116 3rd St SE
Cedar Rapids, Iowa 52401
Insulin has become the poster-child drug when it comes to the debate over controlling skyrocketing drug prices and life-or-death stakes.
In the last week, it became a political football as congressional Democrats passed a sweeping $740 billion health care and climate package.
What’s driving the cost surge, and why has it become such a prominent political issue — especially since both Democrats and Republicans agree that something must be done?
The price of insulin
The average list price for a vial of insulin in Canada was $12 compared with $98.70 in the United States, according to nonprofit global policy think tank the RAND Corporation.
U.S. insulin prices are four times higher after rebates, on average, compared with other countries, and about one in four diabetes patients has reported taking less insulin than prescribed because they can't afford it, according to RAND and Yale University researchers.
The U.S. Department of Health and Human Services asked RAND to investigate how American insulin prices compare with those in other parts of the world. Researchers obtained list prices for all types of insulin from 33 countries. Plotted on a graph, the U.S. prices stand alone — with drug companies charging sometimes five to 10 times higher compared with other countries.
The differences were especially stark when the researchers looked at rapid-acting insulin, which accounts for about a third of the U.S. market. The average price in other countries was a little more than $8. In the United States, it was $119.
The analysis by 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.
“Those differences help explain why insulin has become a symbol of the high cost of American health care,” according to RAND researchers. “Its prices have shot up in recent years, for reasons that are opaque at best, with those who can least afford it often paying the most. Reining in those prices has become the rare political cause embraced by Democrats and Republicans alike.”
More than 37 million Americans — or more than 10 percent of the U.S. population — have diabetes, according to the Centers for Disease Control and Prevention. More than 8.4 million of them rely on insulin to manage symptoms and prevent life-threatening complications.
In 2020, there were more than 248,000 adults living with diabetes in Iowa, according to the Iowa Public Health Tracking Portal. In Iowa, total direct medical expenses for those diagnosed with diabetes was estimated at $2 billion in 2017, according to the American Diabetes Association.
It’s considered the most pervasive, expensive and deadly chronic illness in the country.
A new study by Yale researchers found one in seven people who use insulin in the United States faced “catastrophic” levels of spending on insulin, meaning they spent at least 40 percent of their income — after having paid for food and housing — on insulin. The findings were published July 5 in Health Affairs based on data from the most recent Medical Expenditures Panel Survey, which covered 2017 to 2018.
Yale researchers said much of the rising costs can be attributed to supply chains that have become more complicated.
Why is lowering the cost so hard?
Dan Shane, a health economist and assistant professor at the University of Iowa, said the U.S. insulin market is dominated by just three companies: Eli Lilly, Novo Nordisk and Sanofi. Those companies account for roughly 90 percent of the U.S. insulin market, with competition slow to develop because of the complex and expensive nature of creating insulin, Shane said.
Insulin is considered a biological product produced from material from a living organism — in this case, yeast and bacteria — and not chemically synthesized molecules like most other manufactured drugs. Biologic products, by their nature, can’t be identically duplicated, Shane said, which makes it impossible to develop a generic insulin option. Thus, even once the patents and exclusivity periods expire, a competitor cannot make a generic version in the traditional sense.
Instead, manufacturers must make a biosimilar product, which is a medication highly similar to the original biologic medication with no clinically meaningful differences.
Developing biosimilars for insulin, however, is much more complex and expensive process, with the average cost an estimated 22 times greater for a biologic product, according to the American Action Forum, a center-right research institute focused on economic, domestic and fiscal policy issues.
Shane, too, noted insulin products are not interchangeable. Chemical differences in insulin types and variations between products and biological differences in blood sugar regulation between diabetic patients make it so that there is very little competition in the insulin market.
“Within the manufacturing process there’s still trade secrets in how exactly they develop their products, their formulations,” Shane said. “Even if there’s no patent, that is proprietary information so they don’t have to turn that over to someone who is trying to develop a biosimilar for their insulin product.
“ … It’s a market where consumers don’t have a lot of flexibility. This is a lifesaving drug.”
How does Congress plan to lower insulin costs?
The Inflation Reduction Act that passed the House and Senate last week and is expected to be signed into law by President Joe Biden would limit insulin costs to $35 per month for those on Medicare. Senate Democrats also sought to cap the price of insulin at $35 per month for those covered by private insurance, but were blocked by Senate Republicans.
Medicare is the federal health insurance program for Americans 65 and older, as well as some younger people with disabilities.
About one in three Medicare beneficiaries have diabetes, according to the Centers for Medicare and Medicaid Services, and more than 3.3 million beneficiaries use insulin.
Of Medicare beneficiaries who use insulin, one in five reach catastrophic spending, according to the Yale study. Moreover, those Medicare patients account for more than half of individuals who fall in the catastrophic spending category identified in the study.
In 2017, Medicare beneficiaries with diabetes paid, on average, about $4,600 in out-of-pocket costs for medical care, an increase of 28 percent from 1999 and approximately $500 more than Medicare beneficiaries without diabetes, according to the CDC.
Additionally, the bill would cap out-of-pocket spending on drugs at $2,000 a year for those on Medicare, beginning in 2025, and seniors could spread out their drug costs throughout the year. In 2024, a 5 percent coinsurance requirement above the Medicare Part D “catastrophic” threshold, which was $7,050 in out-of-pocket spending in 2022, would be eliminated.
Do experts think that will make a difference?
“The price cap approach is probably the path of least resistance to helping consumers,” said the UI’s Shane. “The counter to that is, will some of these companies or insurers just cost shift?” by passing on more of the total cost of care to those in their health plan.
“That’s always a possibility, but given some states have done this as well … that probably stands to have the best chance to directly lower costs for consumers,” he said.
To date, 22 states and the District of Columbia have capped co-payments on insulin, devices or diabetes supplies.
“Insulin is too expensive for too many people with diabetes,” said Dr. Robert Gabbay, chief scientific and medical officer for the American Diabetes Association. “We appreciate the Senate approving copay cap for seniors, but disappointed 43 senators opposed making insulin affordable for those with private insurance. We stand ready to work with Congress to make insulin affordable for all Americans who need it, by approving an out-of-pocket cost limit for people with commercial insurance and reforming the insulin rebate system through the INSULIN Act.”
Why did Republicans block a more expansive cap?
The Senate parliamentarian ruled the measure violated a budget rule, stripping it from the overall package. Senate Democrats, though, preserved the cap on insulin costs for seniors on Medicare. They took up a vote to waive the procedural objection and keep the insulin copay cap for private insurance in the bill. The vote failed, with Iowa Republican U.S. Sens. Joni Ernst and Chuck Grassley joining most other Senate Republicans in overriding Democrats’ efforts to waive the rule.
Grassley tweeted that his vote was “not about insulin,” but about Democrats “ignoring budget rules” in the U.S. Senate, and that he supported another far narrower insulin amendment, offered by Louisiana Republican Sen. John Kennedy to provide for discounted insulin for low- and middle-income Americans.
The amendment would have redirected $3.1 billion from the U.S. Treasury to make discounted insulin and epinephrine available to qualifying patients at federally-qualified health centers.
The amendment included a cost-sharing requirement that would have capped the out-of-pocket cost to no more than 20 percent of the total cost of insulin.
To receive the discount, one would have to have an income equal to or less than the 350 percent of the federal poverty level and have a high unmet deductible under a health insurance plan, or have no health insurance at all.
Republicans argued the amendment addressed the pricing issue without violating Senate rules. The Kennedy amendment failed on a 50-50 party-line vote, with Democrats opposed, saying it did not go far enough, covering only a fraction of those on private insurance.
Republicans contend those who are uninsured or are covered by high-deductible health plans pay the most out of pocket for insulin and tend to have high levels of catastrophic spending.
Yale researchers found that among Americans who use insulin, most had Medicare (41.1 percent) or private insurance (35.7 percent). Those with private insurance or no insurance paid the most out-of-pocket for insulin, followed by those with Medicare.
Grassley also noted that the Democrats' bill did not contain things like accountability or transparency measures for pharmacy benefit managers included in legislation he sponsored and introduced as an amendment. He also noted he has pursued other avenues to reduce the costs of insulin, including leading a bipartisan investigation into insulin prices with Sen. Ron Wyden of Oregon, and remains committed to working to lower drug prices.
Ernst also argued the cap alone doesn't do enough to solve the underlying problem of rising prescription drug prices, and said she supports Grassley’s Prescription Drug Pricing Reduction Act. The legislation would, among other provisions, prevent Medicare Part B and D drug prices from rising faster than inflation and cap annual out-of-pocket Medicare drug costs at $3,100, higher than what was passed by Democrats.
Grassley claims the legislation would save seniors and Americans with disabilities $72 billion in out-of-pocket costs in Medicare Part D and save taxpayers $95 billion.
Iowa Republican U.S. Rep. Ashley Hinson of Marion Hinson argued capping out-of-pocket insulin costs at $35 a month will raise insurance premiums as companies try to recoup lost profits.
She said that having the federal government control drug prices will eliminate competition within the pharmaceutical industry and leave patients without access to new, lifesaving drugs.
In contrast, Hinson said she supports House Republicans’ proposed Lower Cost, More Cures Act. The legislation, among other provisions, includes a monthly $50 post-deductible cap for insulin and insulin supplies for seniors in the Medicare Part D program. The bill also seeks to lower how much American families pay out-of-pocket for insulin by encouraging insurers to cover more of the cost for enrollees in high-deductible health plans; calls for more drug price transparency; and seeks increase competition and bring new products, including insulin, to market sooner.
Why has it become such a political issue?
If both parties agree that insulin prices need to be addressed, why has it become such a prominent political issue?
Shane summed it up succinctly: “It’s more preventing a win for the current administration, to be honest. It would be a pretty big positive to meaningfully lower insulin prices, right?”
Republicans contend the insulin cap and other provisions aimed at lowering prescription drug prices were included in a bill that contained poison pills that conservatives could not support, such as tax increases and increased spending to combat climate change at a time of high inflation.
Comments: (319) 398-8499; firstname.lastname@example.org