Published on February 25th, 2014 | by Craig Idlebrook
Understanding Insulin Sticker-Shock
Published on February 25th, 2014 | by Craig Idlebrook
Mary Clark, a realtor in Cincinnati, has grown accustomed recently to being the center of attention at the pharmacy. An independent contractor, Clark has had trouble finding affordable health insurance that covers the costs of the insulin she needs to control her Type 1 diabetes. Since 2012, she’s noticed the price she must pay out-of-pocket has increased steeply; it’s been a big enough leap that even the pharmacists pause in their work when filling her order. “Everyone was just stunned and they would just stand and stare at me,” Clark says.
She knows many other people with diabetes that are in the same situation, especially those who use long-acting insulin like Lantus. She says she can’t afford pump therapy and she has cut out all other expenses, including doctor’s visits and dental care, to keep up with the cost of insulin.
“We do without everything. There will be diabetics who will go without insulin and they can’t,” Clark says. “You won’t make it.”
She’s not alone in worrying about the costs of insulin, although not everyone would notice the same price spikes as Clark, says David Kliff, who owns the newsletter Diabetes Investor.com. It’s the underinsured and the uninsured who feel the brunt of it. People with good health insurance might not even notice, as health insurance companies often demand lower prices from insulin makers for their customers, Kliff says. That’s why two people with diabetes standing in line at the pharmacy might pay dramatically different prices for insulin; the difference might even be a couple hundred dollars per vial of insulin, he says.
“What the consumer pays and what insurers pay are two different worlds,” he says.
What’s driving insulin price increases is a complex question with many answers. One factor that can be ruled out is the basic price of producing insulin. Ever since pharma companies mastered the technique of using bacteria to create synthetic analog insulin in the eighties, the cost of insulin production has remained relatively affordable. But there’s a lot more that goes into determining the price, and much of it has little to do with supply and demand.
Insulin prices are on the rise partly because there are better options for insulin therapy. That means better BG control for many with T1, but it also has led to some market imbalances. Users of long-acting insulin have seen the steepest price increases. Sanofi increased the price of its Lantus insulin twice in 2013, raising the cost by as much as 15%, according to a Bloomberg News report. Novo Nordisk also increased the price of its long-acting insulin, Levemir. Sanofi maintains the dominant market share on long-acting insulin and can dictate price, Kliff says.
“Let’s be honest, they have a near monopoly on the market,” he says.
Many diabetes industry watchers have long held the belief that insulin-producing drug companies are driving up insulin prices simply because they can. That may be an oversimplification, but there is some truth that drug companies are using price increases on everyday drugs like high blood pressure medication and insulin to counter a drop in overall drug sales. Pharma executives admitted this as far back as 2011 during a Reuters Health Summit. And according to the Bloomberg report, U.S. drug spending declined by as much as 2% in the first half of 2013, giving space for insurance companies to be more lenient with price hikes in insulin.
Insulin represents a golden goose for the pharmaceutical industry, especially as the number of people with Type 2 diabetes on insulin therapy increases. A 2011 insulin industry report predicted that the global insulin market will increase by 20% in 2014-2015.
Sanofi spokesperson Susan Brooks says her company considers many factors when it sets the price of its insulin products.
“We consider if it is a newly launched product or nearing its patent expiration. We look at the competition, the presence of other branded products on the market that might compete with our product, and how these products are priced,” Brooks says in an email interview. “We also take into account the presence of generic products, which might result in lower prices for all products within a given therapeutic class.”
Generics are the wild card when it comes to insulin prices. Drug companies are very aware that patents are running out for several popular insulin formulas, opening the door for cheaper mimics. Pharmaceutical companies need to maximize the profitability of their original insulin products while the patents still hold, says Kliff.
Already we are seeing the first shots fired in the battle over generics. In January 2014, Sanofi sued Eli Lilly and Co. for copyright infringement to block a generic version of its popular Lantus insulin. According to a Reuters report, Lilly had informed the FDA that it did not plan on selling its version of insulin glargine until after the patent for Lantus ran out in February 2015. Instead, Sanofi’s lawsuit triggered an FDA rule that automatically blocks the government from approving the Lilly drug for 30 months, a window which would potentially buy Sanofi more time to switch its customers to a new form of Lantus.
Even when generic insulin is available for purchase, people with diabetes shouldn’t expect a price crash, says Kliff. When the patent on metformin expired, prices dropped dramatically, but the same won’t happen with insulin, he says.
“Will it be cheaper? Yes. Will it be 80% cheaper? No,” he says.
The institutional delays for approval of new forms of insulin frustrate Gary Scheiner, a certified diabetes educator and clinical director of Integrated Diabetes Services. He says FDA regulations are driving up the cost of bringing new insulin therapies to market, which in turn can raise prices.
“It sometimes costs hundreds of millions or even billions to bring a drug to market. This is hurting our economy in so many ways,” he says. “The FDA needs to do a much better job of streamlining the process.”
The best chance for downward pressure on prices for insulin might come from health insurance policy-makers who are desperate to control health care costs, says diabetes industry blogger Scott Strumello. Health insurance companies are playing insulin-producing companies off one another to get lower prices. Recently, two health care benefits companies, Express Scripts and Kaiser Permanente, switched insulin brands from Novo Nordisk to Lilly because Lilly could offer a better price, says Strumello. However, he warns there is a limit to how much this tactic can move the needle on prices.
“That works with the industry as long as you have someone willing to cut prices,” Strummelo says.
Each insulin manufacturer offers certain discounts to customers. Sanofi US offers qualifying patients a “Pay No More than $25” savings program for Lantus, Brooks says. With the Lantus Savings Card, patients will pay no more than $25 on up to 3 Lantus SoloSTAR pen prescriptions, for example. There also are a few government programs that can help with insulin costs for qualifying individuals, including the 340B Drug Pricing Program.
Even those with good health insurance must navigate a web of sales incentives, health insurance rules, and regulations to get an affordable price on insulin. Colby Cook, a diabetes blogger at Diabeatitnow.com says he’s seen the price of insulin rise significantly in recent years, but he believes he hasn’t experienced as much sticker shock as some others because he has good insurance and is a savvy shopper. He recently paid $207.90 out-of-pocket for 3 vials of Apidra insulin for him and his 2 T1 children, a price he considers pretty reasonable these days.
“The pharmacist told me the list price is 188.11 (per vial) and I get 10% off that,” says Cook, a computer programmer who lives in Cedar Hills, Utah. “However if I didn’t use a coupon from the Apidra website and get the 10% and have insurance, I would pay…more like 250.00 per bottle.”
Because Cook has not yet met the $2,000 yearly deductible on his insurance plan, his out-of-pocket expense for insulin is higher now than it will be later in the year. Once he surpasses his deductible, the price will dip down to $40 a vial for Apidra. Cook says when he reaches that threshold, he then tries to stock up on insulin by refilling it as quickly as his insurance plan will allow.
“It’s almost like I’m hoarding,” he says. “I’m trying to buy it every 20 days.”
His pharmacist looked into the 340B program for him and could only find one doctor in Utah who was qualified to sign people with diabetes up for it. Cook says he can keep up with the costs for now, but he sometimes has to send insulin to a family member with diabetes who can’t always afford it. He also worries about others in the diabetes community in tighter financial straits.
“I wonder how some people without money would even be able to survive,” he says.