Monday, June 24, 2019

The Insulin Rip-off

30 MILLION Americans are living with diabetes, a chronic disease caused by the pancreas being unable to properly metabolize carbohydrates, leading to high blood sugar levels. For most of its history, a diabetes diagnosis carried with it a death sentence within mere months. Fortunately, a modern diabetic can expect to live for decades if their disease is properly managed.

 For seven million Americans, treatment entails several daily doses of insulin, a synthetic version of the hormone excreted by a healthy pancreas. For Type 1 diabetes patients, uninterrupted access to insulin is especially critical. Their health outcomes depend heavily not only on taking proper doses, but on minimizing variance between blood sugar levels—an imperative that demands a vigilant routine of measurement and monitoring. Just a few days without insulin can be deadly, or trigger severe complications like gangrene or renal failure. 

But the wholesale prices of the most common insulins tripled from 2007 to 2017. The three pharmaceutical companies that manufacture insulin—Lilly, Novo Nordisk, and Sanofi—rake in billions in profits annually from insulin sales alone, with the U.S. market accounting for 15 percent of global insulin users but almost 50 percent of its worldwide revenues. Insulin ranks among each company’s top-selling drugs; one BMJ study showed that prices could be slashed considerably and the drugs would still be profitable.

In 1922 Frederick Banting and his small University of Toronto lab team sold their patent rights to the university for $1 apiece in an effort to protect its integrity from greedy commercial enterprises. The university struggled to meet the demand. Eventually, Banting and his team reluctantly agreed: Lilly was granted exclusive rights to manufacture and distribute insulin in the United States for one year, with European rights going to a Danish firm called Nordisk (later merged to become Novo Nordisk, as it is known today). Thereafter, both firms were entitled to patent any future innovations on their products, and competitors were hypothetically free to enter the market. As of 2014, the top three insulin manufacturers held 19 active patents on insulins alone. With back-to-back exclusivity patents precluding generic competition for decades, insulin prices began to climb. 

If you’re a Big Pharma CEO whose goal is to maximize short-term profits, then jacking up prices on a drug like insulin—whose millions of patients are practically captive—is a sensible strategy. Defenders of the pharmaceutical industry would likely point out that high drug prices are a necessary evil to recoup R&Dcosts and facilitate innovation. Extremely high industry profit margins, the fact that pharmaceutical marketing budgets exceed those for R&D, and the relative lack of genuine drug innovation in recent years all cast doubt on this argument. Lilly sank at least $40 million into developing what would become Humulin (insulin made out of bacteria instead of animal pancreas)according to a 1980 article in ScienceJust as it was going off-patent, the company introduced a new fast-acting insulin called Humalog in 1996.

Dr. Kasia Lipska  explained, “We’re not even talking about rising prices for better products here,” she said. “I want to make it clear that we’re talking about rising prices for the same product … there’s nothing that’s changed about Humalog. It’s the same insulin that’s just gone up in price and now costs ten times more.”

There is one proven method for lowering prices: fomenting robust generic competition after the drug goes off-patent. Lilly’s patent on fast-acting insulin expired in 2014, but because insulin is a “biologic” drug made from human genetic material as opposed to a simple molecule, manufacturing a biosimilar version is relatively complicated and far from guaranteed to drive prices down. And drug companies fight to keep their exclusivity: When Merck tried to create a biosimilar to Sanofi’s Lantus, Sanofi sued and Merck eventually dropped the effort. (Another biosimilar was ultimately approved in 2016, but not until after a similar patent lawsuit.)

But if only one generic enters the market, it typically doesn’t make a big price difference—the biosimilar version of Lantus is priced at only 15 percent below the name brand. Studies show that the market price sees a dramatic reduction only after the entry of several generic competitors into the market—begging the question of whether waiting out two decades of exclusivity, followed by the mobilization of numerous different companies to eventually compete prices down, is really the best route to humane drug pricing.

Removing all financial barriers to insulin to ensure that all patients have an uninterrupted supply of it would require governmental intervention, not just relying on multinational companies to devise better deals. In Canada the same vials of insulin that retail for nearly $300 here were being sold for $30 apiece.

1 comment:

ajohnstone said...

A self-declared “caravan” of Americans bused across the Canada-U.S. border on Saturday, seeking affordable prices for insulin and raising awareness of “the insulin price crisis” in the United States.