Here’s Why Insulin Is So Expensive – And What You Can Do About It

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Marie Beaugureau
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The numbers are in: U.S. spending on diabetes drugs increased from $10 billion to $22 billion per year between 2002 and 2012, according to a recent study. And most of that cost was due to skyrocketing prices for one diabetes medication: insulin. Take, for example, Lantus, one of the most popular insulins on the market. The price of a 10-milliliter vial has shot up from under $40 in 2001 to around $275 today.  

And these costs are hitting more people every year. About 30 million people in the U.S. have diabetes – up from 10 million 20 years ago – with another 89 million experiencing prediabetes. One study estimates that up to one-third of Americans could have diabetes by 2050. With so many people affected by rising insulin costs, it makes sense to wonder why prices are so high.

Human versus analog insulins

Today there are two major categories of insulin. Synthetic “human” insulin was introduced in the early 1980s and appears under brand names like Humulin R and Novolin 70/30. Genetically modified “analog” insulin was developed in the 1990s to provide several benefits over human insulin. Analog insulins take effect more quickly, their effects are more consistent and predictable, and they reduce the frequency of low and high blood sugar. Popular analog insulins are Lantus, Humalog, and Novolog. The prices for both types of insulin have risen over the years, but analog insulin is often much more expensive (compare $25 for Novolin 70/30 versus $323 for Humalog 50/50).

Due to the added convenience and benefits of analog insulin, 96% of insulin prescriptions in the U.S. are now for analogs. However, a growing body of research suggests that synthetic human insulin is just as effective for managing diabetes.

Manufacturing insulin is expensive

Producing insulin is more expensive than producing many other drugs. Insulin is a large complex molecule, and to create it manufacturers use recombinant DNA technology to engineer insulin-producing bacteria. In pharmaceutical terms, insulin’s size and complexity deem it a biologic. Because insulin is a biologic, any “generic” versions (termed biosimilars for biologic drugs) are subject to much more stringent–and expensive–approval processes by the FDA.

Because of the expense of producing insulin, even when biosimilar versions are produced, they only reduce costs for the drug by about 20%, compared to an average of 80% reduction for standard generics. Basaglar, the first insulin biosimilar, was introduced in December 2016 and costs around $235.

Elevating prices: the “big three” insulin makers

Just three pharmaceutical companies–Sanofi, Eli Lilly, and Novo Nordisk–manufacture insulin, and they vigorously defend their formulations against cheaper biosimilar versions. Sanofi recently brought lawsuits against both Merck and Mylan to avoid production of biosimilar versions of Lantus, its blockbuster insulin.

What’s more, a recent class action lawsuit against the three manufacturers claims that each of the companies set artificially high prices for their drugs in order to gain preferred status within the insurance companies’ lists of covered drugs. This system of discounting has a few problems. First, the discounts may not be passed on to consumers and instead can raise premiums, copays, or deductibles. Secondly, even those who are insured may be required to pay a portion of that inflated price out of pocket, not to mention uninsured patients who are on the hook to pay even more.

Incomplete insurance coverage raises costs

There are several ways that incomplete insurance coverage can negatively impact patients who use insulin.

The first is when the insurers and payers adjust their list of covered drugs (the formulary) to favor cheaper drugs for their member populations, with the result of cutting out coverage for some drugs that are popular. This made big news in late 2017, when CVS Caremark dropped coverage of Lantus in favor of the biosimilar Basaglar. Consumers who used Lantus were faced with the choice of switching to another brand or paying full price for their drug of choice.

Another factor that has led to higher costs for consumers is the increased use of high-deductible insurance or coinsurance plans. With a high-deductible plan, patients are forced to pay the full amount for insulin until they reach their deductible limit, which can be thousands of dollars each year.

Finally, people who use insulin and have Medicare Part D prescription coverage often find themselves in the “donut hole,” where they’ve surpassed their initial Part D coverage limit but have not yet reached their out-of-pocket maximum of $5,000. During that time, they must purchase insulin themselves, although at a 65% discount.

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How to reduce the expense of insulin

The expense of insulin has led some people to cut down their insulin intake, which can be extremely dangerous. Rather than risking your health, try these strategies to reduce costs.

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