Why Has the Cost of Insulin Skyrocketed? Officials Seek Answers

The cost of insulin has more than tripled from 2002 to 2013—representing an average rise of $231 to $736 per patient. Photo: Thinkstock

This is the first story in a two-part series on living with diabetes on California’s Central Coast.

For Californians with chronic diseases, the start of a new year means paying insurance co-pays and deductibles all over again.

Those with diabetes face one of the worst out-of-pocket financial hits. Even with insurance, some co-pays are as high as several hundred dollars per prescription refill. For those who are low-income, this can mean choosing between paying for insulin and paying the rent or a utility bill.

Insulin prices have skyrocketed in recent years. An April 2016 Journal of the American Medical Association analysis found the cost of insulin has more than tripled from 2002 to 2013—representing an average rise of $231 to $736 per patient.

The report found that the price increases amounted to a whopping 197 percent hike for a single milliliter of insulin. When put into dollar values, that means that a milliliter went up from $4.34 to $12.92.

Due to the rapid increase in cost, attorneys general in Washington, New Mexico and Minnesota are investigating the primary manufacturers of insulin—Eli Lilly, Novo Nordisk and Sanofi—to see if price-fixing was involved. These states are sharing the investigatory information with California’s Attorney General Xavier Becerra, according to a Kaiser Health News report. Becerra’s spokeswoman said she could neither confirm nor deny that Becerra’s office was investigating the insulin makers.

State Assemblyman Jim Wood (D-Eureka) said that in February he plans to introduce legislation that will regulate industry go-betweens, also known as pharmacy benefit manager groups. These so-called PBMs help set contracts, negotiate discounts and pay drug claims.

“How can these companies explain why the cost of a drug that’s been around forever—like insulin—keeps climbing every year?” asked Wood, who serves as chair of the Assembly’s Health Committee.

Wood said that PBMs were initially formed approximately 40 years ago and used by insurance plans and other payers to manage their prescription drug plans and negotiate prices with drug companies.

The lawmaker said PBMs are currently not licensed or regulated, unlike pharmaceutical manufacturers, health plans, pharmacies and pharmacists and that needs to change.

Wood said that following a series of mergers and acquisitions, there are three PBMs that control 80 percent of the market share with revenues exceeding $270 billion. Some are also merging with drug companies and large pharmacy chains and establishing their own specialty pharmacies.

“Currently, there is no way to assess how PBMs are negotiating with drug companies or health plans, nor is there a way to understand how rebates and discounts are applied, and whether the process is in the best interest of the consumer,” Wood said.

In the glare of the publicity over the soaring prices, drug companies have pledged to either limit additional price increases or develop consumer discount programs to make insulin more affordable to patients.

On the national level, officials with the American Diabetes Association say they too have launched their own investigation into the price hikes and hope to produce a report next year on their findings.

The association’s chief medical officer, William Cefalu, said in a press statement that the ADA commonly encounters diabetic patients saying they have to chose between the cost of their insulin and paying their rent or utility bills.

For millions of people living with diabetes, including all individuals with type 1 diabetes, access to insulin is a matter of life and death,” Cefalu said.

As millions of California health consumers prepare to face down pharmacy deductibles that are can be over $1,500, local medical experts are encouraging diabetic patients to become more informed patients.

“The cost of insulin has become a huge problem for too many Californians,” said Dana Kent, medical adviser to the Natividad Medical Center’s Foundation in Salinas. The center is the Central Coast’s largest public safety-net hospital and only trauma center. It provides care to the bulk of the area’s uninsured patients.

Kent said patients can ask their doctors about using using older and much less expensive insulins such as NPH in regular or 70/30 formulations. NPH was first approved by the federal Food and Drug Administration in 1950 and remains available to to the public without prescription for under $30 a vial at large discount retailers with pharmacies.

The problem, Kent said, is that NPH does not work like the more advanced—and vastly more expensive—Humalog or Lantus formulations. This makes managing blood sugar more complex, which is why doctors prefer their diabetic patients to use the more stable modern-era insulins.

“Until we can figure out what’s behind these price increases I urge all people with diabetes to work closely with their doctors, ask for samples and seek out and use manufacturer coupons,” Kent said. “It’s important for them to get and stay informed.”

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