Patients face sticker shock from insulin prices
Mark was shocked to find out the insulin he needs to control his diabetes costs more than $300 per vial.
After losing health insurance coverage, the painting company owner faced the prospect of paying for multiple vials every month on his own. The Medford resident asked that his last name not be used.
“It would cost me $1,000 a month easy if I had to buy it,” Mark said. “Well, that’s a house payment. My house payment is $950.”
Alma Elder — a nurse case manager for La Clinica — stepped in to help. She worked with his doctor to find cheaper types of insulin Mark could use.
Elder also connected Mark with the La Clinica Community Pharmacy, which buys medication at discounted prices and passes the savings on to patients. The pharmacy was able to offer two types of insulin Mark needs for $10 and $23 per vial.
“That’s a huge difference from $200 or $300 a vial — so it’s affordable,” Mark said.
Like other Americans confronted with the full price of insulin, he said the costs of the life-saving medication have skyrocketed out of reach.
“They’re astronomical. They’re unaffordable,” he said.
The average list price of insulin has tripled since 2003, according to the American Diabetes Association.
While many insured patients are shielded from the market price of insulin, more are finding out the true cost.
Businesses grappling with escalating health insurance costs are pushing higher co-pays and deductibles onto their workers. Employer-provided insurance covers almost half of Americans.
“I have a gentleman who works hards and has employer-provided insurance,” Elder said of one of her La Clinica patients. “He’s not buying his insulin because his co-pay is too high. It affects all levels of people and income.”
Studies have repeatedly shown many patients will cut back on the insulin they use or go without when out-of-pocket costs are too high.
Workers who haven’t reached their deductible for medical spending in a year face the full cost of insulin.
Full costs also hit the 7% of Americans who buy their own high-deductible health insurance plans, plus the 9% of people who are uninsured.
Senior citizens on Medicare face high costs when they enter a medication coverage gap known as the “donut hole.” Medicare covers 14% of people in the United States.
The estimated 20% of residents on Medicaid remain largely protected from out-of-pocket insulin costs because the program is designed for low-income people. Some still report they can’t afford the small co-pays.
The amount people pay for insulin is escalating even though many experts believe the drug should be provided at no or very little cost to patients.
Covering insulin up front would allow more people to keep their diabetes under control — preventing kidney failure, heart damage, amputations, vision loss and other catastrophic complications that drive up health care spending.
The American Diabetes Association, many elected officials and even some middlemen in the drug supply chain support low or no-cost insulin for patients.
But insulin pricing remains shrouded in mystery, with insiders pointing fingers at each other and struggling to understand who profits from a dysfunctional system.
A must-have medication
Type 1 diabetes is typically diagnosed in kids or young adults.
Their pancreas produces little or no insulin — a vital hormone that allows sugar to enter cells and produce energy. Type 1 patients will die if they don’t receive insulin.
Type 2 diabetes generally develops later in life. The body either resists the effects of insulin or doesn’t produce enough. If diet and exercise aren’t enough to manage blood sugar, patients will need medication, which could include insulin.
Mark had Type 2 diabetes for an unknown period of time before he was finally diagnosed 10 years ago.
“I got really thirsty and I couldn’t get enough to drink,” he recalled. “I felt like I had the flu. I stayed home from work. After two weeks, I went to Providence hospital and threw myself on the counter and said, ‘I’m dying!’”
Mark spent three days in the intensive care unit. Doctors told him if he had waited one more day to seek treatment, his organs would have shut down.
“It was a close call,” Mark said.
With insulin so critical to the lives and well-being of diabetics, the American Diabetes Association spent two years talking to people throughout the insulin supply chain — from drug manufacturers to patients and caregivers at the receiving end. The association published its findings in 2018.
“For millions of people with diabetes, including all individuals living with Type 1 diabetes, access to insulin is a literal matter of life and death,” the association said. “The cost of insulin has steadily been rising, putting this life-saving drug out of reach for millions who need it.”
Patients, caregivers, doctors, insurers and employers are all concerned about rising costs, the association said.
More than 30 million Americans have diabetes, the association said.
Senior citizens are the hardest hit, with more than one in four suffering from the chronic disease, according to Kenneth Thorpe, a professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.
Each year, about 50,000 Americans start dialysis because of diabetes-induced kidney failure, more than 3 million suffer some form of vision loss and 70,000 undergo limb amputations, Thorpe said.
Diabetes costs the nation $245 billion per year in medical spending and lost productivity, he said.
But the structure of the insulin supply chain encourages drug manufacturers to set high prices, the American Diabetes Association found.
Middlemen called pharmacy benefit managers, or PBMs, work on behalf of health plans and employers. They negotiate with drug makers to get discounts and rebates.
Drug makers know they can’t get the full list price for their medicines, so they start off with high asking prices — knowing the PBMs will haggle for discounts and rebates on behalf of their health plan clients.
But diabetics with no insurance, high deductibles or medical spending that lands them in the Medicare “donut hole” are left to cope with those high list prices when they buy insulin.
The PBMs argue their work to negotiate prices lowers the cost of health insurance plans — benefiting businesses and their employees.
But because supply negotiations are done in private, no one in the chain knows exactly who is pocketing the rebates and discounts, and who is passing along savings that lower costs for insulin users, the report found.
List prices are also set high to account for fees paid to wholesalers and discounts to pharmacies, the American Diabetes Association report found.
In addition, drug makers said they have to offer big rebates and discounts to PBMs so they can get their products placed on PBM lists of medications covered by insurance plans.
Insulin maker Novo Nordisk told Congress this year the list price of its NovoLog FlexPen has jumped 310% percent since 2003. But the company said the money it actually earns off the insulin device fell 21% because of rebates and discounts.
Meanwhile, lack of competition plagues the insulin market, with only Novo Nordisk, Eli Lily and Sanofi manufacturing the critical drug for the United States.
“Along with yearly increases, the published data also suggest that when one insulin manufacturer increases the price for a given insulin formulation, the other insulin manufacturers often increase their prices by a similar amount shortly thereafter,” the American Diabetes Association report said.
Doctors — and patients who ask for specific drugs after seeing ads — are contributing to the problem by using expensive types of insulin when cheaper, effective alternatives would work for some diabetics, the report said.
Tackling the problem
With 70% of Americans saying they want Congress to address the high cost of prescription drugs, elected officials are searching for ways to bring down prices.
U.S. Rep. Greg Walden, R-Ore., has sent letters to drug makers, PBMs and health insurance companies asking for details on secretive supply chain negotiations.
“Unfortunately, even though the average net price that manufacturers are receiving for insulin products is decreasing and PBMs are working with health plans to help reduce the cost of insulin for health plans, many Americans are facing increased out-of-pocket costs for their insulin at the pharmacy counter,” Walden said in a Dec. 6 letter to health insurance companies.
He said Congress has heard testimony that many insured and uninsured diabetics are paying the full list price, or close to it, at the pharmacy counter.
“Even worse, we heard that patients who cannot afford their insulin will sometimes ration, dilute or not take their insulin, which can have severe short- and long-term negative health consequences,” Walden wrote.
He asked the health insurance companies whether they design coverage plans that take into account the financial consequences when diabetics can’t adhere to their insulin plans.
Walden also asked whether they offer insulin at low to no-cost to prevent expensive complications from diabetes.
U.S. Sen. Jeff Merkley, D-Ore., is taking a different approach.
In November, he introduced the End Price Gouging for Insulin Act, which would require drug companies to offer insulin to Americans at the median price of what they charge in 11 major developed countries.
Merkley noted Americans who drive across the border to Canada can buy some brands of insulin for one-tenth the price they pay here.
Laws in America block the import of prescription drugs from other countries.
“While Big Pharma gouges patients to make big profits off of insulin, Americans are dying,” Merkley said. “Unaffordable high prices are leading to patients rationing their insulin, leading to dire health consequences — heart attacks, stroke, blindness, kidney failure, foot disease and amputations, even death.”
Merkley said drug companies use loopholes in the American patent system to extend patents that would otherwise expire. The practice keeps generic versions of many insulin products off the market.
He said companies also use “pay-for-delay” tactics where one drug company pays another not to bring a lower-cost alternative to market.
Walden opposes pegging American drug prices to those paid in other major developed countries.
In a December speech he agreed some drug companies stop generics from coming to market and block access to newer drugs that would bring down costs.
But Walden said government price controls would cut research and development spending on new cures for a range of diseases.
Back at the La Clinica West Medford Health Center, Mark said he takes his diabetes very seriously now. He avoids all sugar and administers insulin in hopes of warding off devastating health complications from the disease.
“It eats you up from the inside,” he said.
Mark said low-cost insulin from the La Clinica pharmacy is his lifeline as he continues to shop for an affordable health insurance plan — a tough proposition for a small business owner in his 50s. He worries about what is happening to other people facing high insulin prices.
“It’s totally unaffordable for people who don’t have any help,” he said. “People can’t afford it. I don’t know what they’re going to do. They’re just going to get sicker and sicker.”