Insulin, the life-saving medication that the more than 30.3 million Americans with diabetes require to live, is getting dramatically more expensive every year.
According to a report from a working group at the American Diabetes Association (ADA), the list price of insulin has nearly tripled since 2002 and the average price of insulin has increased by 64 percent since January 2014.
Some patients have to make hard choices between paying for their medicine or other basic life necessities, such as food and electricity, or are even rationing their insulin, a dangerous practice that can lead to death.
What is driving this exorbitant spike in cost for a drug that has remained largely unchanged since its discovery in the early 1920s? And what can physicians do to help their patients obtain the insulin they need?
Deane Waldman, MD, MBA, distinguished senior fellow in healthcare at the Texas Public Policy Foundation in Austin, Texas, says simply caring for patients is muddled by third-party entities, including the government, health insurers and pharmacy benefits mangers (PBMs).
This works against physicians being able to offer their patients the best care possible, because physicians are forced to prescribe from what are often limited medications available through a patient’s insurers and pharmacies.
“This whole third party in between the doctor and the patient is not only jacking up the prices [of medications] astronomically, we can’t really do what we think is best for our patient and give the patients the option to choose,” Waldman says.
Middlemen push up prices
Consumers perceive that their insurance plans pay for their prescription drugs, and the consumer simply pays the remaining co-pay. However, “[Insurance companies] haven’t paid for a prescription probably since the 70s,” says Aaron Heilaman, PharmD, owner of Tradition Drug in Ada, Okla.
Indeed, the supply chain for insulin is described as “complex” by an ADA working group organized to address insulin’s affordability problem. The working group writes that, due to the numerous stakeholders including manufacturers, PBMs, pharmacies, health plans, and employers, “There is no one agreed-upon price for any insulin formulation. The price ultimately paid by the person with diabetes at the point of sale results from the prices, rebates, and fees negotiated among the stakeholders.”
Health insurers farm prescriptions out to PBMs, typically to the top three: CVS/Caremark, Express Scripts, and OptumRx, which between then manage about 70 percent of the market, according to the ADA.
PBMs negotiate lower prices directly with the pharmaceutical companies, getting discounts on different medications.
“PBMs came along and said, ‘We can be Visa for you. We can streamline the process from the point of sale at the pharmacy back to the insurance company,’ ” Heilaman explains.
Therefore, in many cases, PBMs decide which drugs they’ll carry in their formulary and can add or remove a drug at their whim. The pharmaceutical companies then have to offer steeper discounts or “rebates” in order to have their drug included in a PBM’s formulary.
When PBMs manage the pharmacy benefit portion of a health plan, the ADA working group points out, they are beholden to their clients, health insurers and employers, not patients.
Though the three insulin manufacturers—Sanofi of France, Novo Nordisk of Denmark, and Eli Lilly and Co.—all make similar insulin, whichever company is willing to give the largest rebate is the one that gets put on the formulary, Heilaman explains.
“The United States healthcare game is not an open, free, fair market. It’s captive by big corporations that call all the shots,” he says.
Incremental patent changes
Another driver of higher cost, Waldman says, is that pharmaceutical companies have figured out ways to tweak drugs that are about to go off patent, enabling the manufacturer to extend the patent on the drugs or obtain new ones. This process prevents generic drug manufacturers from producing cheaper versions of the drugs.
“A drug company can take a known drug that is about to go off patent and simply combine it with another drug that never was on patent in the first place, and get a new patent,” Waldman says.