Well, it’s kind of complicated, but we’ve done our best to fill you in down below.
Eli Lilly, Novo Nordisk and Sanofi (the “Big 3”) dominate the global insulin market by producing over 90% of the world’s insulin supply, creating a three-way oligopoly on the industry. The insulin manufacturers have a history of raising the prices of their products at the same time, and the price increases are not proportionate to the cost of other goods and do not reflect U.S. inflation rates. In many places around the globe, the price of medication is regulated, but due to the largely unregulated pharmaceutical market in the United States, the Big 3 have been able to continuously price gouge insulin products to over 45 times the cost of production. Insulin manufacturers are free to set the list price of insulin at whatever they choose, no matter how unethical, and face no legal repercussions. The short and simple answer to, “Why is insulin so expensive?” is simply because it can be, and people who use insulin have no other choice, we must pay or die.
American Healthcare System
In addition, the bureaucratic system of Pharmacy Benefit Managers (PBM’s) provides a problematic barrier to accessing affordable insulin. PBM’s choose which drugs are covered for each specific insurance plan and receive financial rebates from the drug manufacturers they choose to do business with. This drives the price of medications, like insulin, up even further.
Lack of Successful Government Intervention
The US considers drugs to be a part of the “free market system” and therefore the government refuses to intervene on regulating the price of medication. Many politicians also take donations from the pharmaceutical industry and are influenced by industry interests. Despite meager federal efforts to mitigate widespread lack of access to healthcare, such as the 340B Drug Pricing Program and Medicaid/Medicare, these programs are not accessible to everyone due to demographic limitations or lack of access to federally qualified health centers, and leave many people unaccounted for. Current legislation like co-pay price caps only help a small percentage of people, and are not a solution to the insulin crisis.
The US government also fails to act on a patent protection loophole called evergreening, which is when manufacturers extend the lifetime of patents that are about to expire, in order to retain royalties from them. They do this by either taking out new, slightly modified patents (ex. Novolog and Fiasp), or buying out competitors for longer periods of time than would be normally permissible under the law (source). For example, Sanofi has filed 70 secondary patent applications in the United States since the drug was first put on the market in 2000. This is common practice among the Big 3. Because of evergreening, these drug companies are able to maintain their status as the dominant producers of insulin in the world.
Pharmaceutical Industry Influence
The pharmaceutical industry is incredibly adept at controlling the narrative in patient communities by infiltrating the network from all sides. This is extremely evident in the diabetes community. Government officials, doctors, diabetes patient advocacy organizations, and individual community members alike are all guilty of taking monetary donations, paid partnerships, and other perks from pharmaceutical companies in exchange for their promotion of pharmaceutical interests or for their silence on the insulin crisis. While some actions may seem less detrimental, like speaking at a PhRMA sponsored panel or a paid ad on Instagram, any affiliation with a pharmaceutical company is a resignation of power. This infiltration is not new and, in the diabetes community space, dates back to the earliest diabetes camps. We’ve had 70+ years of this influence on our community. These relationships enable good PR for the pharmaceutical industry and condition the community into believing that making money off our bodies is not only okay, but also normal. This, in part, has played a role in the exploitation of people with diabetes and has helped sweep injustices under the rug.