessive price for the drug. Thanks to the review board, insulin prices in Canada are one-tenth what they are in the United States, and insulin manufacturers still make a profit there. If the US Food and Drug Administration (FDA) has the authority to oversee drugs for safety and efficacy, why can’t they also ensure that prices aren’t extortionate?
Better yet, the government can take on the responsibility of producing and providing vital medicines themselves, freed from the constraints of the profit motive — as some states in the United States are already considering.
While manufacturers’ decision to lower insulin prices is worth celebrating, giving private corporations the unchecked ability to dictate prices is what caused the insulin affordability crisis in the first place. We can’t trust them with that power any longer.