By Jerry Mitchell
MS Center for Investigative Reporting
In 1921, scientists in Canada discovered insulin. After winning the Nobel Prize, they sold the patent for $1 each, saying the hormone for battling diabetes “belongs to the world.”
Now, a century later, many Americans are crossing the border to buy the life-saving medicine for themselves and their families, or ordering it online, because insulin can be up to 10 times cheaper there.
That’s no surprise given that the list price for a vial of insulin has skyrocketed in the U.S. from 75 cents to $250 in a little more than a half-century.
Mississippi is the first state to sue both the three drug makers that control the U.S. insulin market – Eli Lilly, Novo Nordisk and Sanofi-Aventis – and the pharmacy benefit managers, such as CVS Caremark, that negotiate prices with those companies.
“As the mother of a diabetic, I know the emotional, physical, and financial toll the unacceptable price of insulin has on families,” Mississippi Attorney General Lynn Fitch told the Mississippi Center for Investigative Reporting (MCIR). “I filed this lawsuit on behalf of every Mississippian who relies on this medication to survive. Even though the cost of producing these drugs has decreased, these companies have raised the reported prices of their diabetes drugs up to 1,000%, in lockstep, and down to the decimal point within a few days of each other. They are making record profits at the expense of diabetics and Mississippi taxpayers, who have been overcharged millions of dollars a year for outrageously inflated diabetes medications.”
She put the figure for the treatment of Mississippians suffering from diabetes at $3.5 billion a year. Nationally, the direct medical costs top $237 billion.
The lawsuit, which seeks punitive damages, claims these drug makers have been hiking insulin prices and then paying a huge chunk of that to pharmacy business managers in exchange for placing their drugs on lists from which patients pick their medications.
The drug makers and managers deny they have been colluding to raise prices.
“Lilly denies the allegations, and we will vigorously defend ourselves against these accusations,” Lilly officials told MCIR in a statement. “We also have taken numerous steps to ensure people living with diabetes can fill a monthly prescription of Lilly insulin at an affordable cost.”
Novo Nordisk said the allegations are false: “We are aware of the complaint and disagree with the allegations made against the company. We are vigorously defending ourselves in these matters. We have a longstanding commitment to supporting patients’ access to our medicines.”
CVS responded that the allegations “are built on a false premise and completely without merit.” CVS placed the blame for high insulin prices on pharmaceutical companies: “Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products, and we would welcome such an action. Allegations that Caremark plays any role in determining the prices charged by manufacturers for their products are false, and we intend to vigorously defend against this baseless suit.”
Unlikeliest of heroes
For centuries, Type 1 diabetes was a death sentence, often killing children in less than a year.
Recognizing that diet played a role in diabetes, doctors experimented with potatoes, rice, and even opium as possible cures. Other doctors limited patients suffering from the disease to only 400 calories a day. All of the patients died.
Enter the unlikeliest of heroes: surgeon Dr. Frederick Banting, who had been such a mediocre medical student he didn’t know how to spell diabetes.
In Type 1 diabetes, the pancreas produces little or no insulin, a hormone needed to allow sugar to enter cells to produce energy. With help from two students, Banting began research on the problem at the University of Toronto in 1921. They were able to extract insulin from an animal pancreas that they gave to a diabetic animal. The blood sugar dropped dramatically.
The discovery began to save lives. In 1923, Banting and his team were awarded the Nobel Prize for their work.
The team sold the patent to the University of Toronto, which in turn worked with Eli Lilly to develop the first commercially produced insulin.
Initially, all insulin was derived from animals, but in 1982, Eli Lilly created the first synthetic insulin, which was marketed as Humulin.
Fourteen years later, the drug maker unveiled its first analog insulin, a laboratory-grown “human” insulin. Other companies followed suit.
In recent decades, drug makers have introduced pills that seek to address Type 2 diabetes. Some prevent the kidneys from absorbing glucose.
Some make the body more sensitive to insulin. Others help control appetite and blood sugar levels.
Insulin pumps and pens are taking the place of syringes, and continuous glucose monitors measure blood sugar levels, transmitting that information to a smartphone or computer. In 2020, the FDA approved a device that integrated these two.
Eli Lilly, Novo Nordisk, and Sanofi all provide assistance programs to aid patients who can’t afford insulin.
Monthly insulin price as high as a PlayStation 5
Catie Santos, a 28-year-old from New Orleans, grew up knowing about Type 1 diabetes because her brother was diagnosed with the disease at age 10. On her 23rd birthday, she was horrified to learn she had the same disease.
Since then, she has met people who were diagnosed in their 50s with the disease once known as “juvenile diabetes.”
The monthly price of her insulin, she said, ran as much as the new Sony PlayStation 5, which can carry a price tag of more than $1,000.
Santos went on her parents’ insurance, but that assistance ended when she turned 26. “You really have to figure out this insurance thing quickly,” she said. “I’ve known [Type 1] diabetics who had to take corporate jobs just to stay alive.”
Some have to move back home with their parents to make it financially, she said. She is one of them.
Her most recent scare took place in the wake of Hurricane Ida, which left her family without power for three weeks. She had to cram a month’s worth of her insulin into the refrigerator of her aunt, who happened to have a generator.
The high cost of insulin has prompted some Americans to head for Canada or Mexico and still others manage to get the medicine or diabetic supplies through an underground network.
“You think, ‘It’s America, it’s 2021. Surely, you don’t have to pay somebody $50 to travel to meet you with insulin after traveling for six hours,’” said Santos, who works in that network. “But the reason you do that is it’s risky shipping insulin because it’s heat sensitive.”
Through social media, she connects people, she said. “If I hear people are in need, I’ll start a Twitter thread. We’re not trying to profit off of people; we’re trying to work the system that profits off of people.”
‘The only thing that’s changed is the price’
In 2019, Congress heard testimony from diabetes experts and others regarding the high cost of prescription drugs.
“I can help [patients] shop for the best price of insulin, connect them with a discount pharmacy, sometimes switch to a less expensive product,” said Dr. Kasia J. Lipska, an endocrinologist and assistant professor at Yale School of Medicine. “But these are Band-Aid solutions. What we need to do is exert pressure on drug makers to reduce those prices.”
Over the past quarter century, the prices of products have increased an average of 75%. That’s a fraction compared to the huge hike for insulin. A vial of Humalog (insulin lispro), which cost $21 in 1996, now costs as much as $400 – a more than 1,800% increase.
During that time, “there’s been no innovation to improve Humalog,” Lipska said. “It’s the same exact insulin hormone. The only thing that’s changed is the price.”
A study she worked on found that 1 in 4 rationed insulin because of the high price.
Executives for the drug makers and the pharmacy benefit managers acknowledged to Congress in 2019 that the cost of insulin had become too expensive.
Kathleen Tregoning, an executive vice president at Sanofi, testified that while the treatment of diabetes has been transformed by medical innovations, “the landscape in which patients access medications has also fundamentally changed, and not for the better. We understand the anger of patients who cannot afford the insulin they need due to rising, out-of-pocket costs.”
She pointed out that while the list price for Sanofi’s insulin had risen 126% between 2012 and 2018, the net price had actually fallen 25%.
Out-of-pocket costs for those with insurance and Medicare Part D have increased about 60% over this time, she said.
“We want these rebates, which have grown in recent years and have resulted in substantially lower net prices, to benefit patients,” she said. “Unfortunately, under the current system, savings from insulin rebates are not consistently passed through to patients in the form of lower deductibles, co-payments, or coinsurance amounts.”
Pharmacy benefit managers denied a role in the high price of insulin. “Rebates are not the cause of increasing drug prices,” Amy Bricker, senior vice president for one of the pharmacy benefit managers, Express Scripts, told Congress. “In the system today, rebates are used to reduce overall health care costs for consumers.”
If manufacturers wanted to reduce their list prices, “there would be no implication to their rebate status,” she said.
U.S. Rep. Brett Guthrie, R-Kentucky, said Congress was trying to figure out why there’s a higher price “that seems to be caught up in the system. … We need to figure out the economics.”
During the hearing, drug makers testified they are paying billions in rebates each year to the pharmacy benefit managers in return for better placement on drug lists for patients. The drug makers say the managers are the ones to blame for the high insulin prices, because they’re failing to pass on the savings.
The managers, however, deny this, insisting that their practices have helped lower the price of insulin.
Then-U.S. Rep. Joe Kennedy, D-Massachusetts, said it’s frustrating to hear the drug makers and the pharmacy benefit managers point their fingers at each other for insulin’s high prices. “The status quo is not going to continue,” he said. “It can’t.”
Mike Mason, a senior vice president for Lilly, said their net prices have declined since 2009.
Asked if Novo Nordisk had lowered its price, President Doug Langa replied no, saying the best way to reach the most patients in the most affordable way are through the drug lists. “Anything that risks that … is something we have to strongly consider.”
Kennedy asked Langa, “What do we do to try to make sure patients in this country get access in this country to life-saving medication that was sold for a buck to make sure that every person gets access to it? What do you suggest?”
“I suggest that we all come together for solutions, get together with Congress to make sure rationing never happens again,” Langa replied. “One patient [dying] is too many.”
On Sept. 28, Lilly officials announced a 40% price cut next year for the generic version of its bestselling insulin, Lispro, which will be 70% less than its name-brand version. The new list price will be $82 a vial and $159 for a pack of five pens. This is Lilly’s second price cut in two years.
Laura Nally, a pediatric endocrinologist and assistant professor at Yale University School of Medicine, questioned the value of this price cut since “most people know that you can get Lispro using a GoodRx coupon for $40 per vial.”
Since Lispro doesn’t appear on a drug list for patients, she said, “this won’t help decrease the cost of the medications that insurance companies have to pay, and so the high cost of insulin is still going to translate to the person with diabetes or other individuals with private insurance. PBM’s are still able to make money, insulin manufacturers are still making money by only allowing expensive, brand name insulin on the formularies, and now can make extra money by charging $80 for a vial that only costs $6 to produce.”
Dan Hurley, author of Diabetes Rising: How a Rare Disease Became a Modern Pandemic, and What to Do About It, said drug makers have raised the prices in recent decades because they can.
“The incredible speed with which vaccines and antibodies against COVID-19 were developed demonstrates what’s awesome about the pharmaceutical industry,” he said. “The incredible prices of insulin and other life-saving drugs demonstrates what’s wrong.”
MCIR J-Lab student Karli Carpenter contributed to this report.
Email Jerry.Mitchell@MississippiCIR.org. You can follow him on Facebook, Twitter or Instagram.
This story was produced by the Mississippi Center for Investigative Reporting and funded in part by the Fund for Investigative Journalism. It was also produced in partnership with the Community Foundation for Mississippi’s local news collaborative, which is independently funded in part by Microsoft Corp. The collaborative includes MCIR, the Clarion Ledger, the Jackson Advocate, Jackson State University, Mississippi Public Broadcasting, and Mississippi Today.
Mississippi Center for Investigative Reporting is a nonprofit news organization that is exposing wrongdoing, educating and empowering Mississippians, and raising up the next generation of investigative reporters. Sign up for our newsletter at https://www.mississippicir.org/sign-up.