The insulin market starts to break open
Saturday Tuck Talk for Eli Lilly's insulin cap announcement
Eli Lilly, a Big Pharma drugmaker, with huge marketshare of the life-saving drug insulin, announced it would slash some of its prices by 70%, but this action dents public perception more than it puts money back into people’s pockets. The market — and close-to thirty years of outcry — have forced this move.
The public, congress, and policy makers have taken aim at Lilly in recent years because of it’s unfathomable price hikes. Humalog, the all-star insulin from Lilly and most widely used, has leapt in price 1,000% from $21 a vial in 1999 to over $300 in 2019. These jumps in price have occurred without justification: Humalog, and other insulin products, have barely changed in their capabilities since the late 90s.
This of course all pokes at the nature of drugmakers, Big Pharma. Like many drugs, insulin costs far less to produce than what it is sold at. Researchers estimated it cost less than $7 dollars to make a vial of insulin.
Here’s what Eli Lilly announced:
The billion dollar insulin products Humalog and Humulin list prices will fall 70% by October.
Lilly’s generic insulin will be $25 a vial starting in May
Launching of a 5-pack injectable pen insulin that is cheaper, but just as effective, compared to the competitor Lantus® on the market.
Capping insulin for out-of-pocket purchase at $35 (Lilly is really just expanding an already exiting value program that started in 2020).
Some Background & context: Insulin is the essential drug used by nearly 8 million Americans to help control their blood sugars by bringing high levels down. If unchecked, the body can go through kidney failure, ketoacidosis (poisoning of the blood), unconsciousness, and eventually death. If blood sugars are high over the long term, it can lead to long term complications like organ failure, amputations, and blindness.
If someone doesn’t have diabetes, their functioning pancreas (the organ behind the stomach and shaped like a soggy boomerang) produces insulin naturally and keeps the blood sugar in homeostasis. For people with type-1 diabetes, and some with type-2, lab-made insulin is essential to live. Before insulin’s creation in the early 1920s, diabetes would often be a death sentence.
Because of the recent high prices of insulin from the companies like Eli Lilly, diabetes has been a death sentence for many individuals in the United States. People like Alec Smith, died from ketoacidosis in 2018 from rationing of insulin because he couldn’t afford enough. His death and others has fueled outrage from organizations like T1International and the #insulin4all movement. Over the years, those who paid out of pocket or with high deductible plans, would often spend $1,000 a month on insulin supply alone. In November a study was released that a little over a million people rationed insulin, about 16% of insulin dependent users.
Why Eli Lilly’s announcement of lowering prices is more about public perception than actual change. In reporter Rebecca Robbin’s excellent piece in the New York Times on Lilly she writes:
Lilly trumpeted its decision as a victory for patients. In reality, though, Lilly’s moves are more limited than they initially appear. Lilly’s existing $35 cap on out-of-pocket payments will be easier for privately insured patients to take advantage of. But the policies announced Wednesday will not have much, if any, effect on what many people are actually paying.
Lilly won’t be losing money by cutting back prices, and life won’t change for many buyers, especially those already with insurance. The $35 cap announcement comes as extra fodder to bolster the slashed 70% announcement, as Lilly has already had an existing program called Lilly Insulin Value Program born out of the pandemic that helps the uninsured get insulin for $35 a month, or less. Before we laud Lilly as the corporation with the biggest of hearts, remember there are self-incentive reasons for these moves. Follow the money: Lilly isn’t likely to lose profits due to this. There are other reasons Lilly made this move:
Because of last year’s Inflation Reduction Act, Congress forced a $35-a-month cap on insulin co-payments for Medicare patients. This pushed the needle to drive down prices.
The slash was only to older insulin products, not to all of Lilly’s, newer products.
There is a rebel force of competitors gathering. Civica, a nonprofit, wants to sell insulin vials for $30 by 2024. Shark Tank host and entrepreneur Mark Cuban wants his company to sell low-cost insulin. The state of California plans to manufacture it’s own insulin along with other high-priced drugs. More competitors selling at lower prices would mean the high priced big dogs: Lilly, Sanofi, Novo Nordisk — who control an estimated 90% of the insulin market — would likely have to bring their prices down. So, Lilly, with it’s recent announced cut, is getting ahead of the game.
The price cut will be good for those paying out-of-pocket and those without insurance, but will it effect Big Pharma’s middlemen (Pharmacy Benefit Managers)? PBMs and their backdoor negotiations with companies like Eli Lilly for discounts and rebates have been a reason for the high prices in the first place. PBMs receive a discount and then charge a higher price when supplying insurance companies, hospitals, pharmacies, or individual patients. Time will only tell what the reduced price will do to the larger healthcare system.
Public praise. This looks good. There has been constant pressures from the public — citizens who have paid with their wallets and sometimes lives for this life-giving creation. There have also been political pressures from committees, task forces, and members of congress. President Biden praised Eli Lilly for their recent announcement. Bernie Sanders sent letters to the two other big companies asking for a price slash on their insulin products. All this led to higher stock prices for Lilly and the perception they are doing the right thing for patients. It’s easy to turn this into: Big Pharma puts patient over profit.
The slash is safe guarded. Without federal regulation, Lilly could still crank the price up if it wanted to. Although, with more players entering the game such as Mark Cuban, non-profits, and the state of California, good competition, good old fashion markets, might bust the grip the giants have had on insulin.
Why this matters to me: My mother died from complications of type-1 diabetes in 2011 at age 49. She did not die from rationing or because of the price of insulin. The reasons she died are long and knotty, and for a different space and time to explore. But insulin played a role in her whole life. It gave her life. Without it, she wouldn’t have lived as long as she did. I wouldn’t be alive without affordable access to insulin.
Open heart, open mind
ENDIT.
Sources not linked above
Thank you for keeping on top of the real story for all of us, who would not normally pay attention. Great insight Tucker❤️