According to the USC Schaeffer Center study, the complexity of insulin pricing and distribution lies in the lack of transparency surrounding profit distribution. With middlemen now claiming more than half of the profits within the supply chain, it is crucial for policies to be implemented that address this issue and ensure that savings are passed on to patients.
In addition to the rise in middlemen’s share of profits, manufacturers are also facing challenges in maintaining their revenue. This unsustainable distribution of profits ultimately leads to higher costs for the entire system, making it necessary for comprehensive policy changes.
The USC Schaeffer Center researchers emphasize the importance of addressing the entire insulin supply chain in order to create a more equitable system that benefits patients. By increasing transparency and implementing policies that prioritize patient access and affordability, the aim is to reduce the financial burden on individuals who rely on insulin for their well-being.
Insulin Expenditures Flow
USC researchers utilized 15 data sources to monitor insulin spending from 2014-2018. The share of profits for manufacturers dropped from $70 to $47, with pharmacies, PBMs, and wholesalers gaining larger proportions. Health plans witnessed a decline.
These discoveries underscore the growing influence of intermediaries in keeping costs high and illustrate the distribution of profits among system entities.
It is crucial for policymakers and stakeholders to address the role of intermediaries in the pharmaceutical supply chain to ensure affordable access to essential medications like insulin for patients. Transparency and regulation may be necessary to mitigate the impact of profit distribution on overall healthcare costs.
Transparency Challenges
The lack of transparency necessitated amalgamating data from various sources to unveil expenditure trends and map the flow of money through the distribution system.
Adopting this method uncovered the complexity and opacity of financial transactions within the system.
Policy Interventions
High prices of insulin burden millions of Americans with diabetes, prompting policymakers to explore solutions. While CMS initiatives strive to decrease patient expenses, addressing market concentration and the influence of middlemen is crucial for long-term affordability.
Collaboration among system participants, transparent financial tracing, and systemic solutions are essential to improve healthcare and affordability.
Support for this study was provided by USC Schaeffer Center for Health Policy & Economics through various donations.
Although insulin’s discovery a century ago transformed diabetes treatment, rising costs impede accessibility. Policy and clinical interventions are essential to enhance insulin affordability and availability for diabetic populations.
Keywords: Insulin, Cost, Access, Affordability, Biosimilar medications, Value-based pricing
Insulin Centennial Reflection
A century after insulin’s unveiling, accessibility and affordability remain pressing issues. Innovations from the past century have broadened treatment options, yet cost barriers persist, necessitating continued clinical and policy advancements.
Ongoing efforts in insulin delivery technologies and pharmacokinetic enhancements aim to maximize therapy efficacy and safety for individuals with diabetes.
Technological Advancements in Insulin Therapy
In 2012, the global insulin market was valued at around $21 billion. The market is dominated by three multinational insulin manufacturers, Eli Lilly, Novo Nordisk, and Sanofi, who control 99% of the market by value and 96% by volume. The use of pricier insulin analogs has led to increased prices, negatively impacting affordability. Data from the ACCISS study revealed varying government procurement prices for human insulins. Prices differed among country income groups, with the highest median prices in low-income and lower middle-income countries. Availability and affordability of insulin are worse in low- and middle-income countries. Insulin was accessible in 48% of pharmacies worldwide, with differing affordability levels. In the U.S., insulin expenditures surged significantly from $10 billion to $22 billion between 2002 and 2012, primarily due to prescribing changes and price hikes.
Analysis demonstrates a substantial increase in insulin prices over the years, with the U.S. having the highest manufacturer prices globally. Expenditures for prescription drugs in the U.S. in 2018 reached $476.2 billion, with insulin ranking among the top drugs by total expenditures. High out-of-pocket costs for insulin impact treatment adherence. Policies targeting drug cost containment can detrimentally affect medication usage. Increased cost-sharing is linked to lower drug treatment rates and poorer adherence. Medicare beneficiaries face high out-of-pocket medication costs, affecting drug utilization.
Despite these challenges, technological advancements in insulin therapy have been made in recent years. Continuous glucose monitoring systems (CGMs) have revolutionized diabetes management by providing real-time data on glucose levels. Insulin pumps have also improved insulin delivery by providing precise dosing and reducing the need for multiple daily injections. Additionally, researchers are exploring the potential of artificial pancreas systems, which automate insulin delivery based on glucose levels, to further enhance treatment options for individuals with diabetes.
IMPACT OF COST AND COST-SHARING ON INSULIN USE
Affordable prescription drugs are vital for diabetes treatment. Cost-sharing aspects in prescription drug plans can influence medication usage. Higher cost-sharing leads to reduced drug spending and affects adherence. Low-income individuals are particularly impacted by medication cost-sharing. Policies to enhance medication affordability include introducing generic drugs and biosimilars, addressing market exclusivity, and removing barriers to lower-cost alternatives.
Generic Medications
Generic drugs provide cost-effective alternatives to brand-name medications, resulting in significant savings. The utilization of generic drugs has risen over the years, leading to cost reductions. Generic competition plays a crucial role in controlling prescription drug costs. Ensuring timely access to generic drugs is essential. Strategies to mitigate drug supply disruptions and ensure drug quality and safety are crucial for the long-term affordability of medications.
The Patent System and Market Exclusivity
Patents offer protection for 20 years from the initial filing date and can hinder competition. Pharmaceutical manufacturers engage in various strategies to extend patent protection, which can impede the entry of lower-cost generics into the market. Intellectual property laws and regulations should be updated to prevent monopolies and maintain fair competition.
Biosimilar Insulins
Biosimilar insulins, while not identical to reference products, offer more affordable options for patients. The U.S. healthcare system has been slow to embrace biosimilars, contributing to higher costs for patients. Policies promoting the use of biosimilars can enhance patient access and affordability.
Structural Factors
Structural factors like limited flexibility in government price negotiations and lack of transparency in dealings with pharmacy benefit managers contribute to high insulin expenses. Ensuring transparency and fair competition in the pharmaceutical market can help lower insulin prices and improve access for patients.
Medicare Part D
To combat high insulin costs and improve access for diabetic patients, healthcare providers can consider prescribing lower-cost insulin options. Increasing the availability of biosimilars and addressing market exclusivity can also aid in reducing costs. Enhanced negotiation flexibility, transparency in drug pricing, and value-based pricing are important steps towards enhancing insulin affordability and access.
Encourage/Teach Providers to Consider Using Lower-cost Insulins
Studies have shown an increased use of newer insulin analogs in the U.S. over the past two decades. Providers should weigh the benefits of these analogs against costs and explore lower-cost insulin alternatives. Laws should be updated to prevent practices like pay-for-delay deals and ensure fair competition in the pharmaceutical market.
Medicaid has the ability to bargain for lower drug prices for its beneficiaries, a feature not available in Medicare Part D. It is crucial for all federal drug benefit programs to have the flexibility to negotiate prices effectively and prevent unjustified price increases. Manufacturers should not have the power to manipulate prices through rebates and discounts.
Implementing value-based pricing can enhance medication access for individuals with diabetes. By using financial and clinical criteria to determine medication prices, outcomes-based pricing can benefit those with uncertain real-world effectiveness. Value-based insurance design can promote the use of high-value medications by reducing patient costs. Although regulatory barriers currently hinder value-based pricing, new payment models like the Part D Senior Savings Model show promise in reducing out-of-pocket costs for insulin.
Despite the transformative impact of insulin on the lives of people with diabetes, access and affordability remain significant challenges. Even on the 100th anniversary of insulin’s discovery, many patients globally still face difficulties in accessing or affording it. Collaboration between various organizations and stakeholders is necessary to ensure insulin remains accessible and affordable for all individuals with diabetes.
The increasing cost of insulin can be attributed to several factors, including the shift from cheaper animal and human insulins to more expensive insulin analogs, significant price increases across all insulin types, prescribing practices of clinicians, restrictions on price negotiations by payers, and a lack of transparency in the insulin supply chain.
To improve access to and affordability of insulin, clinical and policy measures must be implemented. These include promoting the use of lower-cost insulins, ensuring timely availability of biosimilar insulins, enforcing stricter rules on extending patents, granting more opportunities for price negotiations, increasing transparency in drug pricing, and implementing value-based pricing for insulin.
Insulin plays a vital role in the survival of individuals with type 1 diabetes and is also crucial for managing blood sugar levels in many with type 2 diabetes. The high price of insulin has been linked to underutilization, which can increase the risk of complications and premature death in diabetes patients. Both healthcare providers and patients need to carefully weigh the pros and cons of insulin treatment.
For some individuals with type 2 diabetes, lower-cost human insulins could be viable alternatives to more expensive insulin analogs, especially if they have specific medical conditions or cost concerns. Collaborative efforts among different stakeholders are essential to ensure that all individuals with diabetes can access and afford insulin.
**DISCLOSURE:** W. H. Herman and S. Kuo have no relevant financial disclosures.
**Publisher’s Disclaimer:** This is a pre-edited version of a manuscript accepted for publication. Errors may be present in the content and all relevant legal disclaimers apply.