
The insulin racket: why a drug made free 100 years ago is recently expensive - wallace_f
https://prospect.org/article/insulin-racket
======
maire
This is an issue beyond insulin. I hope they don't just focus on insulin.

Generics do not work to lower prices on drugs because there is price fixing
between companies. Price fixing is illegal in the US but does not seem to be
enforced.

I discovered this because my sister in law has a rare disease and she depends
on a rare drug called syprine. Her drug costs went from 177.00 a month to
$8000.00 a month where it hovered there for a year, then it went up to
$43,354.73 a month.

The US funds the manufacture and research on drugs for rare diseases but only
while the drug is under patent. Once the drug is out of patent then there is
no regulation. These are called "orphan drugs."

It turns out that Valeant (the maker of syprine) was guilty of price fixing
and was under investigation by the federal trade commission. The case went all
the way to the supreme court which came down against Valeant. The end result
seems to be nothing.

~~~
toyg
> [monthly] $43,354.73

That's half a million per year. At that price, unless syprine's manufacturing
process requires digging diamonds, one could probably save money by hiring a
dedicated chemist (100k p/y or thereabout) and giving them the necessary money
to make the drug just for one.

If I were an insurance company, I'd consider buying a small pharma outfit and
target it at these orphan drugs just _to save money_.

~~~
dariusj18
Interesting point about insurance companies saving money that way. I know that
some insurance companies are starting to run medical practices and pharmacies,
I wonder how far away them making their own drugs is. Unfortunately, I fear
that that's the direction of further distopia.

~~~
vonmoltke
> I know that some insurance companies are starting to run medical practices
> and pharmacies

They are? Where is this happening? This could be a good thing, but I doubt it
since the regulations on such entities will likely be warped in their favor.

~~~
MichaelApproved
Kaiser Permanente is doing that in California. I was very happy with their
healthcare when I lived there.

~~~
komali2
Kaiser's cool until you try to get mental health treatment through them. Then
they become a comedy of cynical errors.

First, they make you get evaluated by one of their psychs. Take depression for
this example. Unless you're having suicidal thoughts, according to Kaiser, you
don't have depression. So no, therapy is not covered.

So, you say "no really, I am demonstrating every symptom of depression other
than suicidal tendencies, I just want a therapist." ok fine we've got a
troublemaker over here demanding the healthcare they pay for, stick'm in a
room with 10 other patients and an unconcerned therapist, call it "group
therapy," done.

"But I don't want a room full of random people to know about the shit I go
through in my life or my past abuse. I have depression, I want therapy." Fine,
you have overcome the requisite 3 months of phone calls and bullshit that
filters out 90% of our insurees, so you get to be on the waiting list for one
of the five Kaiser approved therapists in the bay area. Next appointment:
2021.

Of course, you could always just pay out of pocket, between 100$ and 200$ a
session...

~~~
shaftway
The backend of this isn't any better.

They've been outsourcing significant amounts of this to secondary companies
(e.g. Easter Seals, BHPN), which then outsource the work to smaller agencies.
This turns into the smaller agencies fighting for basic services on behalf of
clients.

There are regular mandatory meetings (monthly I think) where execs from Kaiser
and the intermediaries announce breaking changes, or straight out berate the
group of providers for doing their job, or for not doing things that aren't
their job. They like to change coding rules without telling people and then
blaming them for not coding properly. They also like to force companies to
follow rules, especially when it doesn't particularly make sense (like
carrying insurance for injuries to customers when customers aren't allowed on-
site).

Then after all of that they'll arbitrarily hold payment as long as the
possibly can. A couple of the smaller agencies in our area have gone under
because they couldn't pay staff while they waited for checks. We've seen them
delay payment by over a year after services were billed.

The only real strategy in this case is to spread out your customers by
insurance provider. Unfortunately that means turning very needful customers
away, because you can't become too reliant on any one funding source.

Source: I provide support to a mental health services agency in my off time.

------
dmitryminkovsky
"...made free 100 years ago..."??? What?

> Insulin from cattle and pigs was used for many years to treat diabetes and
> saved millions of lives, but it wasn’t perfect, as it caused allergic
> reactions in many patients. The first genetically engineered, synthetic
> “human” insulin was produced in 1978 using E. coli bacteria to produce the
> insulin. Eli Lilly went on in 1982 to sell the first commercially available
> biosynthetic human insulin under the brand name Humulin. [0]

This process—programming bacteria to generate complex human biomolecules for
our consumption(!!)—was a crowning human achievement. It did not occur 100
years ago. Insulin is not simple [1], and making it in the current
pharmaceutical form that we expect, at the scale we need, is not some simple,
100 year old thing. We can't take these things for granted.

No comment on how much makers should charge for insulin.

[0] [http://diabetesstopshere.org/2012/08/21/the-history-of-a-
won...](http://diabetesstopshere.org/2012/08/21/the-history-of-a-wonderful-
thing-we-call-insulin/)

[1]
[https://en.wikipedia.org/wiki/File:InsulinHexamer.jpg](https://en.wikipedia.org/wiki/File:InsulinHexamer.jpg)

~~~
makomk
As far as I know, current clinical evidence shows that modern porcine insulin
isn't actually any better or worse than synthetic human insulin overall.
However, it's also not any cheaper these days either - in fact, I think the
NHS pays slightly more for it than human insulin. Sure, managing to program
bacteria to produce complex human biomolecules was a major breakthrough, but
the tech is old and refined enough that companies can churn the stuff out
relatively cheaply.

~~~
aeorgnoieang
> churn the stuff out relatively cheaply

The _marginal_ costs (per unit) are relatively cheap but the fixed costs,
especially regulatory costs, are very much not cheap; which is one reason why
there's so little competition.

------
RHSeeger
> The price of his insulin had apparently gone up again to $1300, which was
> more than he had in his bank account.

> Five days later, he was dead.

I don't mean to sound insensitive here, but... last I checked it's possible to
pick up insulin (without a prescription) for $25 a bottle. Sure, it's not the
same insulin he was probably on, but it does work (I was on it for many
years). A little bit of searching on the web would have turned of this
information; so why is he dead instead of on a different insulin?

~~~
alistairSH
Yes and no... [https://www.snopes.com/fact-check/insulin-walmart-
vial/](https://www.snopes.com/fact-check/insulin-walmart-vial/)

There are other articles available that describe the situation.

tl;dr - Yes, you can get a vial of insulin for $25. But, it's not the same
kind of insulin most diabetics take. They are typically prescribed insulin
analogs, which still require a prescription. The $25 version could likely keep
them alive, but the dosing/usage/effects are not as consistent.

~~~
makomk
The original article is pushing the narrative that those new, fancy insulins
"offered minimal benefits" compared to that older insulin, that they're just
prescribed because of "aggressive marketing campaigns" by the evil big pharma,
and that this is what's pushing up insulin prices. The fact that you can buy
the older stuff off the shelf with no prescription for $25 is definitely a
problem for its narrative, and the fact that there are genuine disadvantages
to doing so is an even bigger one.

~~~
RHSeeger
The newer insulins are definitely better. Just the fact that they act faster
allows one to take insulin reactively (blood is high, take a bit of insulin to
bring it down). This is a large QOL boost in that it allows more flexibility
in eating.

------
chadcmulligan
Maybe the Red Cross should parachute Insulin into the US like in any other war
zone. It is a war zone, the owners of the health care system have declared war
on their customers it seems, they are only now becoming aware of it.

~~~
mruts
Why hasn't Amazon declared war on their customers? It doesn't have to do the
market, and it certainly has nothing to do with capitalism. It has to do with
rent seeking on behalf of lobbyists are the corruption of government. Imagine
a world where drugs go off-patent in 5 years (or if you really want to be
radical, no patents at all) and every drug was available without any
prescription whatsoever. I guarantee you prices for pretty much all drugs
would be 10-100x lower. How do I know this? Because I moved to a country
(Tanzania) in which no one has health insurance and there are practically no
controls on any drugs at all.

Medications that had costed me $500 with insurance per month in the US I can
buy for $20/month. One of my friend's father is diabetic, and he spends maybe
$40/month on insulin.

The patent system in the US combined with the 3rd party payer system has
created astoundingly bad incentives for every party. And the result of all of
this is sky high drug prices.

People seem to think that the defective US healthcare system is an indictment
on free-market capitalism. But there's nothing free-market at all about our
system. What it's really an indictment on is cronyism, corruption, and rent-
seeking.

The question becomes, what do we do about it? The tangled and corrupt web of
healthcare will be almost impossible to undo. I'm a staunch neoliberal but
even I don't think it's going to be possible to go back to that in the US. It
pains me to say/think this, but maybe the only solution for us is single-
payer.

Single-payer has pretty terrible incentives too, but probably not even as bad
as the current system.

~~~
imtyler
>People seem to think that the defective US healthcare system is an indictment
on free-market capitalism. But there's nothing free-market at all about our
system. What it's really an indictment on is cronyism, corruption, and rent-
seeking.

Isn't the allowance of 'cronyism' etc, what makes the market "free?"

~~~
skohan
If you believe that then the billions of dollars corporate interests spend on
think-tanks to produce messaging is probably working.

The original concept of free-market economics, as envisioned by Adam Smith,
was defined in opposition to entities governments and guilds using their power
to impose artificial rules in the market to subvert natural market forces like
supply and demand. Pharma companies use regulatory capture to do exactly that:
they set up a legal landscape for their own benefit and everyone else's
detriment. Rent-seeking is anything but free-market.

~~~
imtyler
>...They set up a legal landscape for their own benefit and everyone else’s
detriment.

So if I’m understanding correctly, the problem is not a lack of willingness to
break up/regulate this monopoly, but instead the regulations and lobbying that
explicitly facilitated its creation?

Are there any inherent facets of a free market that prevent such abuses?

~~~
mruts
The inherent weakness of any and every society is always going to be the
government. As the entity with the monopoly on force, the corruption and
influence on government from interest groups will necessarily be the weak
point in the system.

It's incredibly hard to generate the political will of many people who will
slightly be hurt by something against the will of the few who will be
significantly hurt even if the aggregate damage is far greater for the many
than the few.

Almost all legislation follows this sort of calculus: zoning laws, tariffs,
minimum wage, etc.

------
omh
This looks like a case study of what is wrong with the US healthcare system.

There isn't much discussion of why it's expensive in the US specifically. In
other countries insulin prices haven't risen in the same way and are still
affordable. So why is the price gouging only happening in the US?

As a T1 diabetic in the UK, where the wonderful NHS covers all of my insulin
costs, this is one reason why I'd never be able to move to or work in the US.

~~~
coldpie
> As a T1 diabetic in the UK, where the wonderful NHS covers all of my insulin
> costs, this is one reason why I'd never be able to move to or work in the
> US.

I'm a T1 Diabetic in the US and I consider myself very lucky to work in
software. I have good insurance, so my medication only costs me about $200 per
month. That's just an additional cost I have to pay to be alive, on top of all
the other stuff everyone else has to pay for, too. If I had a lower paying
job, or a job with less good health insurance, I can see how I'd be priced out
of living.

~~~
chadcmulligan
I'm sorry but I find that horrifying.

I'm in Australia, my brothers recently diagnosed as a T1 diabetic, he's
currently taking a career break to spend time with his family and get his
health and medication all sorted out. Thats all fine here because the costs
are reasonable, I see these reports form the US and can't help but wonder when
it will get here, most 'innovations' do, fortunately the US health system
doesn't seem to be getting a foot hold here.

It seems to me, as an observer, that the health system along with the cost of
education have been set up to produce a slave class, I could be wrong but its
definitely something that I fight to keep out of here. Five years or so ago I
was regarded as a socialist, but with how things are going, most people I
speak to no longer argue about it, so it seems the battle is being won here. I
find it hard to understand how there aren't marches in the street over there
about this.

~~~
coldpie
It's bad, but it's not all that bad. Most jobs, such as mine, provide health
insurance that makes costs at least manageable, if not reasonable. I live a
happy and comfortable life, despite the $200 monthly tithe to the CEOs of the
insurance and pharmaceutical companies.

And there is progress being made. The ACA passed under Obama was a very
significant step forward, and public perception is shifting in favor of more
government involvement in healthcare[1]. As with most things, the problem is
money in politics and media. Republicans resist any attempt to slow the
accumulation of money into the hands of the ultra-wealthy, and also own the
most popular news channels, so they've convinced a significant chunk of the
population that making the wealthy wealthier will somehow help them. A good
chunk of Democrats are also paid to oppose changes to the current healthcare
regime. But there's a growing number of Democrats actively campaigning for
single-payer and other sane systems, and support among voters for single-payer
is also growing[2].

There's hope. The situation isn't so bad that violence is the answer, yet.

[1] [https://www.pewresearch.org/fact-tank/2018/10/03/most-
contin...](https://www.pewresearch.org/fact-tank/2018/10/03/most-continue-to-
say-ensuring-health-care-coverage-is-governments-responsibility/)

[2] [https://thehill.com/policy/healthcare/339247-poll-support-
gr...](https://thehill.com/policy/healthcare/339247-poll-support-grows-for-
single-payer-healthcare)

~~~
thewileyone
> Most jobs, such as mine, provide health insurance that makes costs at least
> manageable, if not reasonable.

Hope you don't lose your job for some bullshit reason.

------
stenl
$1300/month is absolutely crazy. In Sweden, a whole year’s worth of injection
insulin is about $600 (actual cost to the government, including the disposable
injectors) and $0 to the end user.

~~~
wil421
Another person commented on a different thread that he was buying some kind of
auto-injection pen that fetched a premium to the bottled stuff. It seems he
was not aware that he could’ve used the regular bottle stuff and saved a LOT
of money.

The pharmacist should’ve given him a better consult and told him options for
cheaper stuff. I had a pharmacist and a tech search for 30 mins several times
for a rebate that brought my cost to $0. They will suggest another medication
if the one you are getting isn’t covered. They will even call you doctors to
get a new script.

It seems there were failures on multiple levels. He should’ve been aware of
better options. The pharmacist shouldnt have let him leave when he couldn’t
afford it.

~~~
rswail
The primary failure is that healthcare is considered an "industry" in the US
and that health "insurance" is incentivized to keep prices (and profits) high.

Health insurance by private companies is just a scam. In combination with
"not-for-profit" hospitals, medical practicioners loaded with college debt,
lobbying to government to enforce ongoing rent-seeking (eg "Medicare D is
specifically not allowed to negotiate drug prices").

The entire US health system needs an enema.

It should _not_ be up to the patient to "be aware of better options". It
should _not_ be up to the pharmacist to stop him leaving when he couldn't
afford it.

What should have happened is that a doctor prescribed the appropriate
medication, and a pharmacist supplied that medication, both ensuring the best
outcome for the patient.

The cost of the medication should be absorbed (not totally perhaps, but within
the bounds of reality and the minimum wage) by the government.

That forces the government to negotiate the best possible price with the
suppliers and to remove inappropriate IP "rights" when they no longer "promote
the progress of science and the useful arts".

~~~
wil421
How well has negotiating drug prices worked for Medicare?[1]

[1][https://www.forbes.com/sites/johnwasik/2018/08/10/why-
medica...](https://www.forbes.com/sites/johnwasik/2018/08/10/why-medicare-
cant-get-the-lowest-drug-prices/amp/)

------
colechristensen
>So he made a rational decision: He’d go uninsured, save the cost of the
premium, and just pay for his meds out of pocket, while racking up work
experience that could serve as a springboard to a better position with health
insurance.

He did not make a rational decision. This is the most upsetting part. I
looked. You can buy an insurance plan in Minnesota with a $750 deductable
$6000 out of pocket max for $350 per month.

It is not possible with that plan and a few more like it to spend more than
1000 per month. If you are planning to spend that much anyway it is irrational
to pick anything else.

What seems to have happened is he was using expensive autoinjector pens while
on good insurance and then didn't adapt when he lost it and didn't get the
right advice for purchasing his own insurance or the right education to be
able to pick an appropriate plan.

~~~
beached_whale
Those pens allow for accurate dispensing.

~~~
colechristensen
Who wouldn't choose to learn how to use a syringe well instead of paying a
third of their income for auto pens?

~~~
rmrfrmrf
Not sure if this is the same issue, but apparently the cheaper insulin
syringes are thicker and cause more pain and bruising. From my understanding,
these are shots that need to be administered several times a day in
perpetuity. The savvy consumer's options are chronic physical pain or poverty.
With that in mind, would you still suggest that people go with the cheaper
option?

~~~
beached_whale
Most diabetics, not pumping take two kinds of insulin. One that provides a
basal dose that covers the glucose your body produces. One to two injections a
day for that. In addition, there is the bolus dosages that are taken with any
carbohydrates. So most people on average, eat 3 meals a day, plus any
snacking. We are up to about 6 a day here.

The cheaper insulin in the US is garbage and should not be used. period. The
problem is the companies are have no pressure to reduce prices. the customers
are captive and must pay or die. They make money in other countries that have
price controls on the same product.

------
jostmey
The article seems to blame the Bayh–Dole Act and similar events that allowed
Universities to sell government funded research results to the pharmaceutical
industry. I don't believe this is the problem--the Bayh–Dole Act incentives
new drugs. This explanation doesn't explain why off patent drugs have gone up
in price.

I suspect the problem is market collusion and the FDA shutting down
competitors on drugs where patents expired, which I believe is what happened
during the epipen crisis.

~~~
kyshoc
In the case of insulin, I think it has more to do with the FDA's processes
than corruption.

It would be very difficult to make a profit on generic insulin because it's a
biologic drug, which means a generic manufacturer wouldn't be able to bypass
the FDA approval process by proving bioequivalency.

EDIT: Upon further reading, there is a pathway[0][1] for "biosimilars", but it
seems to have higher requirements than chemical generics.

[0]:
[https://en.wikipedia.org/wiki/Biologics_Price_Competition_an...](https://en.wikipedia.org/wiki/Biologics_Price_Competition_and_Innovation_Act_of_2009)

[1]: [https://www.fda.gov/drugs/biosimilars/biosimilar-and-
interch...](https://www.fda.gov/drugs/biosimilars/biosimilar-and-
interchangeable-products#biological)

~~~
coldpie
The generic insulins that are out of patent protection are also significantly
worse than modern, patented insulins. Here's a good article on the topic:
[https://www.webmd.com/diabetes/news/20150318/why-isnt-
there-...](https://www.webmd.com/diabetes/news/20150318/why-isnt-there-any-
cheap-generic-insulin)

------
cproctor
Some big hospital chains are starting a nonprofit generic drug manufacturer,
Civica Rx. This seems like a promising step forward. For those more inclined
to direct-action, there's Four Thieves Vinegar [1].

[1] [https://fourthievesvinegar.org/](https://fourthievesvinegar.org/)

~~~
dev_dull
Why not just import it from foreign manufacturers for a fraction of the price?

~~~
vonmoltke
The FDA won't allow that unless those manufacturers go through its approval
process.

~~~
dev_dull
Sounds like a fixable problem.

~~~
zaroth
If you’ve read the stories on some of these foreign manufacturers, you might
reconsider trying to bypass the FDA inspection requirement.

Here’s just the first hit I saw on Google, there have been quite a few exposés
on the topic.

[https://www.npr.org/sections/health-
shots/2019/05/12/7222165...](https://www.npr.org/sections/health-
shots/2019/05/12/722216512/bottle-of-lies-exposes-the-dark-side-of-the-
generic-drug-boom)

------
Shivetya
One key take away, Wal Mart sells a lower priced version along with supplied
for testing. Well that is all and fine, they do list some reasons it isn't
ideal but they leave out the big one. Most people under insurance or
government provided health insurance are not permitted to use it.

Throw in over regulation besides limiting which types are available also can
interfere with refills of both insulin and testing materials and even require
periodic confirmation by a medical professional you are still diabetic.

~~~
sithlord
They sell a $25/vial of Regular insulin; its an older style, and can be fairly
dangerous to use, as it has quite the different action as the newer 'fast-
acting' insulins.

With that said, if tight on money, its certainly better to use it, and monitor
it closely, than not be able to afford the $225+/vial novolog or humalog.

~~~
pimeys
Monitoring is expensive. The strips can be 1-2 euros per one.

~~~
opencl
Walmart sells their own brand for about $0.20 each, the "name brand" ones are
about $0.60-80 here. I have a diabetic friend whose insurance will only pay
for 2 strips per day and he buys the remainder from walmart (and has 2 meters
because the insurance-provided one is a different model that doesn't work with
the walmart test strips).

------
pg_bot
What's left out of most conversations around insulin.

\- The incidence rate for diabetes has skyrocketed over the past 25 years.
It's estimated that 100 million Americans are now living with diabetes or
prediabetes.

\- Most of the patents for the newer insulins are mostly on manufacturing
processes. Read up on Lusduna if you want to see how difficult it is to bring
an insulin to market in the US.

\- Biosimilars are significantly more costly to bring to market than generic
drugs.

\- Alex Azar, and every other secretary of HHS have had the ability to allow
legal importation of drugs from Canada since 2003. We actively choose not to.
While IMO the risks are worth the benefits, I will concede the other side does
have a valid argument against importation.

\- The price difference is with fast acting insulins. These insulins offer a
higher quality of life relative to the older insulins. The clinical benefits
of using a fast acting insulin versus something like Novolin 70/30 (aka
Walmart insulin) are negligible, while the price difference is substantial.
(Talk to your physician before switching insulins) From the people I've talked
with, fast acting insulins are a godsend if you have diabetic children or
can't keep a regimented schedule.

\- All of the companies that manufacture insulin are public and you can read
through their financial statements to verify that what they are saying is
true.

All that being said...

I'm surprised that an enterprising Canadian has not exploited insulin
arbitrage.

You can buy insulin over the counter without a prescription in the USA and
Canada. Canadian law does not prohibit exportation of drugs to the United
States.

Theoretically you could set up an escrow service that connected Canadians who
wanted to make a buck with American diabetics. The service could offer
insurance in case a delivery was not made and you needed to buy insulin in the
US.

Obviously this would complicate things with your insurance. No insurance
company is going to cover bootleg Canadian insulin when it comes to your
deductible.

~~~
skohan
> It's estimated that 100 million Americans are now living with diabetes or
> prediabetes.

Holy cow - that's like 1/4 to 1/3 right? That seems insanely high!

~~~
fortran77
Let's not conflate Type 1 diabetes with Type 2 diabetes.

~~~
GordonS
T1 is rare compared to T2, but those figures are still shockingly high.

------
WomanCanCode
There should be an alternative way of getting the insulin bypassing the big
pharma... Any organizations trying to make that happen?

~~~
Robotbeat
Dunno why you were downvoted, but here's one such organization:
[http://openinsulin.org/](http://openinsulin.org/)

------
rayiner
The article and title start with a false premise. The insulin made free 100
years ago is very different than the insulin you get today. It’s faster
acting, etc. nothing is stopping someone from manufacturing the circa 1992
version (or even the very good versions developed in the 1990s). But so long
as doctors prescribe, and insurance companies are willing to pay for, the
newer stuff, there is little market for the older versions.

Ironically, the heavy subsidization of health insurance is what’s actually
causing the problem. When there is no reason to control costs (especially
under the ACA, where insurance companies cannot increase profits by doing so),
there is a huge incentive to keep pumping out marginally better versions of a
drug, because you’re not competing on price with the old, out of patent
versions.

------
dusted
The state, not private interests, should spearhead production and research of
pharmaceuticals, it should be part of basic developed-country infrastructure,
like transportation and education.

~~~
specialist
The system I imagine:

* drug development being funded by government;

* thru misc stages (research, clinical trials, certification, mfg, etc);

* at every stage third parties (public, private, or both) bidding on time boxed rights to license drug and carry drug thru remaining stages;

* licensee paying royalties.

Earlier involvement in the most promising drugs is incentivized by allowing
third parties to license earlier, taking on more of the risk, getting a better
deal.

Orphaned drugs can still get some love by do gooders. In fact, government can
pay (subsidize) third parties when there's no profit.

I'm a total noob, and have zero idea if this worldview has any merit.

Also, prohibit advertising and all forms of payola.

~~~
jonlucc
We _sort_ of have this system, but in reverse. You're suggesting to default to
government, and we currently have a default-to-private system. The US
government funds basic research, basic development, and clinical trials for
projects it deems important enough that will not see adoption by corporations
due to a lack of profit.

One example of this is ebola vaccines. If I remember correctly, the incidence
of ebola is incredibly (even internationally) low, but there is a public
health justification for keeping a working vaccine available. The government,
mostly through NIH, will sponsor the development of these kinds of projects.

This also happens sometimes with orphan diseases. The government funds more
research further up the chain until it's enticing to private companies.

------
sytelus
This is a unnecessorily long article where the central message gets lost. My
understanding is that there were two major insulin manufacturers and in past,
they competed which kept prices down. Then suddenly they realized that if they
stop wasting their resources in competing and instead cooperate then they can
get arbitrarily high profits. With this internal understanding, one would
raise the price and soon other would match that high price. They did this over
and over to their great surprise that customers are just eating up the higher
cost. This was the much better and shorter path to huge profits!

I have a general theory that in any two-party system where rewards are
potentially unlimited and at the expense of someone else, the parties would
sooner or later learn that its better to cooperate instead of competing. We
have seen this movie in cable industry, cell phone industry and so on. I
expect this to happen also in political parties in US, UK and elsewhere. In
those scenarios, parties will soon learn that if they cooperate then they can
acquire unlimited power, funds and control at the expense of resources (i.e.
people) and divide these spoils between themselves which will be much higher
than if they tried to compete with each other.

------
userulluipeste
_" the Toronto team sold their patent rights to the university for $1 apiece
in an effort to protect its integrity from greedy commercial enterprises"_

 _" Eventually, Banting and his team reluctantly agreed: Lilly was granted
exclusive rights to manufacture and distribute insulin in the United States
for one year"_

This makes no sense to me! If they were not interested in making money, as to
donate their patent rights, why not letting it be public? Why selling it to a
university? Then why get shocked that an academic organization does a poor job
on scaling up production and on other non-academic related things? Oh, and the
cherry on top, why did it have to be manufacturing _exclusive rights_?!

------
Circuits
We need to hold these people accountable for their actions. Life sentences or
if necessary capitol punishment sentences for the players and actors who are
responsible for hiking up prices on drugs for no better reason than increased
profit margins, enough is enough. It doesn't matter if its diabetes, ms or
cancer if the the drugs aren't affordable then the people producing the
medication should immediately be taken to court and if found guilty of price
gouging should be punished accordingly.

~~~
anonuser123456
As long as future citizens can hold people like you equally culpable for the
predictable result, sure.

Here is my prediction; no one enters/stays in the high risk drug market
because whack jobs want them dead for getting a return on R&D.

In fact, I would take this one step further. You my dear comrade, since you
don't work in the field trying to invent drugs and lower drug prices, are
obviously part of the problem. Since you rent your labor elsewhere for your
own benefit you artificially distort the market and keep prices high.

Since you seem to believe capital punishment is an appropriate sentence, I
only ask that you put a little skin in the game and mark your beliefs to
market.

~~~
Circuits
The high risk drug market? What are you talking about there's nothing high
risk about the drug market. Their profit margins are enormous, absolutely
gigantic. If you are under the impression that the people setting drug prices
are good people trying to make an honest living then you are very, very
confused.

The industry is thick and rife with corruption and greed. Their paying off
politicians and doctors left and right. Have you any idea the kind of people
your defending? Go discover a cure for cancer tomorrow, you will be dead by
Monday. They will pay to have you killed, that's the kind of people your
defending.

Skin in the game? Anyone who is dependent upon drugs to live already has skin
in the game, I already have skin in the game. If they so choose any one of us
who is depend on these drugs to live could be dead within the year, how's that
for skin in the game?

------
AngeloAnolin
Lots of comments focused on having a good paying job with comprehensive
benefits (insurance). I don’t think that is even the solution here. The main
problem is that lifesaving medications have prices spiralling out of control
to the point where it becomes unaffordable for people to get it.

Not everyone will be lucky or capable enough to have a job that will allow
them access to the medicines they need through some benefits or financial
salary.

Will regulations work such that medicines categorized as lifesaving will be
capped at a price that is affordable for people? Or is a solution based on
ensuring patents are used not as a leverage to gouge prices but to protect the
intellectual property and not financial commodity?

Solutions abound but when the greed of a few is being upheld, then it just
becomes a reality that people becomes the bearer of bad news and in turn have
to swallow the bitter pill of unaffordable medicines.

------
LargeWu
I think there is a very good argument to be made for nationalizing drug
production in the USA, at least for generics. The idea that private companies
have the power to gouge people _just for the privilege of staying alive_ , in
the name of profit, is reprehensible.

------
rb808
I dont understand why there aren't more generic competitors. If 20 years ago
companies were profitable selling at a much lower price, surely a new biotech
company could do the same now?

We're all looking for startup ideas with subscription models, this looks
obvious.

------
tobyhinloopen
Why is insulin not being sold illegally? Like a black market of imported
insulin? Or is it?

------
vlindos
As European and T1 diabetic - my monthly insulin dose is covered l in the
poorest European country - Bulgaria. Even if I need to pay it it is still way
much afordable - around 130 dollars. Looks there are many troubles over the
ocean... One more thing - I get quality insulin that is latest tech and
improves my life much. Much better products than I was getting for example 15
years ago and probably the same or better than than my fellow Americans are
getting for there. But I bet the corruption is so high that if I want to
import the same products from Europe there will be a law against it.

------
phlogisticfugu
If nobody has yet started one, sounds like an opportunity for patient-owned
collectives to manufacture and distribute off-patent drugs for chronic
diseases.

I'm thinking similarly to what was done for medical marijuana, but with more a
credit union-type feel.

So long as legislation clears the hurdles to such organizations, it wouldn't
cost taxpayers, and seems more in-line with the spirit of patent expiration.

------
pattisapu
Heartbreaking. And ludicrous.

For what it's worth, there seems to be a silver lining for some diabetics
today, separate from the issue of insulin pricing -- the technology available
now for continuous glucose monitoring, that takes a lot of dangerous guesswork
out of day to day living.

It is another ongoing cost, but, it seems, not quite as devastating as what is
going on with insulin.

------
todipa
How come there are no startups disrupting this market and producing it
cheaply?

------
mrosett
Obviously this is a huge problem. For a more analytical perspective, take a
look at Slate Star Codex on drug shortages and price gouging:

[https://slatestarcodex.com/2019/04/30/buspirone-shortage-
in-...](https://slatestarcodex.com/2019/04/30/buspirone-shortage-in-
healthcaristan-ssr/)

~~~
makomk
That explanation of the economics and poor regulatory choices that led to all
this certainly makes a lot more sense than the explanation in the other
aricle. Unfortuntely, it's also less condusive to thinking that it's all the
fault of mass-murdering villains running pharma companies who should be
harassed for every second of their lives, and that anyone who even thinks this
is worth discussing wants people to die. So I guess it's not surprising those
comments are up top and this is languishing near the bottom.

------
dang
Related from 2016:
[https://news.ycombinator.com/item?id=11154237](https://news.ycombinator.com/item?id=11154237)

------
WalterBright
I don't understand why competitors don't enter the market with older versions
of insulin that don't require biologic methods to create.

~~~
officialchicken
They exist (most insulin produced today is rDNA biologics), and are about $25
at Walmart. Of course, the same thing at CVS or Walgreens is $100+. I know b/c
I switched back to using them after needing to travel internationally for more
than 1 month at a time... my expenses went from $2500+/mo to under $200/mo,
including the extra testing supplies required to support this regiment. At the
same time, I take up to 7 shots a day and am definitely now a "Medical
Tourist". Yes, I can go to Europe or Canada and buy supplies (at retail cost)
for less than the US, including travel. But - that's actually MORE FREEDOM for
me. YMMV.

~~~
WalterBright
If they exist, why doesn't the article mention it and why don't patients use
it?

------
Cenk
* in the US

------
qaq
So any startup that basically provides insurance that covers 10 cents but
gives access to insurance pricing for like $10 a month?

------
wolfi1
I don't know how long a pen lasts, but the insurance in my country pays about
40€ for five pens.

------
bawana
If we didn't let the rich get richer, would they then figure out other ways to
enslave the poor and make their lives ever more miserable? It seems humans
have a built in need for win-lose scenarios (schadenfreude?) and winning races
by ever increasing margins. Cant we make a logarithmic scale for money so that
10x more money is only double the buying power?

------
joelx
Patent ownership does nothing to encourage innovation. Most of the innovations
are based on prior research, and most are done in publicly funded labs that
would do the research regardless of the profit motive. Allow full competition
to work or you end up with a corrupt version of capitalism.

------
tomxor
Why is there no exact pricing regulation for such widely needed drugs?

Capitalistic models don't work for everything, it certainly does not benefit
this type of drug in an oligopoly... there is no competition and there is no
need for it, the research is ancient history. Price fixing is not the problem,
it's an inevitability, which is why the government should do it for them:

1\. Regulate exact price, zero flexibility.

2\. Require production of specific drugs as requirement for access to _any_
government research grants. Alternately to avoid production issues entirely:
production is simply the cost of _being_ a pharmaceutical company selling any
drugs to your country.

3\. Meet demands through responsibility proportional to net profit. Make more
money? great, but it has to benefit availability of basic drugs.

------
otikik
I must say, the lack of ... rage ... on this article surprising.

I would expect there to be a leaked list of names of the executives
responsible for this, with pictures and home addresses. I would expect people
protesting in front of their homes 24 hours per day. And covering their cars
with rotten eggs when they went out.

That's the kind of thing that would have happened in France.

~~~
lm28469
> I would expect there to be a leaked list of names of the executives
> responsible for this, with pictures and home addresses. I would expect
> people protesting in front of their homes 24 hours per day.

That's how you end up with dead people. It's the difference between
journalism/civilised discussion and cesspools like twitter/fb threads, we
should present facts, not opinions or call for violence.

No matter how fucked up these things are you don't want to lower yourself to
their standards, you'll lose all grounds for discussion.

~~~
supergauntlet
>No matter how fucked up these things are you don't want to lower yourself to
their standards, you'll lose all grounds for discussion.

This is the classic centrist liberalism argument that we have to maintain
civility at all costs.

The time for civility was back when the drug companies were doing things like
pushing bad legislation (that didn't directly hurt people) or the like.

The time for civility is over. People are dying because drug companies are too
greedy and unregulated. The only way to get them to stop being utter vacuous
wastes of oxygen is, in the long term, regulation. But in the short term?
Harass the fuck out of them. I have exactly zero sympathy for the pharma execs
that are profiteering off human misery.

~~~
la_barba
>The only way to get them to stop being utter vacuous wastes of oxygen is, in
the long term, regulation.

Anything specific?

~~~
supergauntlet
I mean it depends on the context, right? I just mean that generally speaking,
when there is nothing forcing people to be decent, it is clearly not simply
enough for "wow this is morally reprehensible" to be a deterrent.

For profiteering off generic medication, I think some sort of subsidized
natural monopoly producing and selling generics would work. Clearly, there
isn't enough profit in the generics to make money off them without acting in a
malicious anti-competitive manner, so incentivizing it otherwise must be
necessary in a market system.

Alternatively, have a purely nationalized "company" that's funded by taxpayers
and "sells" generics at cost. I think the value to society of cheap, readily
available generics make this worth it even if it's not something that could
survive in the market.

~~~
la_barba
I work in biotech/pharma, and not all of us are greedy sacks of shit as some
people seem to think. I'm not an exec and cant speak to their ethics broadly,
but like any industry where people make big bucks you have greedy asshole-y
people here too. But coming back to regulation, the FDA's primary mandate is
the safety of the populace, its not to create economic incentives or
disincentives. The FDA has been slowly increasing the standard required for
compliance, which in turn raises the operational cost to ensure
safety/efficacy/reliability/etc (obviously a very good thing IMO) but that in
turn has also increased both the incidence and the cost of failure. When one
product that sucked up a cool 10-50M of capital fails, the company has to
recoup the cost elsewhere. Of course nobody wants to take a haircut
themselves, so they just bump up the prices. I think a lot of this has to do
with the ways companies in general pretty much have to absorb market risk to
give a false sense of stability to their workforce. Maybe if our corporate
system were structured where it was OK to fail, people might be less inclined
to mask the failure on the balance sheet to please Wall Street.

>Alternatively, have a purely nationalized "company" that's funded by
taxpayers and "sells" generics at cost. I think the value to society of cheap,
readily available generics make this worth it even if it's not something that
could survive in the market.

Well, maybe.. I'll keep an open mind but when has the government done anything
cheaply or efficiently? They will have to sub-contract at-least some parts of
it out just like they do with weapons or infrastructure or other projects.
Government contractors are going to milk the system with their '$100
screwdriver' invoices.

------
hk2001
I work for one of the companies mentioned in the article.

I too am troubled by the increasing burden on those unable to pay for their
insurance, and feel that something must change, and quickly.

However, I’m shocked when I read articles like this one that manage to miss
the crux of the issue so badly (though, to be fair to the author, most
articles on the subject make the same mistakes). Perhaps it’s because I work
in the industry and have more insight that I take for granted, or perhaps I’m
simply blinded by personal biases and _I’m_ the one off base, but the issue
driving insulin price increases seems to be obvious: to he insurance system in
the US is irredeemably broken. A few facts, considered together, support this:

1\. The number of diabetics in the US has skyrocketed in the preceding
decades.

2\. The list price for insulin has also skyrocketed in the last 20 years

3\. The amount of money the main insulin makers are paid per insulin fill is
actually down during this time

So you have an increasing demand for a product, combined with an increased
price, but less money per unit being made by the parties allegedly jacking up
the price for profit. So where is the excess money going? Middlemen.

Insurance companies in the US have enormous leverage over just about every
other party involved in healthcare: the patients, the providers, and the
pharmaceutical manufacturers. This is even more true for medications like
insulin, where there isn’t much difference in efficacy between brands. In a
normal market, these companies would try to compete on price. But for insulin,
price continues to rise. This is because insurance companies, and their
negotiators, Pharmacy Benefit Managers (aka PBMs) have a vested interest in
prices _rising_.

PBMs make their money by negotiating prices with pharma companies to secure
discounted prices for insurers, and in doing so, create the insurers’
“formularies”, which are basically the list of all the medications an insurer
will cover, the prices they will pay, and the conditions that must be met.
PBMs get a cut of the discount they negotiate with the pharma company. If drug
A has a list price of $200, and they negotiate it down to $150 for their
insurance clients, they take home x% of all the savings that are made at $50 a
pop.

This creates a perverse incentive however: a PBM stands to make more from a
drug that costs $300 and is negotiated down to $150 than a drug that is $200
that is negotiated down to $150, even if everything else is the same. That
means you are more likely to get better insurance coverage for your drug by
starting high and giving deep discounts. And for drugs like insulin, where
similarities between products are so small that the only place you can compete
is price, how well you are covered by insurers compared to your competitors
will make or break your business.

Insurance companies themselves also love drugs with high costs that are then
discounted deeply, because when they charge a patient coinsurance, it’s based
on the list price, and not the price the insurer is paying. So even though
they’ve negotiated the price of insulin down by over 50% with the pharma
company, they are still going to charge you y% based on the full price. So if
they continue to get insulin from manufacturers for $Y per unit every year,
they continue to charge you 20% of a cost that continues to rise further and
further away from $Y, meaning they are actually paying less and less as prices
rise. They will claim to be using the reduced costs to lower premiums, but if
reduced costs are only the result of increased costs for the sick, then all
we’ve done is create an insurance system where the sick are subsidizing the
healthy, which is entirely backwards.

So now we have a system where manufacturers raise prices year after year, only
to also give ever increasing discounts to insurance companies and PBMs, in
hopes that it actually increases the number of patients who can afford their
products (i.e. those with decent insurance). But those left holding the bag
are the individuals without insurance or those with high deductible plans
(which are becoming increasingly common).

It’s also important to note exactly how much power these middlemen have. It’s
a common narrative that Big Pharma is able to get away with bad practices
because of their power. But in reality, only a single pharmaceutical company
is in the Fortune 50, and none of the insulin makers are. In contrast, 80% of
the PBM market is controlled by 3 companies, 2 of which are Fortune 50, and
the third is a subsidiary of United Health, which is an insurer and is also
Fortune 50. In fact, 10 of the Fortune 50 companies are middlemen (insurers,
PBMs, or drug distributors) in the healthcare industry.

Again, maybe my view of the issue has been entirely skewed by my personal
biases. Also note that this isn’t necessarily the cause of all price gouging
in the pharma industry. There are certainly bad actors that are jacking up
prices simply because they can. But it seems to me like the true issue at the
heart of the insulin pricing problem (the insurance system in the US) is being
skipped over to focus on the symptom because the idea of rich pharma companies
reaping in profits from price gouging because it is a simpler narrative.

------
ptah
this only applies in US

------
mparramon
Capitalism.

------
inflatableDodo
Those poor, poor drug companies, it is not their fault they acted like utter
cunts. After all, they were allowed to act like utter cunts, so they just had
to. So lets solve this by removing all regulation that stops them from acting
like utter cunts in other interesting ways, that couldn't possibly backfire.

~~~
felipeko
Your tone seems very uncalled for.

All I am arguing is that if you prosecute people from selling drugs, or make
more regulations, fewer people will sell drugs - at a higher price.

It shouldn't matter people are cunts, if they have competition they will have
to provide better satisfaction.

As of now, american people are prohibited from importing drugs, and that's
exactly what utter cunts lobby and fight for.

~~~
inflatableDodo
>"All I am arguing is that if you prosecute people from selling drugs, or make
more regulations, fewer people will sell drugs - at a higher price."

Looking at the _other_ drug market, not only does this not stand up, but also
the quality is a crapshoot.

~~~
felipeko
The other drug market has fewer people selling than otherwise, at a higher
price (for the quality) than otherwise.

I'm not sure how you are able to the opposite conclusion.

~~~
inflatableDodo
Being a street corner crack dealer in many US cities has so much competition,
that it pays below minimum wage.

------
inflatableDodo
As far as I am concerned, the people engaged in price gouging for insulin are
essentially committing mass murder for profit. It is so far outside of any
kind of moral standard, that I have no problem in categorising it as just
straight up evil.

~~~
andrewla
This is not a coherent position. By this logic, every single person who is
_not_ making insulin (people like you and me) are also guilty of committing
mass murder.

There's clearly something very, very, very broken here, but unwinding the
tremendous weight of bureaucracy and regulations that prevent an interested
investor in setting up shop making insulin on the cheap is the root of the
issue. The regulations need not even be a negative; I don't have a reason to
believe that recombinant engineered bacteria produced insulin is really that
easy, and the regulations may be all that's keeping a tide of ineffective or
harmful varieties of insulin from flooding the market.

~~~
csb6
“This is not a coherent position. By this logic, every single person who is
_not_ making insulin (people like you and me) are also guilty of committing
mass murder.”

This is ridiculous. Pharma companies, unlike you and me, have the
ability/equipment/expertise to manufacture insulin. Many people need insulin
to survive. These companies could make insulin for relatively cheap and _still
be massively profitable_ , but they choose not to, and people suffer because
many people who need insulin can’t afford the artificially high prices.

Acting like this price-gouging is caused by anything other than corporate
greed is naive and misleading.

~~~
andrewla
What about the pharma companies that do not produce insulin (like GSK or
TEVA). They have all the necessary expertise, ability, and equipment to
manufacture insulin. Many people need insulin to survive. These companies
could make insulin for relatively cheap and still be massively profitable, but
they choose not to, and people suffer because many people who need insulin
can't but it from them.

Of course it's corporate greed -- even if they sold insulin for relatively
cheap and were massively profitable, they would only bother to produce it
because of corporate greed.

~~~
csb6
No one is talking about the other companies. Here is a hot take: companies
which are currently selling insulin are ripping people off. People are
suffering as a result.

Whether or not other companies could conceivably produce insulin is
irrelevant. The parent commenter and I are talking about the current
producers’ shitty behavior. If someone falls out of a tree because I easily
could have but chose not to grab them, that is wrong. Other people _could_
have possibly helped and didn’t, but that doesn’t make my shitty behavior any
less shitty.

I glad we can agree on the impact of corporate greed, though.

