Eli Lilly Drops Insulin Price - Not as Noble as it Sounds

March 2, 2023

Mar 02, 2023

Healthcare Reform

March 2, 2023

Good Day Healthcare Advocates

I am so thankful for all of you and for the actions you take to move us towards a universal healthcare system. Some of the topics in work are:

The current state of healthcare providers and the potential impact of Universal Healthcare on them
How Universal Healthcare affects the insurance industry (it’s not what you think)
Rural healthcare challenges
Hospice Fraud revisited - this is worse than was reported

Please send topics to me via the chat button and I will research and report. If you need assistance in other ways, lectures, presentations, etc. Just let me know, I’m happy to help.

Diabetes: This Could Be So Much Better

A few days ago we discussed diabetes. It is a serious life threatening disease that affects 37 million Americans. Since NPR ran a news story on it today I wanted to revisit how the healthcare industry profits from it and correct some of the statements made in their broadcast.

The reason for today’s news story was that ELI Lilly, one of the 3 insulin manufacturers, decided to drop the price for simple insulin for many people to about $35/month. That is good news.

According to the American Diabetes Association, 8.4 million Americans take insulin (not the 7 M mentioned in the story). It is a serious condition and can be life threatening.

Prescription pricing in the US is pretty much a shell game. There is the list price and there is a net price. The list price of insulin in the US is 10x higher than anywhere else. Here is a link to a Rand Corporation Study on the subject of insulin list prices in the US. Remember that the list price includes all the bribes and kickbacks involved in the alleged deceptive pharmacy practices that these manufacturers and pharmacy benefit managers undertake for most drugs. Rand estimates that taking those out, the net cost, is still 4x more than any other country.

According to NBC People with Type 1 diabetes need, on average, one to three vials of insulin per month, the American Diabetes Association reports. Patients with Type 2 diabetes don't always need to take insulin, but those who do can sometimes require more than people with Type 1 diabetes.

A report published in 2020 in JAMA Network Open found that in 2017, the average monthly out-of-pocket cost for insulin for people with a high-deductible insurance plan was $141. More than 50% of insulin users with employer-based insurance spent over $35 out-of-pocket on average for a 30-day supply of insulin in 2019 and 2020, according to the Health Care Cost Institute, a nonprofit group that tracks drug prices. About 5% of them spent more than $200.Some people may pay even more, well over $1000/month.

According to CalMatters.Org. This year, Senate Bill 90, by Sen. Scott Wiener, a San Francisco Democrat, would limit what diabetics pay out of pocket for their insulin — prohibiting state-regulated health insurance plans from imposing a deductible on those prescriptions and capping the copay at $35 for a 30-day supply. The current copay limit is $250.

Keep in mind that 10% of the diabetics in the US are in California and that is about 3.7million people. Lilly was portrayed as taking a noble path by dropping the price of common insulin for many customers. However, they are faced with this new legislation in California affecting 10% of their customers that will automatically set that price.

There is far more behind the scenes and this was missing from the NPR story. There are 3 Pharmacy Benefit Managers (PBMs) controlling about 90% of all prescriptions. They are CVS Caremark, OptumRX and ExpressScripts. There are three major insulin makers and they are Eli Lilly, Novo Nordisk, and Sanofi and they have continued to raise the price of insulin dramatically for end users.

In January of this year, the California AG, Rob Bonta, sued these 6 companies for violating the state’s unfair business practices, using deceptive, illegal and unfair schemes to drive up the cost of the life saving drug. Here is the 47-page suit if you lack reading material.

According to the CDC $1 out of every $4 in US health care costs is spent on caring for people with diabetes. That’s about $237B on direct costs and $90B on lost productivity. 61% of all diabetes costs are for people 65 and older - read that as Medicare, and the cost for each of those Medicare beneficiaries with diabetes is almost $6000/year.

Regarding insulin, the developers James Collip and Charles Best, sold the insulin patent to the University of Toronto for a mere $1. They wanted everyone who needed their medication to be able to afford it.

It is worth noting that the US government has similar laws to California covering deceptive and unfair business practices and these companies could easily wind up in federal court as well.

They are in Section 5 of the Federal Trade Commission Act (FTC Act) (15 USC 45) which prohibits ''unfair or deceptive acts or practices in or affecting commerce.