By Katie Stancombe
INDIANAPOLIS – For six years, Erin Roberts worked two jobs in order to afford the life-saving medication her son depended on for survival.
“It was really hard,” she said. “I feel like I missed a lot of family life because I was working as a registered nurse, and so I would work five 12-hour shifts a week.”
When he was two years old, Roberts’ son was diagnosed with Type 1 diabetes, a disease that occurs when the body does not properly process the food it needs for energy.
There are only three insulin manufacturers in the United States – Eli Lilly, Novo Nordisk and Sanofi. All three have seen an increase for insulin prices over the last decade. Photo by Katie Stancombe, TheStatehouseFile.com.
The pancreas, an organ that lies near the stomach, makes a hormone called insulin, which is needed to transform the sugar from foods into energy.
Without it, the body’s glucose levels can rise dangerously, resulting in potentially life-threatening situations.
But while necessary for survival, families across the country are finding it increasingly difficult to afford their diabetes medication.
Roberts, who requested her name be changed for the purpose of this article, said she didn’t want her son to feel like his diabetes was a burden on their family.
“I try not to let our son know how his disease affects our family financially,” she said. “I know he’s somewhat aware, but I don’t want that to be something he feels bad about.”
As a nurse practitioner, Roberts works with disadvantaged diabetic Hoosiers, many of whom are at a loss for how they will pay for their insulin.
The price of an order of insulin per patient increased from roughly $230 in 2002 to more than $700 in 2013, according to an analysis published in 2016 for the Journal of the American Medical Association. An order can last for weeks or months, depending on the patient.
“My patients are still struggling,” she said. “If they go to the pharmacy, I know it’s going to be hundreds of dollars for their insulin, and they just look at me and say, ‘I can’t. I can’t do that.’”
Dr. William Herman, a coauthor of the analysis and professor of epidemiology at the University of Michigan School of Public Health, said it’s difficult to know exactly why these costs have increased so dramatically.
“What used to be an inexpensive therapy is now potentially unaffordable to patients with diabetes,” Herman said.
The doctor added that the cost increase might be due in part to the changes of what types of insulin have become available on the market.
“From the 1920s to the 1970s, insulin was purified from the pancreases of animals slaughtered for their meat,” Herman said. “It was actually very inexpensive, but also in limited supply.”
Next came human insulin, developed through molecular cloning. This allowed for the first mass production of insulin identical to that made naturally in the pancreas. Although identical, doctors found that human insulin took too long to start working in the body.
Then a new option entered the market in the 1990s – insulin analogs.
“There became this effort to create insulin analogs, which were different from human insulin, but were chemically modified to have either shorter or longer duration of action,” Herman said. “They came to the market at a premium price of about $40 per vial. And the price has gone up from $40 a vile now to almost $300 a vial.”
But Herman said insulin prices keep rising without explanation.
“The market share has now gone so that the animal species insulins are no longer available, human insulins are probably five percent of the total insulin market, and everybody with diabetes has moved to these analog insulins,” he said. “I think partially what the market will bear is that there are no choices now, and so people are caught between a rock and a hard place.”
Herman sees patients who struggle financially all the time.
“There are people who cut back on their doses, who ask not to be on insulin because of the cost, and there are a number of people who just stop taking their insulin because they can’t afford it,” Herman said.
How insulin is priced
George Huntley, a previous national chair of the American Diabetes Association, said there are a few key players at work when it comes to pricing insulin, the biggest being pharmacy benefit managers. Pharmacy benefit managers act as a middleman between drug manufacturers and consumers, the largest of which includes Express Scripts, CVS Health and OptumRx.
Pharmacy benefit managers dictate which specific drugs consumers can receive from their plan without garnering additional out-of-pocket costs. They are primarily responsible for developing and maintaining the formulary and contracting with pharmacies.
They also have the power to negotiate discounts and rebates with drug manufacturers. That’s where Huntley said things start to get fishy.
He thinks PBMs hold power over drug makers. If they don’t offer rebates, the PBM will not give that manufacturer an official list that details which medicines may be prescribed.
“Which means that manufacturer isn’t going to sell that drug,” Huntley said.
Brian Henry, spokesman for Express Scripts, said PBMs don’t ask for rebates.
“Rebates are something that the drug company decides to offer,” Henry said. “It’s one way of many that the price can be brought down.”
There are only three insulin manufacturers in the country: Eli Lilly, Novo Nordisk and Sanofi.
When insulin is prepared to leave the manufacturer, it’s labeled with a list price, the manufacturer’s suggested retail price before any rebates or discounts have been applied.
That product will then arrive at the PBM, where negotiations will determine its net price – the final price consumers pay for a product.
“If you look at the change in costs of insulin over time, they just keep going up in lockstep across the manufacturers,” Herman said.
For example, imagine one manufacturer raises the price of Humalog, Lilly’s diabetes drug, by eight cents. Just a few days later the second manufacturer will up their price by 10 cents. Then the third will follow suit and the cycle continues in an upward spiral.
But Greg Kueterman, spokesman for Eli Lilly, said numerous factors are considered when pricing medication, including the cost to produce the product, expertise, and scientific and medical preciseness.
“The list price of insulin over the last decade has certainly gone up,” Kueterman said. “Since 2009, the net price that we have received for our insulin has actually gone down.”
Kueterman said no single entity is responsible for rising insulin prices, but Henry disagreed.
“Drug makers are the one’s who set the price for drugs – not PBMs, not any other group across the supply chain,” Henry said. “The drug makers decide how much they’re going to charge for their medicine. And our job as a PBM is to lower that cost.”
Eli Lilly and Novo Nordisk both offer discounts and patient assistance programs for those concerned about affording their medication. However, patients eligible for discounts depend on their insurance coverage and deductibles.
Huntley said that while PBMs and manufacturers bargain prices, consumers are left with the short end of the stick.
“The person who’s really harmed in this is the patient who’s at the cash register,” he said. “That’s the one who’s getting really nailed with the fullest price. The uninsured, of course, and anybody in a high deductible phase of their plan.”
An Eli Lilly spokesperson said numerous factors are considered when pricing insulin — the cost to produce the product, required expertise, and scientific and medical preciseness. Photo by Katie Stancombe, TheStatehouseFile.com
Roberts said the struggle to pay for her son’s insulin was a progression over the past 15 years.
“I’ve been all over the spectrum as far as our family and insulin,” Roberts said. “Right now I pay $10 a month, but I’ve had times where I had a $3,000 deductible and the first three months of the year I paid $1,000 a month for insulin.”
She said that on average, her family spends $500 per month on insulin and other supplies her son needs in order to live.
“We spend more money on diabetes than on our house payments,” Roberts said. “Even with good insurance, that’s just how it is.”
Herman said the root of the problem could be traced back to the pharmacy benefit managers and manufacturers.
“The bottom line is there’s just a lack of transparency in terms of why the costs have gone up and who is actually benefiting from the costs,” Herman said.
Kueterman said that Eli Lilly is as transparent as it can be, without overstepping regulations and contracts.
“We talk to stakeholders, we talk to media, business partners – and we try to be as open as we can be,” he said. “We recognize that people would like to know more, but there’s a number of things we can’t go into.”
Henry agreed, saying that Express Scripts is very clear about what kinds of savings they offer.
“For our clients, the people who pay the most for our medication, and our patients, the people who are actually taking the medicine, we are very transparent with what they need to know in order to make the right decision,” he said.
New drugs and medications can take several years to be developed, tested and perfected before reaching the market for sale. Financing this process can cost manufacturers billions of dollars.
“But 15 or 20 years after a new insulin is introduced, you have to assume that they’ve paid off their research and development costs,” Herman said.
Roberts thinks that if copays could be $50 or less per month, that would be a reasonable price to pay for insulin.
“On one hand I think that’s a reasonable price to pay for medications,” she said. “But I know on the other hand the way insulin is manufactured and what they have to do to produce it, it’s expensive. So I don’t really know how it’s possible to find a balance between the two.”
Katie Stancombe is a reporter for TheStatehouseFile.com, a news website powered by Franklin College journalism students.