Why lowering the cost of insulin is so hard in the US
Story at a glance
Congress failed to pass a proposal that would have capped out-of-pocket insulin costs at $35 a month for people not covered by Medicare.
More than 34 million Americans have diabetes, and it’s considered the most expensive chronic illness in the country.
Currently only three drug companies manufacture insulin in the U.S., with competition slow to develop because of the complex and expensive nature of creating insulin.
Over the weekend, the Senate tried to rein in the skyrocketing price of insulin for millions of diabetic Americans but ultimately couldn’t garner enough support. The failure reflects the complexity in regulating insulin and the stronghold pharmaceutical companies have on the drug.
Senate Democrats tried to rally support for a proposal that would have capped out-of-pocket insulin costs at $35 a month for people not covered by Medicare — but fell just three votes short.
However, they were able to secure the $35 insulin price cap for Medicare beneficiaries.
Most diabetic Americans, however, will still face steep insulin costs, as 2020 Census Bureau data shows about 54 percent of Americans were in employment-based health insurance plans while about 18 percent were enrolled in Medicare. There were also about 28 million people who did not have any health insurance in 2020.
At the same time there are more than 34 million people of all ages that have diabetes in the U.S. It’s considered the most expensive chronic illness in the country, with $1 out of every $4 in health care costs spent on caring for people with the condition.
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Those who have type 1 diabetes need to take shots of insulin daily because their bodies don’t make enough on their own. Those with type 2 diabetes can sometimes manage the condition through lifestyle changes, but many end up needing prescription insulin.
Of those roughly 34 million Americans who have diabetes, more than 7 million require daily insulin. Without it, uncontrolled diabetes can lead to blindness, kidney failure, loss of limbs and ultimately death.
Yet the price of the insulin hasn’t been affordable in the U.S., with drug companies charging some of the highest prices for insulin compared to other countries — sometimes five to 10 times higher.
An analysis by the RAND Corporation found that between 2012 and 2016, Americans aged 18 to 64 with employer-sponsored health insurance went from spending $1,432 on insulin to $2,853.
Put another way, in 2018 the average price per standard unit within the different types of insulin products in the U.S. ranged from $73 up to $119 — while other countries like Canada, the U.K. and Australia charged less than $10 per unit.
That’s partially due to the insulin market here in the U.S., which is dominated by just three companies: Eli Lilly, Novo Nordisk and Sanofi. Though insulin was discovered nearly 100 years ago, the process of making it is more complex than other medications, which has resulted in little competition and rising consumer prices.
An analysis by the American Action Forum (AAF) explains that insulin is considered a biological product because it’s produced from material from a living organism — like yeast and bacteria — and not chemically synthesized molecules like most other manufactured drugs.
Biologic products, by their nature, can’t be identically duplicated — which makes it impossible to develop a generic insulin option. Instead, manufacturers must make a biosimilar product, which is a medication highly similar to the original biologic medication with no clinically meaningful differences.
However, all the biosimilar insulin products brought to market in the U.S. were still being created by the three primary insulin manufacturers — Eli Lilly, Novo Nordisk and Sanofi.
That’s likely because developing biosimilars for insulin is challenging and expensive — the average cost an estimated 22 times greater for a biologic product.
“This cost and complexity will likely slow the development of competitors in the insulin market and prevent the kinds of price drops that have occurred with small-molecule drugs,” said AAF.
Congress tried to step in with legislation that would simply cap the cost that drug companies and health insurance providers could charge for insulin — bypassing the issue of biosimilars — but failed.
Some states have intervened with their own insulin copay cap legislation, like Maine which has a law limiting insulin costs to $35 for a 30-day supply for state-regulated commercial health insurance plans. West Virginia, Utah, Washington, New York and three other states have passed similar legislation.
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