The Flawed Drug Pricing System
Insulin is a life-saving medication that 30 million diabetic Americans depend on. 1 in 4 Americans cannot afford insulin, but, the price of insulin has tripled since 2002. Many diabetic patients are forced to make the hard choice between paying for insulin or paying for basic necessities such as food and electricity. Why are drug companies charging so much while millions of patients are struggling to make payments? The US drug pricing system is extremely complex, but in the case of insulin, a large part of the price increase is due to the broken US drug pricing system.
A large part of why insulin prices have skyrocketed is drug patents. When a new drug has been on the market for enough time its patent expires, which ends its dominion over the market and allows generic competition to enter, significantly lowering overall prices. Insulin has been around for nearly 100 years, yet only three companies own patents to manufacture insulin in the US: Sanofi, Eli Lilly, and Novo Nordisk. In the US, patents can be extended if manufacturers make changes (not improvements) to the product. To take advantage of this loophole, Eli Illy, Novo Nordisk, and Sanofi have made small changes in the manufacturing process in order to file new patents. This has allowed them to have a monopoly on insulin in America.
Over the years, the prices of insulin among these three companies have risen at virtually the same rate. This means that patients have no choice but to pay for expensive medicine, as they have no cheaper alternative. The three manufacturers claim that their prices are set independently, but the nearly identical price increases of Insulin create suspicion. You might think that the FDA could simply order these drug companies to lower prices, but in the US, the FDA does not regulate drug prices. In fact, drug companies don’t even have to disclose to the FDA how prices are set. This means that the price of insulin could rise and fall to virtually any amount at the whim of drug companies.
Eli Lilly, Novo Nordisk, and Sanofi say that drug prices have risen due to the complexity of the reimbursement system which would make the drug unprofitable at lower prices. However, insulin is significantly cheaper in foreign countries such as Canada and Taiwan. In the US, an insulin pen by Novo Nordisk costs approximately $140 and would last a week. On the other hand, insulin pens by Novo Nordisk from Taiwan and Canada cost $8 and $13 dollars respectively. It is clear that Insulin manufacturers have taken advantage of the healthcare system to make millions of dollars in profit while many struggle to afford medicine. If Congress doesn’t take action soon, this Insulin crisis could worsen, leaving millions of Americans struggling to pay for basic necessities due to the exorbitant price of their medicine.
References
Business Insider. (2019, February 12). Why Insulin Is So Expensive | So Expensive [Video file]. Retrieved from https://www.youtube.com/watch?v=7Ycd8zEdoVk.
Rosenfield, J. (2019). The rising price of insulin. Medical Economics, 96(7). Retrieved from https://www.medicaleconomics.com/article/rising-price-insulin.
Tridgell, D. M. (2017). Insulin is too expensive for many of my patients. It doesn’t have to be. Washington Post.
