The Potential Cost Consequences of Accessing Cheaper Insulin Now


Diabetics all over the world have rejoiced at the news of pharmaceutical companies recently cutting the prices of insulin. On 1st of March 2021, Eli Lilly & Co., cut their insulin prices by an impressive 70%. Two weeks later, Novo Nordisk A/S and Sanofi SA followed suit. This has been undoubtedly great news for diabetics, who often have to spend a considerable amount of money to buy the vital medication.

These changes have also meant that out of pocket payments have been capped at $35 for many insulin versions. While this is a massive benefit for diabetics, experts in the industry warn that this could have a negative effect in the long term. This is because it limits competition from cheaper alternatives, known as biosimilars. This could result in the cost of insurance remaining high and preventing the biosimilars from gaining traction.

In the immense research that was conducted to make this cutting of prices a reality, Eli Lilly went as far as developing the first human insulin a century ago. This drug has become one of the most sought-after drugs in the world. In the USA, Medicare spending on insulin reached over 13 billion dollars in 2017, an impressing increase of 8 times the cost of 10 years earlier.

The Affordable Care Act launched the world of biosimilar drugs, which are very similar in terms of quality and performance when compared to the brand name versions. Unfortunately for diabetics, competition in this arena has been slow to materialize, with only two biosimilar insulins approved in 2010. The welcome news is that Civica Rx, a non-profit organization based in Utah, is developing versions of insulin from Lilly and Novo that will cost around $30 per vial.

When it comes to selecting a brand name drug they have used for years or an unknown alternative, many patients would choose the former. Even with the companies lowering the list price to $65 per vial, the capped out of pocket payments of $35 is enough to make the brand-name drugs more competitive than the biosimilar versions.

It is clear that the pharmaceutical companies have made some giant strides in making insulin more affordable currently. Unfortunately however, this could lead to higher costs later. Insurance providers, pharmacy benefit managers and drug companies are incentivized towards keeping the amount of rebates lower on cheaper medicines, ultimately causing everyone to pay higher costs indirectly through increased premiums.

Although steps are being taken to make insulin more affordable, the primary aim for pharmaceutical companies may be to maintain their monopoly on the insulin market.

Eli Lilly and Co. is an American-based pharmaceutical company headquartered in Indianapolis, Indiana. It was founded in 1876 by Colonel Eli Lilly and is one of the world’s topmost pharmaceutical companies. It specializes in medications, medical devices and animal health products, with insulin being one of its primary products.

Robin Feldman is a professor at the University of California College of the Law at San Francisco. She is also a renowned expert on intellectual property and health law with a particular focus on pharmaceutical, technology and innovation issues. She has focused her research on the development of the pharmaceutical industry, the innovation process and the long-term health systems issues associated with those activities.