Insulin maker to slash price: What we know
Recent laws, changes in market influence cuts
Amid consumer angst and political pressure over the cost of life-saving insulin, Sanofi announced Thursday it would slash the price of its most-prescribed insulin, Lantus.
Sanofi was the final holdout among three companies that make up 90% of the world’s insulin market by value. Earlier in the week, Novo Nordisk followed Eli Lilly Co.’s plans to slash U.S. prices by up to 75% and 70%, respectively.
Sanofi said it will cut the price of Lantus by 78% and short-acting Apidra by 70% as of Jan. 1, 2024.
The prices these companies set for insulin have increasingly been scrutinized by analysts, politicians and patient advocates. In recent years, federal and state laws, Medicare and Medicaid policies, and changing market dynamics for these older insulin drugs have influenced price cuts.
But more needs to be done, said Elizabeth Pfiester, founder and executive director of T1International, an advocacy organization for people with Type 1 diabetes.
The life-saving medication is needed by millions of people. A 2020 survey from her organization found 1 in 4 people with Type 1 diabetes rationed insulin because of cost. Patients also struggled to pay the out-of-pocket costs for other needed supplies such as insulin pumps, testing strips and continuous glucose monitors.
Her organization is pushing for a federal policy that would cap the cost of insulin.
“It’s great that they’ve chosen to lower the price,” Pfiester said of the insulin manufacturers. “But they can choose to raise the price again.”
Sanofi drops list price for Lantus
Sanofi’s list price is $292 per vial of Lantus, the amount charged before discount programs or reduced prices negotiated by health insurers. When Sanofi cuts the price as of Jan. 1, Lantus will cost about $64 per vial.
The company also announced a price cap that ensures no patient will pay more than $35 for a monthly supply of Lantus.
The Paris-based pharmaceutical company earlier said most people with private insurance already pay $15 or less because of a copay assistance program. The drugmaker’s program for the uninsured also offers a 30-day supply for $35.
“The list prices of our insulins do not reflect the actual, net prices paid to Sanofi after various discounts and rebates,” Sanofi said in a statement. “Despite the rhetoric about skyrocketing insulin prices, the net price of insulin has fallen for eight consecutive years, making our insulins significantly less expensive for insurance plans.”
Sanofi vowed to continue to listen to patients, advocates, caregivers and others to “better understand additional actions we could take to address access or affordability challenges.”
Why is insulin so expensive?
Insulin prices charged by the three major drug manufacturers spiked over the past two decades. From 2002 through 2013, the average price of insulin nearly tripled, according to the
American Diabetes Association.
A Senate Finance Committee investigation in 2021 found the drug price increases coincided with lucrative rebate demands from insurers and pharmacy benefit managers, which are drug-pricing middlemen that command steep rebates in exchange for favorable placement on private insurance plan drug formularies.
These pharmacy managers in the past decade began to pit manufacturers against one another by excluding them from large blocks of patients through formulary exclusions, the Senate Finance Committee reported.
Why insulin prices are starting to come down now
Last year’s sweeping climate and health bill called the Inflation Reduction Act caps insulin costs at $35 a month for Medicare enrollees.
And last month, Biden urged Congress to extend that out-of-pocket cap to younger Americans who have private health insurance.
Washington, D.C., and 22 states have enacted cost-sharing limits for consumers purchasing insulin, according to the American Diabetes Association.
Drugmakers also are bracing for a drug pricing change under Medicaid, the federal health program for low-income families.
Medicaid has required drug companies to pay rebates when they significantly raise prices over time. But the amount drug companies paid Medicaid was capped in previous years.
The new provision, part of the American Rescue Plan Act passed in 2021, eliminates the rebate cap beginning next year. In other words, drug companies could face significant financial penalties beginning next year, said Antonio Ciaccia, CEO of 46brooklyn Research, a nonprofit that researches drug pricing.
The elimination of this Medicaid rebate cap, in particular, might be influencing drugmakers decisions to drastically cut insulin list prices, Ciaccia said.
“It’s one thing for a drug manufacturer to offer something for free,” Ciaccia said. “It’s another thing to literally pay for the privilege of doing so.”
Market dynamics mean insulin will keep getting cheaper
Drug manufacturers also face changing market dynamics.
Cost Plus Drugs, a company from tech entrepreneur Mark Cuban, aims to cut out pharmacy benefit managers and deliver lower-priced drugs to consumers. The company has launched a test program for insulin.
Meanwhile, CivicaRX plans to make and sell market discounted biologics that are interchangeable with Lantus, Humalog and Novolog.
The nonprofit, which is building a manufacturing facility in Virginia, expects to seek authorization from the Food and Drug Administration for its insulin products beginning next year, a spokeswoman said.
Ciaccia, of 46brooklyn, said these older insulin drugs face competition from newer insulin products, as well as weight loss drugs such as Ozempic.
“The writing is on the wall from a market perspective,” Ciaccia said.
How much does insulin cost?
Prior to companies announcing price cuts, insulin has cost nearly $300 a vial.
Eli Lilly, the first to announce insulin price cuts this month, will slash the drugmaker’s most commonly prescribed insulin Humalog to $66.40 per vial, down from $274.70. It will implement price cuts within the final three months this year.
Novo Nordisk, a Danish drugmaker, will cut the price of its top-selling NovoLog to $72.34 per vial, down from $289.36. Novo’s discounts will take effect Jan. 1.
Pressure ratchets up
This week, President Joe Biden said he’s pleased that Novo followed Lilly’s price cuts and urged “others to follow.”
U.S. Sen. Bernie Sanders, I-Vt., earlier in the week said on social media that “grassroots pressure” led to the Lilly and Novo price cuts, adding, “Sanofi must follow.” The week before, he and U.S. Rep. Cori Bush, D-Mo., introduced a bill that would limit the list price of insulin at $20 per vial.