Why the life-saving drug insulin for diabetes is so expensive

Following is a transcript of the video.

Narrator: Many people in the United States can’t afford insulin. The average price for one vial of insulin is about $285. Most diabetics need two to four vials per month. But here’s the thing. Insulin prices weren’t always this high. “Inexpensive, easily accessible.”

Narrator: A Type 1 diabetes diagnosis was a death sentence before this life-saving discovery.

Commercial: “The all-essential insulin.”

Narrator: Without insulin, an essential hormone that regulates blood sugar, your body can’t regulate how much glucose enters your cells, and your cells starve. The medical researchers who patented their invention in 1923 wanted insulin to be affordable for even the poorest sufferers from diabetes. Sure, there have been major improvements.

Commercial: “This new genetically-engineered insulin has two distinct advantages.”

Narrator: The most recent was about 15 years ago. Insulin’s still an old drug. It’s shocking that the price has increased so dramatically. When a drug has been on the market for enough time, its patent expires, ending its reign of market exclusivity and opening the door to generic competition. This should drive the prices down.

Jeremy Greene: And what’s happening with insulin is a real violation of our expectations, because this is an old drug that is now becoming inaccessibly expensive, long after its worth has been proven, and long after that cost of original innovation of these drugs has already been recouped.

Narrator: There are only three manufacturers making insulin for the United States drug market and the prices of their competing products have risen at the exact same rate. Even though the manufacturers have said that they set their prices independently, this shouldn’t happen in a competitive market. Even the newest variation of insulin has long been approved by the FDA. So you might think that some essential innovations happened in the past few years to warrant such a price increase, well think again.

Nicholas Argento: The products that are out are not really new. They may have tweaked the manufacturing process and the like and they have better delivery pens and the like, but the increase in price has been astronomical.

Narrator: So the product hasn’t really changed, just the packaging and delivery. And the high prices have pushed people to crowdsource money, using sites like GoFundMe.

Tan Mitchell: My son had started to not take his dosages as prescribed, because he knew we were struggling with trying to come up with the funds to get more insulin for him. We had not met the deductible.

Narrator: A diabetic with a high deductible insurance plan could pay for months of insulin prescriptions out of pocket until their their insurance kicks in.

Dylan Porteus: The part that was at the forefront of my mind was that I might die from this, I might not get what I need. The deductible was 5, 6 thousand dollars. Even with them covering half, six vials of insulin, they wanted $837.

Narrator: So how are these skyrocketing prices determined? The manufacturers make the drug and set the price. This is part of the reason why insulin is so expensive. There’s no limit to how high the price can be set, and they don’t have to disclose how they set it. The manufacturers negotiate with Pharmacy Benefit Managers to be placed on PBM formularies in exchange for rebates. These rebates and negotiations also don’t have to be disclosed. Formularies are a list of medicines that the PBM offers. The PBM negotiates on behalf of insurance companies, and the manufacturers give rebates to PBMs in exchange for lower placement on an insurance tier system. The lower placement usually leaves the patient with one option, as it’s the most affordable. It’s a good place for a brand to be, but it’s not always great for the patient. It leaves them with one option, and that option might not even be what their doctor prescribed.

Julia Lerner: It almost feels like insurance is working against us, in a way. I say, so I need X, and they only cover Y. Or I need a certain kind of insulin, and they just, they say that’s tough, sorry.

Greene: This is all wrapped in a web of secrecy.

Narrator: Business Insider reached out to the three insulin manufacturers. and they each cited the complexity of the supply chain as a reason for their high list prices.

William Cefalu: We think there are incentives at every level of the supply chain that facilitate or even encourage the high list price from the manufacturers, to the wholesalers, to the PBMs, to the health plans.

Narrator: And at this point, it’s safe to call what’s happening an insulin crisis. So why isn’t the FDA intervening?

Lydia Ramsey: The FDA can’t do anything around price. So the FDA can’t say, “You have to charge $150 for this, “and you can’t do anything different.” That’s just not how it works in the US. Other countries can have a little bit more sway.

Narrator: The US does not regulate prices. So that’s part of the answer. Insulin’s expensive because it can be. There’s no limit to how high the price can rise. The FDA regulates and approves drugs and grants patents. In the US, a patent excludes others from making an invention for a limited time, usually 20 years. Some critics think that manufacturers of insulin are abusing patents.

Susan Collins: For insulin, a careful look is warranted to determine if minor modifications were used to just extend the patent protections and discourage competitors.

Tahir Amin: What it becomes then is just the patent system has become strategy and defensive tool. How can I strategize to keep my competitors off? Forget about the patent system being about progressing the sciences and the arts, as the Constitution says. It’s become a business strategy.

Narrator: But patents aren’t the reason why a generic insulin doesn’t exist. Unlike chemical medications, like Advil and Zestril, there’s no generic insulin.

Ramsey: With a chemical drug, you have the same chemicals in it every single time. When it comes to a biologic-based drug, like insulin, that’s a much more lengthy process. You have to figure out how to make living cells look and feel exactly the same as the original version.

Narrator: The FDA approval process is lengthy and usually more expensive. In fact, out of all medicines in the US, there are currently only 17 FDA approved biosimilars. In 2016, a follow on biologic insulin, which is close to a biosimilar, was approved by the FDA. It was made by one of the three manufacturers, Eli Lilly, which didn’t exactly add a new competitor, and it didn’t really help the price decrease, which leads patients on their own to find another option.

Lerner: Here’s a group where people can go and say I don’t have the supplies I need, and I really need help.

Andrew Livingston: It’s very surreal to live in the United States and to buy life-sustaining medicine on the black market, you know?

Marina Tsaplina: You have a way to get it, somehow, somewhere. You have doctors who are giving their free samples away.

Livingston: The endocrinologist I saw would just give me whatever free samples she had lying around. Tsaplina: You go to Canada and buy your insulin.

Narrator: Recently, the public has been paying attention to the patient-led movement for affordable insulin.

Elizabeth Rowely: We really wanted to see people living with it who truly understand it being a voice for change.

Tsaplina: You don’t know if you will have enough of a freaking liquid that your whole life depends on. You don’t know if you have enough life. That’s what being not sure if you can afford your insulin means.

EDITOR’S NOTE: This video was originally published on February 27, 2019.