Terrible First Page Article in the Sunday NY Times

Diabetes Advocacy Public Advocacy
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Just during the last few months I became aware from commenters on this board that the same modern insulin that I spent over $200/vial was available in Canada for about $30/vial. When I commented that the Canadian health system must be subsidizing that cost, the Canadian members here pushed back hard and said there was absolutely no subsidy of this insulin. They said that the Canadian health care plan specified the sale price limit to the insulin producers and the producers could choose whether they want to enter the market or not. They concluded that the producers must be able to make a profit at $30/vial or they rationally wouldn't enter the market. That seemed persuasive to me.
Terry, your analysis is spot-on, but incomplete.

Business finance is complex, and like so many things, most people have all sorts of misunderstandings and lack of understanding that leads to harmful conclusions (not saying this is the case with you -- it's a general statement).

The part you left out involves sunk costs. You touch on it above, but don't properly position it w.r.t. present cash flow accounting.

Put simply, the costs of development -- in the billions -- is already spent, hence the term, "sunk cost". In a free market, these costs are amortized (spread out) over the anticipated life of the product. In the case of pharmaceuticals, that's usually the patent exclusivity period, but not always.

So, all that said, it also is true that the cost to actually manufacture something like humalog is exceedingly cheap. A 10ml vial probably costs less than a dollar to manufacture, package, and distribute.

As such, the manufacturer can make a profit on the stuff, in terms of cash flow, at very low prices. However, they can't make the drug profitable overall for the life of the drug without recovering the development costs.

As such, it makes sense to enter into agreements with health care system's like Canada's, the UK, etc., even at these low prices, because it adds to the overall profit picture.

However, if the worldwide pharmaceutical industry did not have the US market -- and population -- to subsidize the development of these treatments, they simply would not be developed.

The only target of my irritation in all this are fellow PWDs outside the US who rail against the industry for high prices, while their costs are miniscule, and fail to appreciate that for most of the advances in our care over the last 30 years, they have their fellow PWDs in the US who are paying through the nose to develop these treatments.

I favor getting US prices more rational by demanding that the rest of the world suck it up and share in the development costs. Then a vial of Humalog will be $70 for all of us, instead of $200 for Americans, and $30 for the rest of the world.

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I've seen people with plaid hair and watched my family turn into space aliens during a couple of my more severe hypos which, obviously, I would encourage everyone to work to avoid.

I don't know... sounds entertaining! My hypos have never been like that, and I wan't to know how to switch on this psychedelic hypo mode in case I have another :-)
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Indeed it is, and it happens every day. You just punched one of my biggest hot buttons with the medical establishment. ;-)

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Good points.Greed trumps the health of another human.

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I am a thin type one and even though I keep saying that my records state type 2. Since we are only five percent we are treated like type twos. It is very frustrating. I have gone to doctors who, after I say I am a type one, actually then asked me if I was using insulin. Type 1s can go way high and way low and it is dangerous, yet if you have a decent A1C you are fine even if you are passing out for half a day.

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Really if you are blind you would need the meter to talk to you.

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Of course...and it is a great that a talking meter is an option. I can't imagine being blind before there were even meters, and we had to pee on a strip and compare the color to a chart!

I would bet my pocket that Dr. Joel Zonszein wishes he would have said "People don’t need a meter that talks to them. There’s an incredible waste of money. Unless they are blind of course."

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The author targets big-pharma in a lot of her work. She raises some valid points- yes, treatment for T1D today is more expensive than it was in 1983- but misses the big picture. Education and support are the two topics that don't get touched in this article. Those are two things that are vital to successfully manage this disease. She doesn't touch on the average cost of complications or hospitalizations due to low BG either. I was without a CGM for over a year- I lost the receiver and didn't want to pay out of pocket for another one. Then, a few weeks ago, I had a strange episode that was most likely due to profound low BG. I got another CGM right away and found I was dropping into the 40's and 50's every night.

Hopefully, ACA will eventually help to regulate costs a bit for drugs in the US, as well as expand coverage to the uninsured. I think this will take years. People are wanting to see quick fixes on all of these problems with our healthcare system. We need to give it a chance to work-- it took decades to screw up our healthcare and it won't get any better or more affordable overnight.

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Not to mention the doc who’s wound up about the talking meters is sort of displaying a total lack of tech savvy since, in medical terms, they aren’t that expensive. A quick google shopping search brings up some for like $30. Big deal doctor bonehead. Do you want a do-over?

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I thought it was interesting, as the flamewar re-erupted today, to note that the person writing the article is, in fact a doctor. It was also interesting as the NYT reply was rather condescending to the DOC in general, did not take the time to investigate the merits of online communities and also seems to imply perhaps collusive ties between industry- sponsored online communities and tech-dealing big pharm. I pointed out in my reply to them that if we are taking money from big pharm (ha ha, where's mine?), the doc is taking money from insurance companies and wondered is that why she left them out of her article about money and diabetes?

A flamewar w/ the NYT is a genius idea though. Even if they continue their self-aggrandizing condescension, "there's no such thing as bad publicity..."

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Just reading the comments... pumps are quite expensive yes... and if my health insurance did not pay for my pump my opinion may be different. However the high price tag pays for R&D, and hopefully financing further advancements to pump therapy. Where I live T1 pumps and supplies are covered by government,I'm curious to know what coverage there is. In other states/countries.

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Many in the US have to pay a copay, often a %age, in the US. It can be quite a bit, 20% of 5000 or 7500 or 8000, because there's a bunch of crap that goes along with a pump, appointments with a pump nurse, doctor, blah blah blah, I went through it once and got the keys to the kingdom and have asked about zero times for any advice on using the gizmo. I research stuff online and tell the doc what I need them to give me. Generally, I have done very well and the docs seem happy to support me. I had a few anomalies and the doc was like "I need to see you every three months" (at $40 copay/ visit). It can be like living in a spreadsheet. I sort of prefer having a degree of contribution on my part to having NHS bureaucrats deciding what I can or can't use to make things run well....

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Thanks for sharing your experience. Everyone should have access to the best possible diabetes management tools and support regardless of insurance or financial situation....IMO.

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We don't have a 'blameless illness.' Lymphoma is more of a 'blameless illness.' Better example. 60 min broadcast, last night. I'm considering protesting increased lab costs. I think they've gone up. I am getting my A1c done at Walgreens next mo., buying strips from Walmart. Will give the hospital/insurance system as little $ as possible. http://www.realclearpolitics.com/video/2015/01/11/60_minutes_report_what_obamacare_doesnt_do.html

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I do think the prices for pumps are very high, however if you consider the cost of precision machining to high tolerances and multiple iterations and years of testing I don't think it is so far out of the ballpark. After all, these companies operate for profit and they deserve to make one. The software and associated algorithms inclusive to that package are also something that is an important key to the high price. Followed by certification by different regulating bodies and then all the trials to verify operation.

As for the higher rate of consumables used with new generation devices, I don't see it as a bad thing.
Imagine if they made the infusion sets out of stainless steel and we only got one. Now think about having to boil and sterilize it or perhaps even learning to sharpen and hone the needle for reuse.
That is what we were doing with syringes not all too long ago.
There is a major convenience factor that we all enjoy now due to advances in the technology not to mention less risk of infection and tissue damage.
I suppose my point is that though it is frustrating that things never seem to move fast enough, we are still progressing forward and I for one, appreciate it.

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I dunno about this. I paid exactly the same amount for insulin in China and France, although it wasn't subsidized in FR because I was clearly an American.

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Can you believe I forgot my insulin when I flew overseas? Almost gave my Doc and my mother a heart attack.