Senate Report Blasts Insulin Makers For High Prices
January 21, 2021 A new, bipartisan report from a key congressional committee is sharply critical of the three major drug manufacturers that sell insulin in the U.S. The companies Eli Lilly, Novo Nordisk, and Sanofi already have been all over the news recently for their pricing behavior. They also are the ringleaders of a group of drug companies that are circumventing federal law by refusing to provide 340B drug pricing program discounts to safety-net providers for drugs dispensed at community pharmacies.
The influential Senate Finance Committee released the report, which is the result of a two-year investigation by the panel. It concludes that the insulin-producing companies Eli Lilly, Novo Nordisk, and Sanofi aggressively raised the of their insulin products absent significant advances in the efficacy of the drugs. Those price increases often were the result of shadow pricing, where one company tracks whether its competitors are raising prices and raises its own price shortly after.
The investigation found that the three companies negotiated discounts with pharmacy benefit managers to be included in their drug formularies and then raised WAC prices. Each of the companies closely monitored the pricing decisions of their competitors and increased prices in lockstep. Sanofi and Novo Nordisk often announced price hikes within hours or days of each other, the report noted.
The committee reviewed pricing for insulin pens and reported that:
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How Rebates Most Of The Cost Of Your Insulin Work
The math is infuriating, but heres the heavily-simplified basics of how rebates work if you made a product for $5 and wanted to sell it, you may set the price at $10, to create a $5 profit. With that $5 profit, you can invest back in your company to create better products, pay yourself whatever you want to do with your $5.
But lets say you want your product to be in more places and available to more people. You might hire a middle person to place your product in new stores across the country, and theyll charge a fee, which is reasonable.
When you begin, their fee is $1. So that you can keep your $5 profit, you raise your price to $11. Still reasonable. But over time, your middle person makes themselves indispensable and knows it. Youre making way more money because of how many products youre able to sell, so youre not about to drop your middle person.
And oh oops you also signed a contract with your middle person to ensure youll always get your product placed in these nation-wide stores, so youre locked in. And part of that contract was an understanding that you wont lower your price, since that would impact your middle-persons profit.
So now, your product costs $50. Its the same product youve never improved it. Your customers are receiving no more value than when the product cost just $10. Over time, you wanted to make more money from it, so your profit is now $10.
Its still $5 to make your product.
Democrats To Lower The Price Of Insulin To $35/month
Video of Schumer:
Majority Leader Schumer announces that insulin will cost $35/month under the agreement to lower prescription drug prices.
Sarah Reese Jones
Schumer said on the Senate floor:
For too many Americans, all it takes is a sudden serious illness and you can find yourselves spending hundreds if not thousands and several thousands of dollars per year, just to afford things like insulin or vitally-needed cancer treatments. Its profoundly unfair and wholly un-American. Imagine the strain you can face: someoneyou or a loved oneis ill and you cant afford the medicine, and you see them, their condition getting worse and worse. I cant think of things that are worse than that.
Yesterday, we took a large step forward in helping alleviate that problem. For the first time ever, Medicare will be empowered to directly negotiate prices in Part B and Part D. This will directly reduce out-of-pocket drug spending for millions of patients every time they visit a pharmacy or a doctor.
Our agreement does other things as well. It will cap out-of-pocket spending at $2,000 per year, ending the dilemma I just spoke about where a life-changing diagnosis could mean thousands upon thousands of dollars in new expenses that an individual cant afford.
And it will reform the pharmaceutical industry to stop price gouging and make sure our countrys drug pricing system benefits patients, not corporations.
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Will The Freeze Effect Medicares Insulin Discount
No. The Biden Administrations regulatory freeze does not impact a new insulin discount that took effect on January 1, 2021. That discount, announced last year by President Trump and CMS, allows seniors who sign up for an enhanced Medicare plan to receive a 30-day supply of insulin for $35. The discount requires seniors to join a Medicare drug plan or Medicare Advantage Plan that participates in the insulin savings model, so only those individuals who are willing to pay for the enhanced coverage are eligible to receive the $35 price cap.
We hope this information on if President Biden raise the cost of insulin is helpful. Stay on top of your health insurance by CALLING us at 410-1320
$35 A Month For Insulin
Paris-based Sanofi said it makes its insulin pricing decisions independently from those of its competitors. Sanofi said the net price of its insulins declined by 53% since 2012, arguing the high prices charged to patients reflect decisions made elsewhere in the supply chain.
Ã¢Over the same period, the net price for commercial and Medicare Part D plans of Lantus has fallen 44.9%, while average out-of-pocket costs for patients with commercial insurance and Medicare Part D has risen approximately 82%,Ã¢ Sanofi said.
Ã¢For all the focus on the growth of list prices, today, the average net price of Lantus is below 2006 levels. That is why we support policy reforms to require health plans to share negotiated savings with patients by requiring patient cost sharing be tied to the net prices.Ã¢
Indianapolis-based Lilly offered a similar response in a statement.
Ã¢Lilly, like other companies, monitors competitor list price changes that are available through publicly available services,Ã¢ the company said. Ã¢However, any changes we make to our list prices are independent decisions, and to the extent they consider competitors they are informed only through publicly available data.Ã¢
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Pharma: Biden Freezes Trumps Lower Cost Insulin And Epinephrine Rule
Posted on 01/22/2021
Big pharma is smiling big right now. The big three insulin producers are Eli Lilly and Company, Novo Nordisk A/S, and Sanofi S.A., in which they dominate more than 90% of the world insulin market by value. After swearing-in, U.S. President Joe Bidens HHS froze the Trump administrations December 2020 drug policy that mandates community health centers to pass on all their insulin and epinephrine discount savings to patients.
The rule was finalized in late December 2020. The drug rule was put in place to benefit patients who have a hard time paying for expensive insulin and allergy medication. Former President Trump campaigned on lowering the price of important pharmaceutical drugs like insulin, which is used to treat diabetes, and epinephrine. Diabetes afflicts over a quarter of Medicare beneficiaries and drives billions in Medicare spending every year. More than 20 million Americans have diabetes, in which the body fails to properly use sugar from food due to insufficient insulin, a hormone produced in the pancreas.
Intermediaries Gain From Rising Insulin Prices In The Us
As the price of insulin continues to rise in the United States, a team of economists at the University of Southern California suggests that solely focusing on drug makers will miss what it claims is an ever-increasing share of dollars going to pharmacy benefit managers , pharmacies, and wholesalers.
While the mean list price of 32 insulin products increased by 40% from 2014-2018, the share of a hypothetical $100 insulin expenditure accruing to manufacturers decreased by 33% and to health plans by 25%, say the study authors in their report published in JAMA Health Forum.
But the share going to PBMs increased by 155%, to pharmacies by 229%, and to wholesalers by 75%.
Even so, in 2018, insulin makers retained the largest portion, about $46.73 of that $100, compared with $10.40 for insurers, $14.36 for PBMs, $20.42 for pharmacies, and $8.09 for wholesalers.
The authors say that profits for insulin makers and insurers have declined citing public financial filings and the widening gap between the net expenditures by drug companies and the net prices they receive.
That growing gap suggests manufacturers have been increasing discounts and rebates paid to intermediaries, write Karen Van Nuys, PhD, Rocio Ribero, PhD, Martha Ryan, BS, and Neeraj Sood, PhD, all from the Leonard D. Schaeffer Center for Health Policy and Economics at USC.
Even so, their work is important, say Chester B. Good, MD, MPH, and Inmaculada Hernandez, PharmD, PhD, in an accompanying editorial.
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Living With Diabetes In 2021 Means Skyrocketing Financial Costs
The price of insulin has increased 1,200% since 1996.
When most people think of managing a chronic condition, they think about doctor’s visits, prescription medicine and lifestyle changes. But for many individuals living with diabetes, medical interventions are only part of the strugglea struggle that is only exacerbated by skyrocketing financial costs.
The costs associated with diabetes management have been climbing rapidly since the turn of the century nowadays, many of those living with diabetes have few options to fund their treatment. They’re often forced to ration medicine, not eat, even upend their livesturning down jobs or moving to a state with better coverage, for examplejust to afford the basic care they need to survive.
Average Price Per Unit Across All Types Of Insulin In 2018
- United States: $98.70
- UK: $7.52
- Australia: $6.94
The average price in America, across all types of insulin, was more than ten times higher than the average for all of the other countries combined. In fact, the closest any country came to paying the $98.70 American average was the $21.48 average that Chile pays.
The differences were especially stark when the researchers looked at rapid-acting insulin, which makes up about a third of the U.S. market. Its average price in other countries was just over $8. In America, it was $119.
It comes at a high cost, and not just financially, but in terms of your life, said Mila Clarke Buckley, 30, whose autoimmune diabetes is slowly shutting down her pancreas. She runs a top-rated blog for fellow diabetics, Hangry Woman, from her home in Houston. She has more than 30,000 readers.
It’s not like one day you can just stop taking insulin, she said. You really have to manage your life thinking, OK, this is my No. 1 priority, to be able to get this little pen of liquid so that I can live.
Insulin prices in the United States are higher than prices in nearly three dozen other countries RAND researchers examinedand it’s not even close.
The prices RAND used in its studythe list prices, set by drug manufacturerswere the most available for comparison across different countries. They’re a good starting point for understanding the true cost of insulin. In the cryptic world of drug-price setting, the list price is like an opening bid.
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Traditional Insulins Are Cheaper Than Modern Insulins
Average retail prices of Novolin and Humulin have gone down, or held steady, while prices of modern rapid- and long-acting insulins continue to go up. On average, traditional insulins now cost less than half of what modern insulins cost.
Why? Traditional insulins have historically been cheaper than their newer competitors. Modern insulins offer better blood sugar control but are synthetic analogs of traditional insulins, which makes them more difficult to produce.
Additionally, when patents on Humulin and Novolin expired around 2000, manufacturers Eli Lilly and Novo Nordisk had to test new pricing strategies to remain competitive.
In 2017, for example, Novo Nordisk partnered with CVS to offer Novolin at roughly 80% less than its list price. Both Novo Nordisk and Eli Lilly have also worked with Walmart to heavily discount Novolin and Humulin under Walmarts ReliOn line of insulin products.
Retail partnerships havent been their only strategy, though. Eli Lilly had been increasing prices for Humulin every 6 months until May 2017, when they decided to stop further increases. In fact, prices of traditional Humulin and Novolin insulins have held fairly steady since then.
and are currently the cheapest traditional insulins, with average unit prices as low as $0.03.
Iv International Human Rights Standards
Unaffordable insulin products in the United States, especially insulin analogs, undermine rights protected under international human rights law, including the right to the highest attainable standard of health, the right to equal and affordable access to essential medicines, the right to equal protection under the law, and the right to an adequate standard of living.
Even for those who are able to afford high out-of-pocket costs without resulting to rationing their medicine, allocating necessary funds for insulin may come with opportunity costs for people living with diabetes, limiting access to higher education, home ownership, and other life goals, and resulting in damaging stress and anxiety.
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Vials Are Cheaper Than Newer Dispensers
In 1985, Novo Nordisk introduced the first insulin pen, making it more convenient for patients to store and self-inject insulin but it came at a price. Today, retail prices of rapid-acting insulins can be almost 40% more expensive if you opt for pens instead of vials.
New dispensers make insulin more expensive. Were seeing that again with Afrezza, the only insulin to be delivered as an inhalable powder. One unit of Afrezzas insulin can cost as much as 20 times the price of other rapid-acting insulins. Average retail prices for Afrezza have also continued rising through the pandemic. Afrezzas manufacturer, MannKind, offers the medication at reduced costs through its direct purchase program.
Here are retail prices of rapid-acting insulins as of October 2021:
Senators Press Insurers For Reams Of Pricing And Rebate Info On Insulin
The FDAs policy decrees that any insulin application thats still pending before the agency on March 20, 2020, will be rejected. Any applicant would then have to start over and reapply under a new biosimilar pathway.
Given the lengthy timeline for drug development along with an uncertain and often timely FDA approval process the hard stop in 2020 has made it dicey for drug makers to submit a potential generic insulin application for several years now.
Even companies who have insulin products in development and are ready to file their applications with the FDA are now waiting to apply until after 2020, given they want to avoid going through the time and money of applying in 2019, only to be rejected on the March 20, 2020, date, AAM explained to the FDA in March 2016.
he policy is already having a devastating effect on current development programs for many important protein products, including insulins, AAM wrote in its most recent letter to the FDA on the subject, adding that the policy conflicts with the relevant statutes, is arbitrary and capricious, words often used by companies to signal they will sue over a policy.
When it was first proposed, generic drug makers blasted the 2020 cliff, saying it would impair patient access to affordable alternatives to insulin and other drugs.
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The Role Of Insulin Manufacturers
The list price of insulin has risen steeply over time, with the greatest increase over the last fifteen years. For context, one vial of insulin typically lasts an insulin-dependent person anywhere from 5 to 20 days. Most insulin-dependent people require 2-3 vials of insulin per month, while some require 6 or more. Every case of diabetes is unique.
In the late-90s, one vial of analog insulin cost about $25-40 per vial, without insurance. By 2005, this had doubled to about $80, then started sharply increasing about $125 by 2010, $260 in 2015, and depending on the type of insulin up to $275 and sometimes as much as $500 or more for long-acting analog insulins. Experts have stated that, even in a capitalist but competitive market, an insulin-dependent person should be paying $130 or less per year for their insulin needs.
These price hikes are not limited to insulin all drugs, including all glucose regulating medications and most recently, diabetes devices, are subject to the rebates problem. But insulin is certainly where we see one of the clearest examples of how the US healthcare system is broken. Not only do PBMs and insurance companies benefit, but the Senate Finance Committees January 2020 report states that despite the insulin manufacturers saying that they are not making as much off insulin as people say, evidence shows that they are.
The report calls out several clear instances of the pricing increase practices:
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Get The Facts On Insulin Pricing + The Presidential Transition
Editors Note: People who take insulin require consistently affordable and predictable sources of insulin at all times. If you or a loved one are struggling to afford or access insulin, you can build custom plans based on your personal circumstances through our tool, GetInsulin.org.
the US Department of Health and Human Services announced that they will be rescinding the 2020 ruleoriginally put on pause for review in January 2021, as outlined beloweffective November 1, 2021. The reversal of the previous administrations Executive Order will not prevent individuals from accessing insulin at 340B participating community clinics.
A flurry of misinformation has been making its way around the internet, stoking fears that the Biden Administration paused or reversed a previous Trump Administration Executive Order that lowered the price of insulin. Below, we clarify what actually happened:
In December 2020, the former administration issued a policy ruling stating that health centers that participate in the 340B program must pass on drug cost savings to the patients they serve.
The 340B program is a section of the Public Health Service Act. This program requires drug manufacturers to sell their products at cost to participating hospitals and clinics that serve uninsured and low-income patients. Through this program, these patients are able to get low or at-cost drugs like insulin.
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