Lane: Busting America's Corporate Drug Cartel

In the face of obscene prices, California will start manufacturing its own insulin. The rest of the nation should too.

by Thomas Lane | 7/15/22 4:00am

The fact that insulin prices in the United States are ridiculous should surprise no one given how often the hormone makes headlines. High insulin prices are also a uniquely American problem — prices here are dramatically higher than in any other developed nation. According to the Department of Health and Human Services, insulin costs around 10 times more in the U.S. than the average across 32 other OECD countries. During his presidential run before the 2020 election, Bernie Sanders even went so far as to lead a bus full of Type 1 diabetics up to Canada to purchase insulin for a tiny fraction of what it costs in the U.S. He has a point — the price discrepancy is nonsensical.

California Gov. Gavin Newsom, a Democrat, recently signed the state’s latest budget into law, which includes $100 million for producing insulin. The plan is brilliant in that it addresses the heart of what causes our high prices — a highly consolidated market that just can’t be broken up without government intervention. There are only three companies — Novo Nordisk, Sanofi and Eli Lilly — that sell insulin here, and they all know that if they each hold the line and charge high prices, they can reap big profits from a captive market. How? First, it’s usually illegal to import prescription drugs into the U.S., ensuring that patients have nowhere else to turn. Technically, Sanders was breaking the law with his bus trip, but something tells me no jury will ever convict him. Second, U.S. patent law is often dysfunctional and guarantees the three current insulin manufacturers can keep competitors out. While insulin itself is generally no longer patented — it first came out in 1921 — each company’s insulin delivery devices are fiercely patented and not interchangeable with other companies’ products. These factors all combine to produce a functional oligopoly on insulin in the U.S. that results in deranged prices that kill. By manufacturing its own insulin and selling it on the market at much lower prices, California can functionally end part of America’s corporate drug cartel.

The issue of insulin prices is frequently in the news because diabetics quite literally will die if they do not get the insulin they need in the right quantity. Skimping on dosage to try and stretch a vial longer to save money kills. It kills thousands, in fact — just last year, 100,000 Americans died from diabetes-related causes. Diabetes may not be curable, but with insulin, it is often controllable. A study of Scottish diabetics found that while Type 1 diabetics on average live 11 to 13 years fewer than the general population, about a quarter of that life expectancy loss was associated with causes related to improper insulin management, such as rationing. Given that this study was performed in the U.K., where insulin costs around a mere eight percent of what it does here, it seems likely that the loss in life expectancy associated with insulin misuse would be even greater in the U.S. due to accessibility issues. Making insulin affordable will be a public health boon.

There have been several other proposals to lower insulin prices, such as price controls and allowing imports. These are workable ideas, and Congress is supposedly looking at the issue as I type. But this certainly isn’t the first time Congress has said they would solve the insulin issue and then proceeded to (you guessed it!) not do anything. There’s no way of knowing whether this will actually be the time a solution is passed. Congress may not be able to walk and chew gum at the same time, but the fifty states can. By pushing multiple solutions forward at the same time, we are most likely to solve the problem the fastest. Speed is essential to saving lives. I hope California’s solution will springboard into a national solution, whether that’s public insulin manufacturing or any of the other good alternatives.

California’s idea is also transferable to other drugs. If we publicly manufacture the many medicines that have been on the market for generations, have repeatedly been proven to be safe and are usually cheap to produce, we prevent this issue from happening again with other drugs. Making insulin isn’t rocket science. Neither is making stuff like epinephrine, the drug in EpiPens which has been used to treat anaphylactic shock since 1903. In the U.S., EpiPens cost over $650 for brand name devices and over $300 for the generic version. In the U.K., they can be purchased for about $70. There’s numerous other examples of drugs that fall into the same categories — the point here should be clear. Public manufacturing of these sorts of drugs can save lives by largely eliminating cost barriers. Hopefully, insulin is just step one.

This shouldn’t be a difficult choice. My own father is a Type 1 diabetic, and while we are fortunate to have insurance that covers his insulin, I remember during the aftermath of the 2008 recession my mother coming home and talking to my dad about upcoming waves of layoffs that might have put her out of a job. I didn’t realize this at the time — after all, I was just in elementary school — but if she had lost her work, we would have also lost the employer-sponsored family health insurance plan that paid for my dad’s insulin. We got lucky and my mom managed to dodge each successive layoff wave over the course of those years, but I can’t imagine the pain of the many other families out there who have lost a loved one after not being able to access the medications they need. This is an easily solvable issue, and California’s plan is the best bet to solve it. Let’s do what’s right and prevent the many funerals we don’t need to have.

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