A System on Support: Understanding US Insulin Prices in 2022

Insulin prices in the US have been increasing for decades, leaving diabetics who require the life-saving drug to ration off their basic household expenses in an attempt to afford their medicine.[1] With 2021 marking the centenary of insulin’s discovery, it is an absolutely pivotal time to reform the current situation wherein insulin is so expensive as to appear more as a privilege than a right.

Currently, over 37 million Americans live with diabetes, 11.3% of the US population.[2] Of this number, 7 million American diabetics require insulin, a hormone prescribed to lower blood glucose levels, on a daily basis.[3] The most prescribed form of insulin, rapid–acting analogs, now average a market price over $110.[4] Most diabetics, however, require several vials of insulin a month, in addition to other medical supplies and monitoring equipment.[5] Without adequate insurance, monthly out-of-pocket expenses can be more than $1000.[6] This leaves insulin an extreme financial burden for more than 14% using it.[7] Consequently, ¼ of diabetics are forced to ration insulin, a potentially lethal pressure from the high costs.[8] The fact that diabetics account for $1 of every $4 spent on health care in the U.S perfectly demonstrates just how extortionate the US market price of insulin is.[9]

The manufacturing costs for a vial of analog insulin sits between $3.69 and $6.16.[10] Yet, its constant upward price growth can be attributed to the oligopoly of three companies (Eli Lilly, Sanofi and Novo Nordisk) that currently dominate the insulin market and are therefore able to maintain high mark-ups. Additionally, due to strict patent laws, generic insulin alternatives are near-impossible to bring to market.

Nonetheless, cheaper versions do exist[11]: Walmart have produced a re-branded alternative to Novo Nordisk for $25 per vial. However, their slightly older formula is less effective, and many diabetics have reported being allergic to the alternative.[12] Further, the availability of cheaper insulin poses dangers: different formulas work for different people and “non-medical switching” for the sake of lowering expenses can be perilous and potentially result in dangerous medical burdens such as kidney disease or blindness.[13] Worse still, insurance companies have often pressurised patients to change insulins without medical guidance to avoid paying higher list prices.

The irony, however, behind the insulin market being a commercial enterprise is quite how cheaply the patent was sold for when insulin was discovered 101 years ago. At $1, the University of Toronto scientists, Sir Frederick G Banting Charles H Best and JJR Macleod, sold their patent to set a precedent for the availability of inexpensive insulin.[14] Their idea, modestly made accessible to save lives and increase the wellbeing of diabetics, has since been capitalised into a tool for extracting profit.

Though many states have progressed to cap insulin prices, out-of-pocket insulin spending has not yet been federally restricted to a nation-wide level.[15] However, the Government of the United States recently acted to do just that: passingthe Inflation Reduction Act of 2022 on 16th August this year, which included a provision capping the prices of out-of-pocket insulin costs to $35 a month for Medicare beneficiaries became public law.[16] The Inflation Reduction Act simultaneously will change some beneficiaries’ prescription pricing. Some seniors may thus pay even less than $35 per month for their insulin from 2026.[17],[18] The bill also forces a penalty onto drug makers who increase their prices exceeding the rate of inflation.

To remedy this, the initial proposal included a related $35 co-pay cap extending to those on private insurance as well as Medicare.[19] Seven Republicans joined the Democrats on this proposal. However, due to budgetary rules requiring a 60-person majority, the more-inclusive policy did not pass.[20] 43 Republicans voted against it including the Senators from states with the highest diabetes-mortality rates: Mississippi, West Virginia, Arkansas, and Oklahoma.[21]

Nevertheless, this wider-impact policy would likely have been insufficient in lowering insulin’s market price, and potentially counter-constructive for the uninsured. Since the Inflation Reduction Act only limits price increases surpassingthe inflation rate in the future, it would not force drug companies to lower their current prices. Consequently, such legislation would likely transpire as a relaxed pressure on big pharma companies. Instead, the burden would be placed on insurance companies who would likely respond by imposing additional premiums on their patients, cancelling out the insulin cost reduction. Arguably, there would be more value in addressing insulin firms’ price-setting power head-on rather than attempting to do so indirectly and allowing drug companies to maintain monopoly profits with impunity. For example, a price ceiling for vials at the OECD average may conceivably benefit diabetics in the US, reduce the amount of tax that funds Medicare insulin expenditure while retaining drug manufacturers’ profits. Even when price caps stretch only to Medicare beneficiaries, the accompanying increase in insurance premiums may detrimentally impact those uninsured or on medical plans not covered by this legislation.[22]

Further, the positive impact of the successful legislature, or even the failed broader proposal, is sure to have disproportionate affects on marginalised groups in the United States. Though it supports the underinsured, it fails to cover the 28 million US citizens without health insurance coverage, not to mention those undocumented in the US.[23] Further, people of colour are at higher risk of being uninsured than non-Hispanic White people and undocumented people in the US, who are disproportionately from indigenous, black, or other communities of colour, are more than four times more likely to be uninsured than documented US citizens.[24],[25] Furthermore, America’s rebate set-up[26] forces the uninsured and underinsured, who don’t receive potential rebate returns, to subsidize others’ increased insurance premiums.[27] This leaves marginalised and economically disadvantaged groups further at risk against inflated insulin prices.

Though supporting low/no-income seniors by charging insurance companies more is an improvement, changing who pays for insulin doesn’t lower market prices. Therefore, the Act remains only a feeble attempt at reforming the drug market. However, the Government has only limited power to intervene in firm structures. Enforcing insulin price caps for everyone or regulating pharamceutical competition and drug markups are interventionist policies, inconsistent with America’s predominately liberal, free market policy culture. Until such policies come into effect then, there must be a call for making health insurance more accessible and affordable for those economically disadvantaged.

The passive choice to maintain such high prices without reformation are in violation of the right to health. 79% of diabetic Americans and/or those who care for diabetics have an average debt of $9000 from insulin payments.[28] Keeping access to insulin unaffordable causes Type-1 diabetics and carers to bargain off insulin, and often their lives, with other living expenses.[29] One cannot feasibly rationalise that a solution required for the survival of so many has come to be treated as a privilege.[30] This despite the fact that the United States has signalled its symbolic commitment to ensuring the accessibility and provision of WHO-determined essential drugs, including insulin, to all without discrimination.[31],[32]Yet, the access to insulin has thus far been treated as a privilege, not a right, and extortionate prices disproportionately affect socially and economically marginalised groups.[33]

Endnotes

[1] Since, type 1 diabetics require insulin to live, when mentioning its life-or-death value in their consumer budgets, I am predominately focusing on intricate arguments surrounding hypoglycaemia in type 1 diabetes. [2] “National Diabetes Statistics Report,” Centers for Disease Control and Prevention, website https://www.cdc.gov/diabetes/data/statistics-report/index.html. Accessed August 22nd 2022. [3] Irl B. Hirsch, "Insulin in America: A Right or a Privilege?" Diabetes Spectrum 29 no.3 (2016): 130–132 [4] Andrew W. Mulcahy, Daniel Schwam, Nathaniel Edenfield, "Comparing Insulin Prices in the United States to Other Countries: Results from a Price Index Analysis" (Santa Monica, CA: RAND Corporation, 2020) pp.1-15 [5] Matt McConnell, "If I’m Out of Insulin, I’m Going to Die” (research report, Human Rights Watch, 2022), pp. 1-40. [6] Ibid. [7] Baylee F. Bakkila, Sanjay Basu, and Kasia J. Lipska “Catastrophic Spending On Insulin In The United States, 2017–18,” [8] Darby Herkert, Pavithra Vijayakumar, Jing Luo J, et al., "Cost-Related Insulin Underuse Among Patients With Diabetes," JAMA Intern Medecine 179 no.1 (2019):112–114. [9] American Diabetes Association, "Economic Costs of Diabetes in the U.S. in 2017," Diabetes Care 41 no.5 (May 2018): 917–928. [10] Ibid [11] "FDA Approves First Interchangeable Biosimilar Insulin Product for Treatment of Diabetes," FDA, accessed August 22, 2022,https://www.fda.gov/news-events/press-announcements/fda-approves-first-interchangeable-biosimilar-insulin-product-treatment-diabetes. [12] Michael Sainato, "'Profit over death': millions of American diabetics struggle to afford insulin," the Guardian, October 30, 2020, https://www.theguardian.com/society/2020/oct/30/americans-diabetes-insulin-cost. [13] American Diabetes Association, "Economic Costs of Diabetes in the U.S. in 2017," [14] Hirsch, Irl. "Insulin in America: A Right or a Privilege?" [15] Luo, J., Kesselheim, A. S., Greene, J., & Lipska, K. J, Strategies to improve the affordability of insulin in the USA. The Lancet Diabetes and Endocrinology, 5 no.3 (2017): pp. 158-159. https://doi.org/10.1016/S2213-8587(17)30041-4 [16] Congress.gov. "H.R.5376 - 117th Congress (2021-2022): Inflation Reduction Act of 2022." August 16, 2022. http://www.congress.gov/. [17] "ADA's Inflation Reduction Act Explainer," America Diabetes Association, accessed September 15, 2022, https://diabetes.org/sites/default/files/2022-08/What-People-with-Diabetes-Need-to-Know-about-the-Inflation-Reduction-Act.pdf. [18] Medicare beneficiaries, principally citizens over 65, hold the highest proportion of diabetes in the population: 29.2% of over 65-year-olds (15.9 million) are diabetic and more than 3.3 million Medicare beneficiaries use common forms of insulin.#,# Consequently, this legislation will have a large impact on a great many US citizens. However, it must be noted that to qualify for Medicare, even over-65, you must be a legal US resident or citizen, among other qualifications. Hence, the positive impact of the legislation is not quite as large as first appears. (CDC “National Diabetes Statistics Report,” Centers for Disease Control and Prevention, website) and (USA, Department of Health and Human Services, Original Medicare (part A & B) Eligibility and Enrolment, (Washington: CMS, 2021) accessed: August 22, 2022, https://www.cms.gov/Medicare/Eligibility-and-Enrollment/OrigMedicarePartABEligEnrol.) [19] "Many Privately Insured People with Diabetes Could Save Money if Congress Caps Insulin Costs," Kaiser Friends Foundation, accessed September 15, 2022, https://www.kff.org/health-costs/press-release/many-privately-insured-people-with-diabetes-could-save-money-if-congress-caps-insulin-costs/. [20] Bill Heniff, Jr., “The Budget Reconciliation Process: The Senate’s “Byrd Rule”, Congressional Research Service, August 22, 2022. [21] Two Senators from the latter, John Boozman and James Lankford, are up for re-election in the coming November midterms.# [22] Gotham, Dzintars, Melissa J Barber, and Andrew Hill, “Production Costs and Potential Prices for Biosimilars of Human Insulin and Insulin Analogues,” BMJ global health. 3 no.5 (2018). [23] Katherine Keisler-Starkey and Lisa N. Bunch, U.S. Census Bureau Current Population Reports, P60-274, Health Insurance Coverage in the United States: 2020, U.S. Government Publishing Office, Washington, DC, September 2021. [24] Jennifer Tolbert , Kendal Orgera , and Anthony Damico “Key Facts about the Uninsured Population” [25] McConnell, Matt, "If I’m Out of Insulin, I’m Going to Die." Research report, Human Rights Watch. [26] The rebate set up is part of American health care law (the Affordable Care Act) entialing a federal minimum medical loss ratio. The legislation requires insurance companies to spend 80% of premiums on customers’ medical claims/ imporving care quality (the remaining 20% to be spent on administrative and business costs). If the insurance provider fails to meet this 80% threshold, which is often the case as pharmaceutical companies offer discounts to insurance porviders, customers receive part of their premium back in the form of a rebate. (This could be in the form of a lump-sum or simply credit towards a future premium payment etc.) [27] McConnell, Matt, "If I’m Out of Insulin, I’m Going to Die." Research report, Human Rights Watch. [28] CharityRX, “The financial burden of US insulin-pricing on the American Diavetic committee” 2022 survey [29] Kasia Lipska, “Break up the insulinracquet,” New York Times, February 20, 2016. [30] Irl B. Hirsch, "Insulin in America: A Right or a Privilege?" [31] United Nations, Universal Declaration of Human Rights (Paris: Palais de Chaillot in Paris General Assembly, 1948), accessed 22/09/2022. However, the US have not ratified this legislation and hence, it is not legally obligatory. [32] McConnell, Matt, "If I’m Out of Insulin, I’m Going to Die." Research report, Human Rights Watch. [33] OHCHR and the WHO, The Right to Health (Geneva: The United Nations, 2008).

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