I saw a number of new insulin options being introduced on the exhibit floor of the ADA Scientific Sessions and while they do seem like they will be useful to patients I am more concerned that they are somewhat false innovations that have been designed solely to make money. And during a symposia session on the costs of medications for diabetes an alarming picture of the insulin industry emerged. In this post I’ll be exploring the landscape of insulin costs from the patient perspective and it isn’t a pretty sight.
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Brian - Great post. It’s well done with plenty of supporting facts. The underlying issue disturbs me. The insulin market is obviously not a free or competitive one. This market is an oligopoly, where the number of market players are few and the barriers to entry for new players are high.
It appears to me that the insulin manufacturers are taking unfair advantage of their customers as well as the the third party payers whether they be private insurance companies or government. I don’t believe that market forces will cause the various companies to set their prices at a level that balances the equities between the profit seeking companies, the patients who need their product to live, and the various payers.
The insulin manufacturers have out-sized power, especially pricing power, and they will continue to milk this model until some counterbalancing force comes onto the scene. History has shown that the only force big enough to have any effect is the will of a large group of people as expressed through governments and regulation. In the United States, one only has to look to the turn of the previous century, to witness the trust-busting activities of the Theodore Roosevelt administration. The trust-busting model involved breaking up companies into many pieces so as to restore a competitive market.
We must remain cognizant of the reality that it is only through government action that citizens grant the right for corporations to come into existence and permitted to operate. We, collectively, allow corporations to operate with limited liability, without which, no company could exist. In return for that grant it was, at least initially, that companies would perform some public good or at least avoid doing harm.
I know I am suggesting political solutions here and perhaps I am violating the spirit of this forum. I don’t believe in the fiction of a “free market.” It’s been shown time and again that market players will do everything possible to distort market environments so that they can earn whatever size profits they deem necessary to satisfy shareholders and a hugely overpaid senior management.
Please excuse my foray into the political. I fear that the only solution to this situation of Big Pharma charging “whatever the market will bear” for the insulin that allows us to survive is to bring potent counter-measures through market regulation and trust-busting.
We created these creatures. We should take matters into our own hands and break them up so that some semblance of not only a free but fair market may be restored.
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Agree.
For thirty years, I was without insurance as an entrepreneur with a pre-existing condition. Got insurance in 2014 and discovered how much more I was charged for everything as an insurance holder. There is an essential flaw, I think, in this system that, first of all, allows egregious markups for insurance claims, and secondly, prices people without insurance altogether out of the market because of the assumption that insurance will pay the bulk of the cost.
How about an organized large demonstration? I think the most important statement here is: “After all the cost of insulin manufacturing is cheap.”
Recently my mail order pharmacy sent me too much insulin/long acting- I still have some in the case that I need it. At first they said I should just keep it and then I was told to send back the extra which would be destroyed. I argued with them about destroying it and now I’ve never heard back about what I’m supposed to do. I had suggested giving the extra to my endo to give to people in need.
I think innovation does help patients in spite of all of this because if they do create a more stable or better insulins it improves lives, for those that can afford them least.
Insulin for Life is a wonderful organization we support here, and they will take your unused insulin & other supplies
some one who commented is way confused about insulins: they wrote "
stop covering the modern insulin analogs if they become too expensive.
In which case everyone would have to go back to using human insulin.."
Sorry, folks but Humalog IS a human insulin AND it is an analog.
Just keeping it real…
Good god, Brian, I think it was you who wrote that! You know better! 
Thanks Marie, I’m aware of Insulin for life and I will look into that. Unfortunately my hands are tied for now because until the pharmacy/ insurance tells me what to do I won’t risk possibly being charged for this insulin, for all I know they could try to charge me the full amount or something crazy like that!
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Unfortunately it was me. Humulin is human insulin, Humalog is a modern insulin analog.
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Interesting blog @Brian_BSC! I am also very skeptical of new products, if mainly because I’m a slacker about doing anything that requires talking to doctors or insurance companies. At the same time, my buddies @TheOneType and Tony (I’m not sure if he’s here but I’ve seen some posts on topics that seem like they might be him, the duckfiabetes guy…) have had great results with Toujeo (which I usually and subsequently will refer to as Touyayo…). Even if it’s “just” concentrated Lantus, it makes sense to me that it would work smoother and more effectively because of the fluid dynamics issue cited by Dr. Bernstein in his “Diabetes Solution” book, which cites a study showing shots > 7U will be absorbed more irregularly than smaller shots. This is interesting to me and I think the concentration issue might be useful to explore on a number of fronts if Touyayo works as great for everyone.
Similarly, we had Afreezapalooza several months ago here at Tu with several members, including many old friends who’s opinions and excellent data reporting skills I’d trust, reporting excellent results with Afreeza which seemed almost magical. I was motivated to discuss this with my (new) doc but decided against it because, as she pointed out, “you’re doing great already, why bother changing?” which fits nicely with my whatmeworry Weltanschauung.
One of my friends is a “dealer” and was before her own daughter was dx’ed. She shared an article on FB with the pharmaceutical industry’s rebuttal to the charges of profiteering that I thought was interesting but, unfortunately, there are so many anti-big pharm videos that I can’t seem to track it down. I think a lot of the issues with medicine and health care would be “solveable” through actuarial science which has generally proven to be very sound at calculating risk and pricing mutual assumption thereof however we as societies are woefully weak at pulling the trigger on that science, perhaps because it’s math which is boring.
Good description of the state of the insulin market, Terry.
The example cited – Lantus/Levimir – certainly doesn’t require any collusion by the two players for prices to stay in lock-step. Indeed, the pricing history/behavior in the long-acting analog market fits a particular economic theory (I can’t recall the name of it, it’s been over 30 years since I took econ) quite well.
In inelastic markets (i.e. markets where demand is not very price sensitive) oligopolies tend to follow competitors UPWARD in pricing, rather than competitive pressures driving prices down to take market share from their opponents.
The theory is, price increases do not reduce demand, so when a supplier raises prices competitors in a market of few suppliers will raise prices to match, reasoning they are leaving money on the table. I.e. “if Lilly can charge X, we can too without losing any customers”.
This problem is especially acute where something similar to brand loyalty (this drug works for me, I’m not going to change) causes customers to be even “stickier” in their recurring business.
Honestly, I don’t think there is any illegal collusion on price-fixing among insulin manufacturers. There simply is no reason to take such a risk, when actually meeting with each other to set prices is entirely unnecessary in a market of a few suppliers to match prices.
Of course, none of that makes a hill of beans w.r.t. to the fundamental problem Brian raises here, and that’s seemingly outrageous costs for insulin. I agree that insulin is outrageously expensive, but I do not agree that the issue is greed or nefariousness on the part of the producers, nor have I seen any evidence this is the case. High prices, and enormous price increases, are not evidence of greed or nefariousness.
Huge net profit figures for these companies would be the first start to making such a case. However, profits in the pharma industry are certainly nothing to boast about. Try high tech for that.
Insulin pricing is very complex. Production costs alone are not the only factor, and honestly it is foolish to look at it so narrowly. There are enormous R&D and FDA approval costs that must be amortized into the expected life of the drug.
Also, price controls in other countries force companies to sell many drugs at a loss (when all costs are considered, as they should be), so these losses are, maddeningly, made up by inflated prices in the US.
Finally, other drugs being produced and sold at a loss are subsidized by insulin. This is one reason why insulin, which in terms of cashflow nets a huge gross profit, is priced high.
Whether or not this is “right” is a rich, complex, never-ending argument. People with ED feel the same way about the pricing of Viagra, which is far more grossly inflated than insulin.
So, in my view we’re only going to be counter-productive taking a “stick” approach to trying to improve this situation… Seek punitive action through government, etc.
People generally become rather uncooperative and hardened in their views when you start accusing them of being crooked. They demand you prove it. The force you to spend gobs of resources proving it, and spend gobs of resources on their own end trying to prove you’re full of it.
While such fights then take years and years to come to some sort of resolution, respective parties are enemies rather than friends working together toward a common goal.
How best to deal with this? Forget about punishing anyone. How about we instead work to have more competition? A lot more competition?
How about the US buy the patents from Lilly for Humalog? Then license it royalty free to anyone who wants to make it – with the only requirement that it must be priced with a net profit of say, 12% (or 10, or 14, or whatever; currently it’s something like 50,000% to cover all those other expenses).
Lilly’s initial investment in developing the drug is recouped. The public is served by insulin being widely available, cheaply. The nation as a whole bears the cost of providing this public good.
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Over and over again you you make the same arguments about insulin production and cost of production. For once, go and read the financial statements of Novo Nordisk, the Danish company that has a 47% worldwide share of insulin production and a 36% market share in the U.S… The bulk of their latest quarter sales is diabetes care related (79%) and almost 57% of their total sales is insulin, so they are a good indicator of the profitability of insulin. See the following quarterly statements and there is a lot of information available: Novo Nordisk Quarterly 2015. The margins on insulins is huge. The latest quarterly profit margin after tax is 39% on sales. Any R&D and FDA approval costs have long ago been covered. Humalog has been around for almost 20 years now.
Yeah, I went on Humalog in 1996 as the first analog on the market. It has been almost 20 years!
Me too, terry.
I don’t see any of my prescriptives as punitive.
This market takes care of the suppliers just fine. It doesn’t serve the needs of the patients or payers, however. This is an unnatural market with lop-sided economic benefits only for one party. Patients do get a better insulin, but is the galloping increase in prices calibrated with that additional benefit?
Since government provides the currency, business law, and the very birth-right to these corporations, that gives them (we, the people) the inherent authority to regulate the market to balance the equities. Since there is no free market with its built-in tempering capacity for huge multi-national corporations, the government is the only countervailing power that can prevent the market players from destroying the very engine of their wealth.
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diaTribe just sent out a great article on “Unpacking the Rising Cost of Insulin and What it Means for Patients.”
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A lot of folks don’t really do a fair comparison. They compare 2xR+N (non-MDI) with full MDI on the analogs.
I did MDI quite successfully for decades with N (4 times a day) for basal and R (3 times a day) for bolus.
Now I do very similar MDI using Lantus (2 times a day) for basal and Humalog (3 times a day) for bolus.
Even though I switched to the analogs several years ago - I do not feel they are obviously better than MDI based on R+N. The analogs sometimes deliver a big surprise - especially when the Humalog kicks in super duper fast, faster than my meals get digested. I think in many ways, R is a better match to “complex” (not just simple carb) meals.
My A1C’s are not obviously better with the analogs. Maybe after I get a couple decades of fine-tuning I will do better.
The insulin manufacturers have “suggestions” for use of insulins that are not completely realistic, whether it be the old N or the new Lantus. Lantus once a day simply did not work as a basal for me. So many folks have more success with splitting the dose. NPH 4 times a day was pretty good as a basal too.
The analogs are way more expensive but I have insurance now, so I don’t actually notice any difference in out-of-pocket expenses.
Like you, I did ok on R and N. I did a full MDI. Yet here we are as Lantus reaches nearly $400 for a vial as compared to $25 a vial for R and N. Is SIXTEEN times the cost justified for what some of us would consider a modest performance improvement? In competitive markets you would expect products with performance advantages to command a premium, maybe 20%. But not SIXTEEN times.
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Where are you finding Lantus at $400 a bottle? Online, I see pricing in the mid to upper $200’s.
You are correct, I inadvertantly selected a carton. I used a reputable site called goodrx.com. Here is the revised statement, basically still true.
Like you, I did ok on R and N. I did a full MDI. Yet here we are as Lantus reaches nearly $270 for a vial as compared to $25 a vial for R and N. Is TEN times the cost justified for what some of us would consider a modest performance improvement? In competitive markets you would expect products with performance advantages to command a premium, maybe 20%. But not TEN times.
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This might be a bit of a tangent. Many people did not like N as a basal but I’ve always wondered whether R can work with a modern pump. I’m sure the timing would be different but a “drip basal” is just a drip basal.