Today, Explained - The fight for affordable insulin

Episode Date: March 6, 2023

Insulin was the poster child of overpriced life saving drugs, but a manufacturer finally capped the cost at $35. Vox’s Dylan Scott explains how pharmaceutical companies for decades managed to overprice drugs Americans desperately needed. This episode was produced by Haleema Shah, edited by Amina Al-Sadi, fact-checked by Laura Bullard and Matt Collette, engineered by Patrick Boyd, and hosted by Sean Rameswaram. Transcript at vox.com/todayexplained Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts Learn more about your ad choices. Visit podcastchoices.com/adchoices

Millions of Americans need insulin to live. But for decades, one in six of them haven't been able to afford it. Antoinette Worsham carries the ashes of her 22-year-old daughter, Ontavia, who died last year after being forced to ration insulin she couldn't afford at $1,000 a month. It's either pay your rent, pay your car payment, or get your medication. Now, after decades of public pressure, one of the world's biggest insulin producers is saying it will cap the price. Drug maker Eli Lilly says it will cap out-of-pocket costs for insulin at $35 a month. But even that price would have the creators of this drug rolling in their graves. Ahead on Today

Explained, we're going to figure out how a cheap drug got so expensive and whether a price cap on insulin could lead to cheaper drug costs across the GTA from Real Canadian Superstore with PC Express. Shop online for super prices and super savings. Try it today and get up to $75 in PC Optimum Points. Visit superstore.ca to get started. My name is Dylan Scott, and I'm a senior correspondent covering healthcare at Vox. How big of a game changer is this price cap on insulin? What's interesting about this is that Eli Lilly is voluntarily capping out-of-pocket costs every month for insulin customers at $35, and essentially matching what Congress authorized for people on Medicare in the Inflation Reduction Act last year.

For the first time in history, there will be cost controls for prescription drugs through Medicare. President Biden's Inflation Reduction Act will soon rein in some drug prices covered under Medicare. What Eli Lilly is doing is saying for people who have private insurance and even for people who are uninsured, they're going to get the same benefit. They will only have to pay $35 a month for their insulin prescription. So, you know, that is a really big deal.

You know, if people who are uninsured certainly can be exposed to the really high prices for insulin that we currently have. You know, those list prices can be as much as like $250. Yikes. And even people who have commercial insurance, you know, if they have a high deductible plan, for example, where they have to spend, you know, like $5,000 of their own money before their benefits kick in. For those folks, especially, this could have a really meaningful effect in making insulin more affordable.

So just tell us what this means for people with insurance, without insurance, who rely on insulin. Do they just walk into the pharmacy, throw down $35, and they're set for a month? What's the reality? So for people who have private insurance, it should be that simple. For people who are uninsured, it's a little bit more complicated. So what Eli Lilly has asked them to do is download a digital savings card. So something you presumably could carry around on your phone, and you would show that at the pharmacy and you would get the same benefit, the same $35 prescription for your insulin. So there's a little bit of an extra burden for people who are uninsured versus people who have commercial insurance. They're trying to make it a relatively light lift, it seems like. But you always worry when there's additional steps

that people have to take to take advantage of a benefit like that or otherwise access their healthcare. How many people in this country, Dylan, rely on insulin? So there are about 8 million people in the United States who depend on insulin every day. Wow. For people with type 1 diabetes, which is usually the type that develops early in life, insulin is absolutely essential. They can't live without it. And even for people with type 2 diabetes, which tends to develop later, some of those people also, their disease progresses to the point that they rely on insulin every day too. My dad was one of those people. And we know before some of these recent actions by Congress and now by Eli Lilly that a lot of those people struggled to afford this medication that they depend on to survive.

Something like one in six people have said in surveys that they ration their insulin supply because of the cost. So there's been a long drumbeat for somebody to do something to make insulin more affordable. And so now we are finally starting to see some progress. So why is this happening now? Did the drumbeat get really loud? Yes. For one, there's just been this really persistent call for insulin in particular to be made more affordable. Dozens of people protesting outside Eli Lilly here in

Indianapolis, they're demanding lower insulin prices. Given the number of people who depend on it, given the fact that it's like literally an essential medication, something that people need in order to survive. You know, I think that has created the sustained pressure to do something about insulin in particular. Several people shared stories about rationing insulin because of the price. Erin Weaver says it killed her son. My mother's heart is furious. Especially on their website when they say that Lilly Cares. If Lilly cared, they wouldn't be killing their consumer base. That's why it got singled out by Congress last

year for that $35 a month cap. And, you know, we're starting to see states develop even more ambitious plans about how to bring down the cost of insulin. So the most exciting proposals would actually involve states producing their own generic insulin and selling it basically for that $10 cost that it takes to produce it. Nothing, nothing epitomizes market failures more than the cost of insulin. So California has put some real money behind this effort. They've authorized $100 million in funding to eventually produce a public generic insulin. $50 million will go towards the development of low-cost insulin products. An additional $50 million will go towards a California-based insulin manufacturing facility

that will provide new, high-paying jobs and a stronger supply chain for the drug. Michigan Governor Gretchen Whitmer has called for her state to do the same thing, put about $150 million behind a program to produce their own public insulin. Some people travel across the border to Canada to get their prescription drugs. And some cry when they refill their medication knowing that the prescription drugs are saving their life,

but the cost is killing them. And Maine and Washington are at least taking a look at the same idea. There's also been some non-profit efforts. There's a group called Civica RX, which is basically a cooperative of hospital systems that is planning to develop its own generic medications, and they're starting with insulin. What Civica is, is the first of its kind, not-for-profit, generic drug company that's truly organized in a way that nobody owns it. That the only value,

the only value that it can distribute is to the patients it serves. And so there's just like, it's become clear that sooner or later, a cheaper, generic insulin is to come on the market in an attempt to disrupt these major drug manufacturers business that thus far they've been able to dominate for almost 100 years at this point. And so I think that's what these guys are trying to get ahead of by voluntarily taking these steps to lower people's out-of-pocket costs. They know that

unless they do something, lawmakers are only going to become more aggressive about taking their own steps to try to make insulin more affordable. So why not get ahead of the game a little bit? They've had some embarrassing public episodes recently, too. Like, you know, there was that Twitter impersonator who, after Elon Musk made all those verification changes to Twitter, basically made a Lilly impersonation account.

Oh, yeah. If you've been on Twitter in the past week, you've no doubt seen the chaos that Elon Musk's new pay-for-play account verification system has created. A phony verified account for pharmaceutical giant Eli Lilly tweeted that it would begin offering insulin for free. And everybody freaked out. The company's stock price tanked by more than 4%.

Punk rock. And it kind of culminated with the company's own CEO acknowledging like, yeah, insulin probably should be more affordable. How much money is Eli Lilly going to lose by reducing the price here? So that's an open question. I do think it's telling that after Eli Lilly announced this news, the company's stocks went up.

And some of the business commentary that I have read in the wake of this news basically said like, they may not actually lose that much money. You know, the insulin manufacturers, most people don't pay the list price. There's pharmacy benefit managers and mandatory rebates for Medicare and Medicaid.

There's a whole kind of complex web underneath the list price that these companies set that filters down and determines what actual patients have to pay for their medications. So it's entirely possible that they can bring that list price down quite a bit. They can cover the out-of-pocket costs for people that would be above $35 a month and still make a pretty good profit on insulin because this is a drug that we know costs only something like $10 a vial to produce. So there's still plenty of money to be made. There's three major manufacturers, at least of insulin in the US, at least to this point, Eli Lilly is the only one who has said that they will provide this drug for $35 a month for

essentially everyone. And so maybe they start to get a bigger market share if the other companies don't follow suit. So it's not necessarily going to be all that bad for Eli Lilly's business either. And they get the PR shine and people get drugs more affordably. So it really does seem to me like close to a all winners, no losers situation. Okay, so just to be clear, you're saying that insulin is only costing them about 10 bucks to make, but they were selling it for as much as like 250 for people a month. How did that get to be? Well, the US has set up this really warped market for pharmaceuticals that has allowed these three companies to basically dominate

the insulin business for the better part of a century. And for a long time, that gave them free reign to set prices as high as they wanted to. And because this is an essential medicine that people need to survive, people and their insurers were going to have to pay it. But because of the way that the U.S. has set up its prescription drug market, that's what gave these companies such freedom to keep hiking prices and what put us in this position in the first place. More on that drug market with Dylan in a minute on Today Explained. Support for Today Explained comes from Aura.

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Today Explained, we are back with Dylan Scott, senior health correspondent here at Vox. And Dylan, we were talking about insulin prices in the first half of the show. I want to talk about insulin, the drug, for a minute. How did this thing come to be? I believe we owe a debt of gratitude to a Canadian. It's true. It's a little difficult to fix an exact date. It was started toward the end of July 1921. Insulin was discovered about 100 years ago by four men, Frederick Banting, James Collip,

John McLeod, and Charles Best. Many Canadians? Several. It was a group of Canadians, actually. We first saw the dramatic lowering of the blood sugar of a dog when we gave it an extract from pancreas that we thought was potent. So what they did was they extracted insulin from the pancreas of a healthy dog, and they gave that insulin to a dog that had diabetes to see if it would control the second

animal's blood sugar, substituting for the insulin that it's supposed to be making on its own, but can't because it has diabetes. Hmm. And it worked. The dog lived for longer than they expected or they would have without the insulin. How did the dog get diabetes? Was it eating too many lollipops? Animals can get diabetes. Sean, when I was a young boy,

I gave my neighbor's cat insulin when they were out of town. Diabetes. What? I don't know how it happens. I presume it's, like you say, the same kind of thing. It can be diet-related. Maybe some animals are born with diabetes just like some people basically

are born with diabetes. For some reason, I read your cat insulin story as just for fun, but you're saying your neighbors asked you to do this. Yes! Oh my god. What kind of person do you think I am? But yeah, so like animals can develop diabetes just the same as people. So anyway, point being, they tested this insulin from a healthy dog on a diabetic dog. It worked. It helped to manage the second dog's blood sugar better than, you know, he would be able to naturally. And so they were i think we've got it and they started testing it on people this was a really big deal before insulin was

discovered people with type 1 diabetes which was that uh what again you usually develop earlier in your life there was just nothing to do for folks well i knew i was going to die everybody at that age with diabetes then died within four or five years, whatever they did. There was a young man who had type 1 diabetes who was the first person they administered the insulin to. And they found, again, that it was successful in managing a person's blood sugar. And so, you know, they recognized the significance of this discovery. And what they decided to do was sell the patent for insulin to the University of Toronto for a dollar. And one of the guys who had discovered it,

Frederick Banting, said that he thought insulin belonged to the world. And so that's why they were basically just giving away this drug that even back then was self-evidently an enormous deal. But over time, private enterprise entered the picture, and those, you know, altruistic intentions did not provide that guarantee that those guys hoped that everybody who needed insulin would be able to get it. So basically, these four scientists invent insulin, start saving lives immediately, and I guess have been rolling over in their graves ever since they died

because of what's happened to prices here? Presumably so. You know, it became obvious very quickly that private drug companies saw the business opportunity here and they weren't going to hold back from it. And, you know, over the following decades, drug companies did make

really important improvements to insulin. You know, they made it longer lasting. More recently, they've made it more rapid acting. And like those can be really important for people's life management. You know, if you need to time your insulin injection based on like when you're going to eat a meal, having a really dependable release and knowing exactly when your insulin is going to kick in can be really important. And, you know, they eventually, you know, we started with the animal insulin that these guys kick in can be really important. And they eventually, we started with the animal insulin that these guys up in Canada first used. But over time,

we started to develop human kind of bioengineered human insulin, which was even more effective. And then more recently, synthetic insulins have kind of become the dominant product on the market. And those come with certain advantages, especially for certain patients, again, in terms of being longer lasting or more rapid acting. But the problem is, given the way that the prescription drug market is structured for all drugs, not just insulin, is it became really easy for these three companies, Eli Lilly, Sanofi, and Nova Nordisk, to just kind of dominate the insulin market. By the 90s and the 2000s, they were the only game in town. These new synthetic insulins were the hottest products that they had developed. And we suddenly started to see prices skyrocket. I believe from 1999 to

2019, the price of some insulins increased by a thousand percent. And, you know, that's where we started to see these horrible stories about people rationing insulin and just finding that this medication that they depended on to stay alive was no longer affordable. A thousand percent. How do people not take to the streets with pitchforks? Well, I do think, you know, what we've started to see here in the last year or two is sort of the culmination of people's anger and frustration with what's been going on. But the truth of the matter is, like, the U.S. has set up a system for prescription drugs that basically allows companies to do that.

As people might know, when a company develops a new drug, like one of these synthetic insulins, they get a monopoly on it. They're the only company that can sell it for 10 years or more before a generic competitor can basically copy the drug and try to sell it at a lower cost. But beyond that initial monopoly that these companies are given, they've got all kinds of ways for extending that patent. They can make little adjustments to the chemical compounds that are in these drugs. They can even, in the case of insulin make little adjustments to the, you know, chemical compounds that are in these drugs. They can even, in the case of insulin, like make changes to the devices that people use to inject the insulin into their bodies. And that can help to extend the patent. And once we ended up in this situation where there were three companies, you know, huge companies that had basically the entire U.S. insulin market under their control, it became really unappealing for anybody to try to

enter that market and provide a cheaper, competitive alternative. Because what these companies can do, because they're setting these list prices that are so much higher than the cost of production, if they start to hear rumblings that like, oh, this other fourth company is thinking about getting involved in producing insulin, they can just drop their prices and still make a profit as we're seeing right now. And for that fourth company that was thinking about getting into the insulin game, suddenly it's a lot less appealing business opportunity. And we've seen that kind of thing happen over the years where there was rumblings that a new company was thinking about getting involved and ultimately pulled out because

the existing manufacturers preemptively cut prices. And it's really only been here in the last couple of years when there's been these new ventures, Civica RX, that cooperative of hospital systems, and some of these state projects that are starting to get underway in California and elsewhere where there actually isn't any kind of profit motive there. Like those nonprofits and those government programs, those would be selling insulin for the cost to produce it. And like that's a much bigger disruption than these companies have faced before. And I think that's why we're starting to see them take more aggressive actions to try to address the cross crisis before those projects really get going. So now that Eli Lilly is capping the price of insulin at $35,

do you at least think the other two companies that are competitive in this market, Novo Nordisk and Sanofi, are they going to lower the cost of insulin too, at least? Well, they are definitely already under pressure to match what Eli Lilly has done. Yeah. at least? Well, they are definitely already under pressure to match what Eli Lilly has done. Bernie Sanders, I imagine, gleefully sent a letter to Sanofi and Novo Nordisk asking them to lower their out-of-pocket costs to $35 a month and match what Eli Lilly had done. As a result of the pressure that the American people are now putting on the pharmaceutical industry, telling them to stop the greed, stop ripping off the American people. As a result of all of that, what we saw today is Eli Lilly substantially lowered the price they're going to be charging for insulin. And now we are demanding

that the other two major insulin manufacturers also lower their prices. President Biden has called on the other manufacturers to follow. Eli Lilly said these other companies could do the same thing, twisting the knife, I imagine, just a little bit. So I wouldn't be surprised if in relatively short order, we see these other companies do the same thing. What about other drugs, Dylan? Insulin is obviously a big deal because as you've said several times here, people need it to live. But there are plenty other drugs that people rely on that are out of reach in terms of price. That's true. And yeah, the basic structure of the prescription drug market that I described that allowed this to happen is still in place. And it applies to all these other medications.

And I mean, I think we are starting to see more interesting experiments in prescription drug pricing later this year. Medicare will be allowed to start negotiating the prices of a small number of drugs for the first time. But still, it's a small number of drugs that will grow over the rest of the decade. But that's a big step that for a long time seemed totally out of reach. But I think one of the most interesting things to watch is this idea of the public production of essential medications. It's starting with insulin. That's what California is going to focus on.

That's what Gretchen Whitmer wants Michigan to focus on. But the same kind of model could easily apply to other drugs. I know the people who are working on these kinds of projects and proposals, they're starting to imagine a future where maybe California produces a public generic insulin and maybe Washington state purchases that public insulin from California and they concentrate on manufacturing EpiPens or some drug that's experiencing a shortage or some other kind of essential medication where there appears to be a market failure that has either, you know, led to not enough of that drug being available or the prices being too high. And so, you know, you could have a future where states specialize in producing certain essential medications and trade with one another. That would be a huge disruption to the pharmaceutical market as it currently exists. That's a long way off, even like California's plans for a public insulin has to get through a bunch of legal and regulatory

and scientific barriers to actually get to the point where they can put a product on pharmacy shelves. But given the scale of the drug affordability crisis, given especially how pronounced the problems have been with insulin in particular. States have gotten a lot more ambitious in terms of what they're willing to consider to try to do something about it. And I don't know that there's any coming back from that. People have just seen pretty plainly how absurd it is that these kinds of drugs could be unaffordable for people in the wealthiest nation on earth.

And so whether it's applying this public pressure to try to get companies to do the right thing on their own, as we've seen with Eli Lilly, or these kind of alternative models for producing drugs, like having the government do it, that I think 20 years ago would have been almost unthinkable, are suddenly being taken seriously. And so I think that is just a sign of how much

the conversation around drug prices has changed in the last five to 10 years. Dylan Scott, reademandweep at Vox.com. Our program today was produced by Halima Shah. She had help from Laura Bullard, Matthew Collette, Amina Alsadi, and Patrick Boyd. I'm Sean Ramos-Firum. It's Today Explained.