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Why Does Insulin Cost So Much After 95 Years?

By Estay Greene | November 11, 2016 | Healthy Lifestyle, Industry Perspectives

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In December 2016, Eli Lilly & Co. announced a discount program effective in 2017 for people who pay largely out-of-pocket for the company’s insulin products.

Check with your insurer to see if you qualify for the discount.


Why Does Insulin Cost So Much?

According to one recent study, the cost of insulin tripled in the US between 2002 and 2013. Unfortunately, that kind of inflation isn’t unusual for specialty drugs these days. But what’s causing insulin prices to keep climbing?

Insulin, a protein that lowers blood sugar, is used to treat diabetes, a group of diseases that causes higher-than-normal blood sugar levels. Until about 30 years ago, insulin was made from pigs and cows.

The era of the biologic – genetically engineered proteins that come from human genes – brought a more sustainable production process. Today, most insulin is made from the E. coli bacteria. These medicines are much closer to the version produced in the human body, which can mean fewer complications for patients.


Is Competition Part of the Problem?

In the 95 years since insulin was developed, a number of drug companies have been making and selling it. But even with all those companies making insulin, competition hasn’t resulted in lower prices – it’s had the opposite effect. In fact, some brands of insulin have seen prices increase by more than 150 percent in the last five years alone.

These price increases can spread like wildfire, with drug companies matching competitors’ price hikes in what’s known as “shadow pricing.” Like our recent blog post about the EpiPen, this is just one more example of the irrational world of drug prices.

Blue Cross and Blue Shield of North Carolina’s spending on insulin has been on a steep incline for years. Each year, BCBSNC spends about $250 million on all medications, with insulin making up 13 percent of the total.

And as complicated as our health care system is, some of the math is very simple. In the case of insulin:



What About Generics?

After nearly a century since insulin became available, you would expect more affordable generic versions to be available. But as we’ve learned with drug pricing, the distance between what you would expect and what actually happens can stretch from Asheville to Wilmington.

When the original researchers sold their $3 patent to the University of Toronto, the university quickly realized it couldn’t produce enough insulin to meet demand, so the school reached out to US drug companies with an enticing offer: You can have the patent rights on any improvements you make to the insulin manufacturing process. With that, the green flag dropped and the insulin gold rush was on.

As newer, longer-acting versions of insulin have been developed, drug companies gained new patents through process innovations – which held off competition from generics. This so-called “evergreening” of patents has stifled generic competition and allowed insulin prices to continue climbing.

Diabetics who rely on insulin are hopeful that a batch of patents on long-acting synthetic insulins that are due to expire in the coming months and years can spur growth in the generic insulin market. In the coming months, drug maker Eli Lilly Basaglar hopes to release a generic, but we’ll have to wait and see how it’s priced and promoted.


What Can You Do?

Can consumers do anything to help control the cost of insulin? Or are they just plain out of luck?

The main thing consumers can do is maintain a healthy body weight so they can avoid a preventable case of diabetes. Some researchers even believe that changes in diet and lifestyle can reverse Type 2 diabetes to the point where an insulin prescription is no longer needed.

Still, climbing insulin prices affect everyone, even people who don’t use insulin. We all pay for expensive drugs through higher insurance premiums. This underscores the urgency of adopting healthy lifestyles and using health care wisely.

To learn more, read our other blog posts on rising drug prices. You can also read blog posts about how you can lower your health care spending by eating better and living healthier.