Insulin Prices Are Down Because Insulin Makers Have Put Access, Not Theater, First

Insulin manufacturing leaders will be in Washington today to face a hostile panel of Senators who are looking for answers around the high cost of insulin. There will, no doubt, be expressions of high dudgeon at the hearing, but other than that, it is likely to be a dud.

The reason that’s the case is because of what insulin manufacturers have been doing on their own. Thanks to these companies, the insulin market currently has:

• a remarkably robust safety net for patients with diabetes,
• extraordinary rebates to encourage insurance coverage,
• innovative programs to make products available at one low, monthly price, regardless of insurance coverage,
• billions in free medicine, and
• the introduction of low-cost biosimilar version.

And then, this spring, all three major insulin manufacturers cut their list prices.

If the system was functioning properly, that list price reduction should not have had any impact on patients. After all, the insurance companies and the pharmacy benefit managers (PBMs) that serve them were already receiving mammoth discounts. But the reality is that patients, too often, weren’t receiving the benefit of those rebates, so manufacturers took the additional step in the name of access.

It was the only way to break through the PBM gamesmanship that often drives down prices for everyone except patients.

People who have been calling for drug price cuts for years should have loudly celebrated the insulin list price cuts. Instead, the industry is getting raked over the coals. Bernie Sanders, I-Vt., the chair of the Senate committing hosting the CEOs this week, said he wanted to ensure that the price cuts were happening “in a way that results in every American getting the insulin they need at an affordable price,” as if that hasn’t been the goal that manufacturers have been working toward for years, often at cross-purposes with insurance companies.

And, in the New England Journal of Medicine, Harvard’s Leemore Dafny worked overtime to come up with an excuse – any excuse – not to give insulin makers credit for prioritizing access. Dafny’s analysis was built on the belief that “the ecosystem benefitted manufacturers.” That’s got to be news to the companies who have seen their revenues from insulin drop for the better part of a decade as they’ve continued to try to build a more perfect safety net for patients with diabetes.

Dafny suggested that the price reductions were prompted by public pressure; the threat of nonprofit, biosimilar version of insulins; and coming changes to Medicaid rules.

None of those theories hold water.

Companies have been responding to patient needs for years. What’s changed is that pharmaceutical companies have learned that they can’t count on PBMs to make the system work. Biosimilar insulin, too, is hardly a new concept, and it seems unlikely that a nonprofit group can sell insulin for much less than the existing net price. And the new Medicaid rules simply change the way that the government can skim additional revenue from drugmakers.

The real explanation is far simpler: manufacturers have been trying for more than a decade to make a grand bargain work. They would offer insulins to PBMs at incredibly low net prices, and – in return – payers would do everything possible to ensure access.

But the PBMs didn’t hold up their end of the deal, so the innovative pharmaceutical companies took the next, logical step and slashed list prices. That’s a dull explanation that won’t make for good theater in the hearing room, but better pharmaceutical policy isn’t about theater. It’s about patients.?