By Linda C. Ashar, JD
Associate Professor, Dr. Wallace E. Boston School of Business
The U.S. government has announced some relief for some diabetes patients by capping the cost of insulin at $35 a month for those with Medicare Part D, beginning in 2023. This measure is part of the Inflation Reduction Act, signed into law in August 2022. Medicare says that eligible participants must pick a plan for 2023 by December 7, 2022.
This change is a long-awaited, if limited, step to address the exorbitant cost of insulin faced by the millions of Americans suffering from diabetes. According to the Centers for Disease Control and Prevention (CDC), 37.3 million Americans have diabetes (approximately 10% of the population). Mallory Locklear of Yale News notes that seven million people require daily insulin.
Why Does Insulin Cost So Much?
Tracking the history of insulin, Mayo Clinic Proceedings shows it has been about a century since insulin was discovered in 1921 and the first patent sold in 1923 (for $3). But producing insulin has never been either cheap or simple. It costs money to manufacture this drug, distribute it, properly assess its use and dispense it.
After its discovery came research and development. In the decades following the first production of insulin, there have been continuing modifications, tweaks and alternatives, all patented and kept within the proprietorship of a tightly controlled handful of companies.
Still, these innovations fall far short of justifying the market cost of insulin to patients. The real driving force is that consumers are a captive population. S. Vincent Rajkumar, M.D., of the Mayo Clinic, emphasizes: “The number 1 reason for the high cost of insulin is the presence of a vulnerable population that needs insulin to survive …[and]… is willing to pay anything to have access to a lifesaving drug.”
According to The Lancet, the history of insulin since the beginning is full of price-fixing and failed antitrust charges. The corporate control of insulin is tight, and the profit margin has been historically lucrative. Today, The Mayo Clinic describes the insulin market as a monopoly. Insulin costs hundreds of dollars each month, says Good Rx.
Other competitors have been unsuccessful in entering the insulin market. T1 International also notes that this lack of success has been engineered by pay-for-delay deals; one of the “Big Three” insulin manufacturers simply pays a would-be new competitor to stay out of the market by bringing a patent infringement dispute against the newcomer and settling the litigation with a payment arrangement.
This practice is not limited to insulin patents, either. The Federal Trade Commission (FTC) reports that these types of lawsuits by drug manufacturers are a “costly legal tactic that more and more branded drug manufacturers have been using to stifle competition from lower-cost generic medicines.” According to the FTC, these deals cost Americans $3.5 billion in higher drug costs every year.
The High Cost of This Drug Is a Serious Health Problem
The high cost of insulin translates to a serious health problem for insulin users, their families and communities. A Yale study reports that “14% of people who use insulin in the United States face what are described as…‘catastrophic’ levels of spending on insulin, meaning they spent at least 40% of their postsubsistence income – what is available after paying for food and housing – on insulin.” The Journal of American Medicine notes that some diabetics even put their lives at risk by deliberately taking lower dosages or skipping dosages, due to the unreasonably high cost of the drug.
NBC News reporter Berkeley Lovelace, Jr. confirms the danger of insulin rationing by diabetics. He reports that “in 2021, nearly 1 in 5 adults in the U.S. with diabetes either skipped, delayed or used less insulin than was needed to save money,” according to a study published in the Annals of Internal Medicine.
Why Is It Dangerous to Take a Lower Dose of Insulin or Skip Dosages?
Elizabeth Rosenthal, M.D., author of “An American Sickness,” explained to the Journal of American Medicine why skipping or decreasing an insulin dose is so critical: “If you skimp a bit on sleeping medicines or even blood pressure pills, you will have a chance to self-correct. But skimping on insulin can be rapidly deadly in people whose bodies make none of their own and can result in a life-threatening metabolic disturbance. It can also hasten disability (e.g., blindness and kidney failure) and early death.”
Lowering Insulin’s Cost Is Helpful, But Doesn’t Solve the Overall Problem of Expensive Medications
The federal government’s effort through Medicare will provide some economic relief for elderly diabetics, but it is not a solution to the real problem. The unsustainable costs of critical prescription drugs – double what other countries pay, according to the RAND Corporation – continue to be a serious issue for many Americans. The Campaign for Sustainable Rx Pricing urges people to work together with a multi-pronged approach to solve this problem. This solution means that a coalition of patient advocates and medical professionals must work with government officials at all levels.
Unfortunately, the high cost of prescription drugs is hardly limited to one drug. There are many more drugs that are difficult for average consumers to afford, even with health insurance coverage. More action is needed to bring down prices.