Reducing the cost of insulin — and other high-priced medications — in the United States will require a concerted effort involving multiple changes to the current convoluted drug pricing system, Mayo Clinic hematologist S. Vincent Rajkumar, MD, argues in a new commentary.
The High Cost of Insulin in the United States: An Urgent Call to Action was published in the January 2020 issue of the Mayo Clinic Proceedings by Rajkumar, professor of Medicine at the Mayo Clinic, Rochester, Minnesota, who specializes in treating myeloma and more recently has become an expert in drug pricing.
He also presented the information in a YouTube video.
As has been widely reported and examined by Congress in the past few years, the cost of insulin in the United States has risen at a far higher rate than inflation. For example, the price of a single vial of Humalog jumped from $21 in 1999 to $332 in 2019, an increase of more than 1000%, and far higher than the cost anywhere else in the world.
Stories of one in four patients having to ration their insulin use because of cost, and of some dying, have fueled protests, leading to legislative efforts and to a few initiatives by some of the manufacturers to address the cost problem.
Collective Advocacy Can Give Voice to the Needs of Patients
Much of the blame has been placed on the manufacturers for charging such high prices and on the pharmacy benefit managers (PBMs) — also known as “middlemen” — for incentivizing higher-priced products on formularies through rebates. Those are major factors, Rajkumar argues, but they’re not the only ones.
“There is no one reason why this is happening, and no one solution. It’s very complicated. It’s multiple factors all playing together. The only way to tackle it is to really understand it 360,” he told Medscape Medical News.
This is true of drug prices overall in the United States, but insulin is a special case. The current analog formulations haven’t changed in over 20 years, yet only in the past 5 years have a handful of “biosimilar” and generic versions started to appear, from the same manufacturers as the branded products.
“Insulin is a window into what’s wrong with the pharma industry…It’s the best example of how the system is broken,” Rajkumar stresses.
Physicians can help ease the problem, he said, by becoming educated about drug prices, taking cost into account when prescribing, and routinely discussing prescription drug affordability with patients.
“Doctors need to not be suspicious of biosimilars and generics,” he emphasized.
Physicians can also advocate for policies that will lower insulin prices, and their institutions can establish preferences for lower-cost biosimilars in formularies.
“Our individual and collective advocacy gives voice to the needs of our patients,” Rajkumar emphasized.
“Everyone in the Supply Chain Benefits From a Higher List Price”
In his commentary, Rajkumar lists six major reasons for the high cost of insulin:
People with type 1 diabetes are a “vulnerable population” who will die without insulin and are therefore willing to pay a high price to stay alive.
Just three manufacturers — Eli Lilly, Novo Nordisk, and Sanofi-Aventis — control nearly the entire insulin market in the United States, with no regulations to cap or control the prices they can charge.
The manufacturers continually file new patents for existing insulin products — 70 in the case of Lantus, for example — that provide additional years of monopoly protection from competition.
Although the US Food and Drug Administration has been receptive to approving insulin “biosimilars,” it still requires manufacturers to go through a long and cumbersome process to obtain licensure, sometimes taking as long as 10 years.
PBMs, paid by insurance companies to negotiate prices with retail pharmacies and pharmaceutical companies (through rebates), stand to benefit from higher, not lower, list prices.
Pharmaceutical companies have vast lobbying power.
Regarding point 5, Rajkumar told Medscape Medical News, “It’s not just the PBMs — it’s the whole supply chain. It’s hard to put a finger on the source of the problem.”
“There’s no transparency in any of the arrangements for you to know why only certain drugs are on a given formulary of an insurance company or PBM.”
“But we do know that in general, the whole supply chain benefits from the higher list price. Everyone,” he noted.
What About the New “Authorized Generic” Insulins?
That’s why Rajkumar isn’t convinced that Eli Lilly’s recent launch of half-priced “authorized generic” insulins — first the Lispro injection in March 2019, and then two combination pen products in January 2020 — or Novo Nordisk’s My$99Insulin program and “follow-on” authorized generic versions of Novolog and NovoLog Mix, launched January 2, 2020, will have a huge impact.
“It’s common sense. If Apple made the same iPhone for two different prices, who would pay the full price? It gives you a window into asking what is wrong with the system that allows that? To pay for the higher priced product, somebody is being paid,” he said.
Indeed, in December 2019, the offices of US Senators Elizabeth Warren (D-MA) and Richard Blumenthal (D-CT) issued a report from a survey of 400 pharmacies nationwide finding 83% of the less expensive “authorized generic” “Insulin Lispro” was not in stock.
More than two thirds of pharmacies reported they couldn’t order the product.
“Eli Lilly has failed to take consequential steps — such as simply lowering the list price of Humalog, as it has in foreign markets — to provide lower-cost access to this important diabetes drug,” according to the senators’ report, which concludes by urging Eli Lilly to lower the list price of its insulin and calling for Congress to take steps to enact systemic change to reduce drug prices nationwide.
Asked by Medscape Medical News for comment, Dani Barnhizer, Eli Lilly’s Manager of Global Diabetes Communications, said, “Like Senators Warren and Blumenthal, Lilly would like to see even broader use of Insulin Lispro Injection, because it’s a real solution that can lower co-pays for people living with diabetes.”
“But the Senators’ paper failed to identify the system challenges that have inhibited access to this lower list price product,” Barnhizer said.
She continued, “Payers determine an individual’s premiums and co-pays, which are subsidized by rebates that pharmaceutical companies pay. And many payers prioritize these rebates to lower premiums instead of offering low co-pays for chronic medications such as insulin.”
“It’s why only one in four people using Medicare Part D, and one in five with commercial plans, have coverage for Insulin Lispro Injection. This won’t change until payers prioritize providing consistent, affordable insulin co-pays,” she added.
However, Barnhizer also noted, “It is not unusual for pharmacies to not stock a medicine. Any pharmacy can place an order for Insulin Lispro Injection, with delivery in 1-2 days. All major US wholesalers are now distributing Insulin Lispro Injection.”
She also said that people who earn 400% or less of the federal poverty level may be eligible for free insulin and that Lilly can provide free insulin to anyone in emergency situations.
Novo Nordisk offers this as well.
Asked why Lilly doesn’t simply lower the price of all their insulins, Barnhizer responded: “Cutting the list prices would significantly disrupt access to branded insulins, which thousands of insured patients depend on.”
“Launching lower-priced insulin options is a less disruptive approach to help reduce the amount people pay at the pharmacy for people who need the help.”
In the Absence of a “Free Market,” Government Involvement Needed
In addition to the recommendations for physicians and their institutions, Rajkumar lists several potential policy-level solutions:
At the state and federal level, regulations should protect against excessive drug launch prices through the same type of value-based pricing approaches used in other developed countries. “Capping the maximum price increases to the rate of inflation is needed and can happen only through state and/or federal legislation,” he writes.
Although some may see this as antithetical to “free market” economics, Rajkumar points out that in the case of many prescription drugs, including insulin, “We not only have an unregulated monopoly, but it’s a prolonged unregulated monopoly for a lifesaving product, not a luxury item.”
“When you grant monopoly protection and put a barrier on competition, that’s not a free market. People have always had regulations on monopolies. Unregulated monopoly is a recipe for high prices. You have to have some regulation that protects citizens from exploitation.”
And here, he believes, the United States could adopt price negotiations as practiced in Europe and other parts of the world, but which are currently forbidden in the United States.
“Other countries negotiate the price in exchange for monopoly protection. You don’t have to re-invent the wheel,” he said.
Reform of the regulatory and legal processes to ease the path for approval of generics and biosimilars to enter the market. This could include reciprocal approval so that biosimilars approved in Canada or the European Union could automatically be granted FDA approval in the United States.
Reform of the patent system to prevent over-patenting and patent abuse, by capping patent life to 7-10 years and forbidding use of additional patents as a way of prolonging market exclusivity.
To this point, Barnhizer pointed out that “none of the Lilly insulins are patent protected. Our most commonly used insulin, Humalog U-100, lost patent protection in 2014.”
A nongovernmental agency should oversee pricing and make recommendations to Medicare and insurers on the maximum price of new and existing drugs including insulin. One body poised to do that work is the Institute for Clinical and Economic Review, which receives 77% of its funding from nonprofit foundations. “I have worked with them and they are the best there is,” Rajkumar told Medscape Medical News.
Any rebates paid by manufacturers to PBMs should be transparent to all stakeholders, including patients.
Nonprofit generic manufacturing should be established. The Mayo Clinic has recently partnered with Intermountain Healthcare and several other organizations in creating Civica Rx, a nonprofit generic company.
Measures and laws that provide access to insulin in emergency situations, particularly for people with type 1 diabetes.
Recent proposed and enacted legislation has been aimed at some of these goals.
The Insulin Price Reduction Act, introduced in October 2019 and just endorsed by the American Diabetes Association, would reduce insulin costs by providing incentives for manufacturers to revert to the 2006 list price of all insulins.
The Affordable Insulin Approvals Now Act, introduced in July 2019, aims to speed up approvals of generic and biosimilar insulins.
And in May 2019 the state of Colorado passed a bill to cap patient co-pays for insulin at $100 a month, and similar legislation has been introduced in several other states.
Rajkumar says that an overall fix will require changes at the federal level.
But, he said, they don’t need to happen all at once.
“There are a number of changes that need to happen, but we can do one legislation at a time…I’m optimistic that something will happen. This is a national conversation. Both sides of the aisle want to do something about it. People are indeed feeling the pinch, so maybe something will get done,” he said.
Rajkumar has reported no relevant financial relationships.
Mayo Clin Proceed. 2020;95:22-28. Full text