Expert: Eli Lilly’s $35 insulin cap more limited than it appears
Drugmaker Eli Lilly and Co. said Wednesday it would significantly reduce the sticker prices of several of its lifesaving insulin products that are used by diabetes patients and whose prices Lilly has repeatedly increased in the past.
Seeking to quiet an outcry about excessive drug prices, Lilly also said it would cap at $35 a month what patients pay out of their own pockets for the company’s insulin — even though the company already had such a policy in place.
Lilly has been a primary contributor to soaring prices for an injection that millions of Americans rely on to keep their blood sugar at levels that will keep them alive. The announcement comes at a time of mounting political pressure on drug companies to rein in what lawmakers and other critics view as the industry’s pattern of abusive profiteering.
Over nearly three decades, for example, Lilly has raised the list price on its most widely used insulin product, Humalog, by more than 1,000%.
The high costs of insulin made by Lilly and other drug companies — out-of-pocket payments for people on certain high-deductible insurance plans can exceed $1,000 a month, although most patients pay far less — have led many patients to ration their insulin supply.
In his State of the Union address last month, President Joe Biden blasted drug companies for increasing the prices for insulin. “Big Pharma has been unfairly charging people hundreds of dollars, $400 to $500 a month, making record profits,” he said.
On Wednesday, Biden hailed Lilly’s announcement as “a big deal, and it’s time for other manufacturers to follow.”
Lilly trumpeted its decision as a victory for patients. “Easier access for more people,” the company said in a full-page ad in The New York Times.
In reality, though, Lilly’s moves are more limited than they initially appear. Lilly’s existing $35 cap on out-of-pocket payments will be easier for privately insured patients to take advantage of. But the policies announced Wednesday will not have much, if any, effect on what many people are actually paying.
And Lilly was already charging insurers only a fraction of its high list price when accounting for rebates and discounts.
David Ricks, Lilly’s CEO, acknowledged in an interview Wednesday there was no guarantee that the company’s changes would result in insurers paying less for Humalog, though he said he expected that would happen.
In addition, the lower list prices, which will take effect over the course of this year, only apply to Lilly’s older insulin products.
“I don’t think that these prices are quite as impressive as they look when you first see them,” said Stacie Dusetzina, a professor of health policy at Vanderbilt University School of Medicine. “It doesn’t necessarily mean that Lilly is taking a big financial hit to do this.”
More than 30 million Americans have diabetes, and more than 7 million of them rely on insulin. Without insulin, patients can die or face serious health consequences including amputation and kidney failure.
Lilly’s price cuts follow years of mounting pressure not just from officials in Washington and state capitals but also from a well-organized community of patients who have called for insulin to be more affordable.
Lilly’s announcement follows a change that went into effect at the start of this year for patients on Medicare. Under last year’s Inflation Reduction Act, Congress imposed a $35-a-month ceiling on insulin copayments for Medicare patients.
Lilly said that it planned to reduce the list price of Humalog by 70% in the last three months of this year.
A vial of Humalog — patients often go through several vials per month — has a list price of $275; Lilly plans to reduce that to $66. However, insurers already pay much less than that: The average net price Lilly charged in 2021 for a vial of Humalog or its generic version was $43 after discounts and rebates, according to the company’s website.
Humalog’s new $66 list price will still be more than triple what it was when the product was introduced in 1996. (Lilly said it will also sharply reduce the list price of its generic version of Humalog, as well as another of its insulin products, Humulin.)
Lilly said that one of its newer Humalog products, a pre-filled insulin pen that has a list price of $530, would not have its price cut. Nor would its long-acting insulin product, Basaglar, which was first approved in 2015.
Lilly’s announcement “does not mean that the situation is fixed or everything is solved,” said Elizabeth Pfiester, who has diabetes and is the executive director of T1international, a group that has been pushing for a federal ceiling on insulin list prices.
“This is good news for some, but we need regulation to make sure that the companies can’t change their mind again and decide to raise the price,” she added.
Some patient advocates are also pushing for legislation that would require insulin manufacturers to charge no more in the United States than they do elsewhere. Insulin is much cheaper in other countries, where governments negotiate prices directly with drug manufacturers.
Ricks said that Lilly opposes “price setting from the federal government,” saying his company and other drugmakers need incentives to innovate and develop improved versions of insulin.
Asked whether Lilly would rule out further price increases for Humalog and the other products for which it announced price cuts Wednesday, Ricks declined to make a firm commitment. He said the company had not increased the list price of any of its insulin products since 2017.
The price of the lifesaving product has been a sensitive issue ever since insulin was invented.
When Frederick Banting helped create the substance a century ago, he refused to put his name on the first patent application because he felt it would be at odds with the Hippocratic oath he had taken as a physician. The inventors soon transferred the patent to the University of Toronto for $1, in the hopes of making it as widely available and affordable as possible. “Insulin does not belong to me,” Banting famously said. “It belongs to the world.”
That is not how it has ended up. In recent years, the three leading insulin manufacturers — Lilly, Sanofi and Novo Nordisk — have replaced older products with newer, costlier versions and steadily increased their prices. Together, the three companies control about 90% of the insulin market in the United States.
Researchers have estimated that a vial of insulin costs less than $7 to manufacture and could be sold profitably at less than $9. In 2019, in response to a Senate inquiry into high insulin prices, Sanofi acknowledged that, by one measure, it cost the company less than $2 to make one of its insulin pens, which at the time carried a list price of $75.
Representatives for Sanofi and Novo Nordisk would not say whether they would follow Lilly’s moves, but said they already had programs that significantly limited most patients’ out-of-pocket costs.