In mid-February the comment period closed for the Federal Drug Administration’s proposed approach to transition insulins as regulated drugs to biologics and biosimilars. Indianapolis-based Eli Lilly and Company noted in its comments that it wanted to introduce its own versions. And, on Monday, it did just that.
Lilly will begin selling an authorized generic of Humalog 100 for $137.35 per vial, which is roughly 50 percent below the insulin’s current list price. As an authorized generic the insulin will be identical to the brand-name, except for the label, and will be manufactured in the same facilities. The generic will be called Insulin Lispro, according to company reports, and sold through an Eli Lilly subsidiary, ImClone Systems.
Introduction of the authorized generic is a compromise, of sorts. The pharmaceutical company is billing it as a way to appease the public, as well as members of Congress, who have noted with distaste that insulin prices have skyrocketed 500 to 600 percent in recent years. Between 2001 and 2015, Humalog increased from $35 to $234, a 585 percent jump. By keeping name-brand Humalog available, the company will continue to sell using the higher list prices to insurers and benefit managers, who also pocket part of the profits.
But let’s be clear, Eli Lilly will make a tidy profit in both instances.
How do I know that? I was listening as members of the U.S. Senate Finance Committee, led by Sen. Chuck Grassley, grilled pharmaceutical executives last week. The executives were asked about drug prices paid by consumers in other countries. Specifically, lawmakers wanted to know if the pharmaceutical companies were able to turn a profit by offering drugs elsewhere at much lower prices. Yes, they admitted.
To put the price difference in perspective, let’s consider the out-of-pocket costs for an American who purchases the new authorized generic: $137.35. Across the border a vial of name-brand Humalog sells for $35.99 Canadian, or roughly $27 U.S. dollars — a fifth of the price of this new “cost-saving” generic. Retail price for a vial of Humalog in the U.S. ranges from $300 to $350 ($175 to $290 with coupons or discounts), and most Type 1 (insulin dependent) diabetics require two or three vials each month.
A similar price gap exists between Canadian and American consumers who use Humalog cartridges in pens, which the company said also will be available in the new generic.
Although I probably shouldn’t have to type it again, I will: Insulin isn’t optional for Type 1 diabetics. If they do not have it, they will die. If they try to ration it, they could die — many have, which has provided urgency to the scrutiny of current prices — but they could also set themselves up for additional health concerns like strokes, heart attacks, blindness, amputation or need for dialysis.
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But knowing price differences, and that Lilly isn’t sacrificing its bottom line, begs the question of why the company is offering a generic now. The answer lies in one word: Pressure. Pharmaceutical companies overplayed their hand, tried to cast blame elsewhere and can see the writing on the Congressional wall.
“Back home in Iowa and Oregon,” wrote Grassley and Finance Ranking Member Ron Wyden, D-Oregon, in a Feb. 22 letter to David Ricks, chairman and chief executive at Lilly, “our own constituents tell us they have faced similar financial hardships that have caused them to ration their insulin, and health care providers share concern over the number of patients who are unable to afford insulin or who spend a significant amount of their income to purchase it. … These hardships can lead to serious medical complications that are entirely preventable and completely unacceptable for the world’s wealthiest country.”
The senators note news reports of Americans entering other countries to purchase insulin “because of its high cost in the United States.” They add that, in 2012, Medicare Part D spending on Humalog was $240 million, while Medicaid spending was $145 million. Just four years later, in 2016, expenses had skyrocketed to $624 million for Medicare and $452 million for Medicaid.
“When one insulin product costs the taxpayer more than $1 billion in one year, the American people ought to know how the company prices its product.”
The lawmakers, acting on behalf of the Finance Committee, directed Lilly (as well as France-based manufacturer Sanofi and Denmark-based Novo Nordisk) to provide a great deal of information related it its insulin product line, research and development costs, market share, profit margins and, of course, pricing. Responses from the companies are due March 8.
What will come of the responses remains to be seen, but this is clearly a bipartisan push to get answers. Hopefully that will translate to an equally bipartisan regulatory push to truly lower consumers’ out-of-pocket insulin cost.
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