The insulin racket

In much of Europe, the cost of insulin is about a sixth of what it is here. That’s because the government negotiates prices directly with the drug manufacturers. In this country an invisible group of businesses, called pharmacy benefit managers (PBMs), do the negotiating. Supposedly they are negotiating for lower drug prices on behalf of insurers, such as employer plans and Medicare Part D. The problem is that PBMs are money-making enterprises: they get “rebates” (kickbacks) from drug manufacturers whose products get the okay from insurers. Though they're supposed to be driving down costs, how can they resist choosing the products with the largest rebates? They don’t resist. They make big bucks: the three biggest PBMs—Express Scripts, CVS Health, and OptumRx—bring in more than $200 billion a year in revenue. Industry analysts estimate that these payments, and other back-room deals, amount to as much as 50 percent of the list price of insulin.

Added to the problem is the fact that, even though insulin has been around for almost a century, there is no generic form available in the US. Just three pharmaceutical companies hold patents for insulin: Eli Lilly, Sanofi, and Nordisk. Together, these companies made more than $12 billion in profits in 2014, a big portion of which is from insulin sales. What's more, they’re able to extend their patents by making little tweaks to the molecules, effectively making them “new” drugs. (After patents run out on older drugs, companies usually stop making them.) Not only that, the three manufacturers keep raising their prices. For example, the price of Humulin RU-500 rose by 325 percent from 2010 to 2115. A racket indeed.

Some smart consumers are fighting back. Anthony Di Franco, who has had diabetes for ten years, set out to learn whether insulin could be home-brewed on a small scale. (Don’t try this at home.) After some research, he concludes; “We can do it, and we can do it now. All of the tools already exist.” Last year, the Open Insulin project raised $16,656 to demonstrate the technological feasibility of manufacturing insulin (it involves injecting certain genes into bacteria). As their website explains, “Industrial protocols for insulin production don't support generic production. They're complex, decades-old, and often encumbered by patents. Ours will be simple and open. All protocols we develop and discoveries generated by our research will be freely available in the public domain.”  Hooray for them!

I keep saying I will stop ranting about pharmaceutical companies. I seem unable to do this. Sorry.

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