
Insulin Wars: How insurance companies farm out dirty work to doctors patients - yarapavan
https://www.nytimes.com/2019/01/18/opinion/cost-insurance-diabetes-insulin.html
======
LorenPechtel
I still think the approach I proposed years ago would be a big help: Turn the
usual arguments on their head, prohibit all negotiation. Drug companies would
be required to sell to all customers at the same price. This would end all
cost-shifting, it's fair for all and forces the drug companies to actually
compete on the end price.

This would end this sort of preferred drug shifting, it would end the game of
state Medicaid often mandating the name brand rather than the generic because
most of the money is federal and the state receives a big enough rebate that
it's cheaper for them. Applied internationally (we don't have direct authority
over foreign drug companies but we could make it a condition of importing them
to the US that they follow our pricing rules) and the big subsidy to the UHC
countries goes away.

~~~
conanbatt
> Drug companies would be required to sell to all customers at the same price.
> This would end all cost-shifting, it's fair for all and forces the drug
> companies to actually compete on the end price.

Then you only sell the drugs that do profit, and stop making the ones that
cost money. You cant make people do what they don't want to do, pharma is no
exception.

The source of this problem is patent law, importation restrictions, etc. In
short, competition.

~~~
slededit
> Then you only sell the drugs that do profit, and stop making the ones that
> cost money.

This is the situation we're in now. Just different people shoulder differing
amounts of the cost. Equal pricing won't change the fundamental economics of
drug research.

~~~
conanbatt
> This is the situation we're in now.

Cost-shifting is a valuable effect in the pharma industry, because high
profit-margin technology might subsidize low-profit high cost drugs.

Price differentiation is usually net positive effect, but being inequitable
people have a reaction against it and more so in health related services. If
you could only sell 1 type of seat in an airplane, for example, you would have
lots less flying than today, by reducing the amount of rich people flying
business/first because of loss of quality, and by reducing the median/average
person because of increased cost.

So yes, from an economic standpoint, equal pricing has an effect on the
research and development of a product. This should be obvious in this
community, for example, look at Google. Almost everything loses money but
search. Equitable pricing would make search cheaper, and all the other
services paid.

------
amgreg
Luckily I never had to take insulin, as I am not diabetic. I had a dog,
however, who needed it. She was prescribed Humulin-N, which is not generic.
The generic insulin would not be adequate for her, according to the vet.

When I got to the pharmacy, I was amazed to learn that it would cost us ~200
USD each time I needed a vial, which I would not be able to afford; I had pet
insurance, but it wasn't any help.

I have family in Brazil. Identical medication is sold there for around 10 USD.
By "identical" I mean exactly the same -- including brand name (Eli Lilly).
Thus, every time a family member was coming to the USA, they'd bring me a few
vials purchased from a local pharmacy that honored our US-issued prescription.

The price difference is shocking. I can only imagine the despair of many
Americans who cannot afford the insulin they need and have no access to
alternative markets such as I had.

~~~
dotuser
You can get novolin-n at Walmart for about $26 a vial without a prescription.
I’m a type 1 diabetic and fallback to this when I’m unable to get a
prescription.

~~~
amgreg
We ended up finding Novolin N at Walmart, before the Brazil solution, but our
Dr. dissuaded us from switching.

You probably know this better than I, but the doctor advised us that Humulin N
and Novolin N are not interchangeable; while they are the “same” insulin
(NPH), the manufacturing process is different, affecting dosage.

In our pet’s case, the Dr. had conducted a series of exams to determine
Humulin N dosages — which he advised us we would have needed to redo if we
switched her to Novolin.

I think in humans it is easier to get blood readings, but in the dog’s case
the Dr. needed to keep her in hospital to do a series of “curves;” this was
expensive, so we did not want to redo.

~~~
dotuser
Interesting, for me (and your dog's mileage may vary), humulin and novolin are
interchangeable. I bought humulin at walmart before they switched to novolin
but I rarely use NPH. I only need it when either I don't have insurance or I
need a new prescription because my insurance decided to switch to another
preferred basal insulin. It's easy for me to see any changes since I can
monitor my blood sugars but for a dog, that could be a challenge and probably
requires a stay at the vet to run tests.

------
ceejayoz
> There are several reasons that insulin is so expensive. It is a biologic
> drug, meaning that it’s produced in living cells, which is a difficult
> manufacturing process.

Seems like this is a fairly minimal component. Per the chart at
[https://twitter.com/odavis_/status/930094350478045184](https://twitter.com/odavis_/status/930094350478045184),
the price has gone up 10x in the last twenty years or so. It has presumably
not gotten more difficult to manufacture.

~~~
refurb
That’s list price. Interestingly, net prices have barely budged in the last
decade. Up only single digit percentage.[1]

 _As the list price rose and rebates grew, Novo ended up paying more and more
rebate money into the health insurance system. Employers used these extra
payments to offset costs in any area, including hospital and physician
payments. Health plans used them to reduce premiums and also offset other
healthcare costs. PBMs retained a portion of these rebates as their profits._

[1][https://www.drugchannels.net/2016/12/novo-nordisk-sheds-
new-...](https://www.drugchannels.net/2016/12/novo-nordisk-sheds-new-light-on-
pbm.html?m=1)

~~~
ceejayoz
[https://www.nytimes.com/2018/07/27/health/rebates-high-
drug-...](https://www.nytimes.com/2018/07/27/health/rebates-high-drug-prices-
trump.html)

> Even as insurers’ drug spending has grown slowly, critics say the rebate
> game has served to inflate the list price of drugs, which consumers are
> increasingly responsible for paying. This is especially true for expensive
> specialty drugs, which treat serious conditions like cancer and multiple
> sclerosis — and whose prices have been skyrocketing.

> As the cost of these products has gone up, insurers have raised deductibles
> and out-of-pocket contributions so that many of the sickest Americans must
> now pay thousands of dollars a year to cover their drug costs. These out-of-
> pocket costs are calculated using something close to the list price of a
> product, not the net price.

~~~
refurb
That is very true. If your insurance requires a copay, it’s on the list price,
not net.

Sometimes the discount is so big that 20% of the list price is more than the
entire net price of the drug.

------
tomohawk
This is exactly what you get when there is no transparency, and everything is
driven by non-market forces. Why not create an actual market where all
medications, medical services, tests, etc, have a known price and people can
make decisions based on cost, quality, and other factors?

~~~
Gibbon1
Kenneth Arrow showed in 1963 that markets can't work for Healthcare.

~~~
refurb
Yet they seem to work fine for elective surgery like vision correction and
cosmetic surgery.

~~~
SketchySeaBeast
Possibly because there's an opt in gap between "I need larger breasts" and "If
I don't find a way to pay for my chemo, I'll die"?

~~~
refurb
Sure, the stakes are much higher, but people often choose their physician
based on skill. Why not throw cost into the mix as well? Right now that’s
impossible.

~~~
SketchySeaBeast
> Sure, the stakes are much higher,

It's not that, it's that the cancer treatments are non-optional. Optional
treatments have the luxury of price comparison and choosing the perfect vendor
- cancer waits for no man and it shouldn't be the market deciding whether
someone lives or dies.

~~~
conanbatt
There is always an option. People die of cancer choosing not to treat it every
day in every part of the world.

I think opinions like yours above always stem from the naive assumption that
all life is worth infinite at any point, so any obstacle to prolong it is a
failure. Well, its not. Some treatments are expensive and cost is definitely
something to take into account. If you get cancer and the treatment to save
you is 100 million dollars, you better have them, because other people should
not pay for that lavish expenditure.

~~~
SketchySeaBeast
I've never heard in a nationalized healthcare system that someones cancer
treatment was too expensive, so they should just die.

~~~
conanbatt
The practice of medicine always had and always will have an economic
component.

Countries dont even match their flu-shot vaccination recommendations, let
alone multi-million dollar treatments.

------
aaavl2821
> It is hard to know where to direct my rage. Should I be furious at the drug
> manufacturers that refuse to develop generics? Should I be angry at the
> P.B.M.s and insurance companies that juggle prices and formularies to
> maximize profits, passing along huge co-payments if they don’t get a good
> enough deal? Should I be indignant at our elected officials who seem content
> to let our health care system be run by for-profit entities that will always
> put money before patients?

> The answer is all of the above. But what’s most enraging is that drug
> manufacturers, P.B.M.s and insurance companies don’t have to pick up the
> pieces from the real-world consequences of their policies. That falls to the
> patients.

I think this is an important and balanced quote. Often in the public debate,
drug pricing and access, which are two separate concepts, are conflated. A
drug can be priced fairly but be inaccessible to patients because insurance
companies and PBMs want to hold costs down. This often happens with drugs that
treat lots of people. Because of the high volume, insurers will have massive
expense for covering a drug, even at fair (i.e. Cost effective) prices. So
they fight tooth and nail (often using the media as a weapon) to reduce price.
Drug manufacturers won't lower price (often bc they will lose money if they
do), so insurers deny

An example of this is CAR-T therapies. Cost effectiveness research shows that
cost per QALY is within acceptable ranges but payers make it hard to get the
drug. I think the same was true of the curative hep c drugs but don't recall
the cost-benefit analyses. These drugs were incredibly effective and many
people would benefit from them, so payers saw a huge potential expense and
denied care until competitors emerged

In some cases though, pricing is the bigger issue. This often happens with
established drugs where manufacturers increase prices, or drugs with limited
competition.

Insulin is an example where both pricing and access are not great, i.e. PBMs /
insurers and manufacturers are probably equally at fault

Drug pricing and access is a complex and highly competitive negotiation
between manufacturers and payers and the media is a powerful weapon used in
this negotiation. Lots of lobbying done as well. And there are many behind the
scenes players with a stake in the debate (i.e. Hospitals wanting the public
to blame drug companies for high healthcare costs). This seems like a balanced
article to me, but take articles about healthcare with a healthy dose of
skepticism

------
amriksohata
I always say this, but reading that makes me think thank God for the NHS in
the UK. Health and education should never be a business. The pharmaceutical
companies are so strong and greedy in the US they want people on their drugs,
rather than look for preventing the problems. They often lambast and send
confusing scientific studies out to ensure no alternative therapies succeed
over their drugs.

~~~
ninjin
As a Type 1 diabetic in the UK I feel inclined to agree and disagree. Yes, the
drug price negotiation is great and keeps my insulin affordable. However, the
NHS comes with its own ailments that we should admit.

For Type 1 diabetics in particular, technological support in the form of
insulin pumps, continuous glucose metres, and closed-loop systems are only
handed out readily to children, while in the US they are far more commonplace
since they are covered by insurance. Personally, it took me 3 1/2 years of
fighting to get my pump – something that I would have had in months if I would
have remained in Japan. One week ago I finally got it and what a difference it
makes in terms of control. However, a continuous glucose monitor is nowhere in
sight and I frankly do not expect to get one within a decade. Perhaps a
pseudo-continuous glucose monitor like the FreeStyle Libre if I am lucky. My
diabetes team in London is great and pro technology, but I can only imagine
those that are less well-informed on how to make the system (NHS) work or live
out in the country. Do they receive the technology they need to manage this
disease?

For those of us with Type 1 diabetes that seek technological support, do read
up over at Insulin Pumpers UK [1]. Also, never feel ashamed to seek the
technology that would help you live longer and less constrained by our
illness.

[1]: [http://www.insulin-pumpers.org.uk/](http://www.insulin-pumpers.org.uk/)

~~~
amriksohata
Agreed lots of flaws, what I like is because it's state based it's in their
interest to cut costs of medicine rather than try give as much medicine as
they can to increase profits

------
nisa
Not sure how possible such an idea is, but why not create a public utility
that creates essential medication for the lowest possible price? In the end
Medicare seems to pay already huge amounts of money for some medications and
there must be know-how in the federal government or other public institutions
on how to manufacture medications.

I'm not trolling. Like clean water, this is maybe an area were society should
not tolerate market failure or cronyism.

~~~
talltimtom
Let’s say we do this, and you create a state funded company that creates cheap
insulin, let’s say they can sell it for 25$ in Walmart. What then happens is
that to sell that drug to the insurance companies they negotiate with the
Phamacy Benefits Managers they will say to them:”We want a 66% rebate!!”
They’ll say errr? At what price? The PBM will say:”we don’t care, insurance
covers the price”. So that company ends up putting a list price at 74 but
providing a 66% rebate to the PBM so they still get their profit... but then
the next year the PBM comes back saying “well, we are going to need a bigger
rebate because the competitors where willing to raise their prices even more
and thus giving us bigger rebates”

You essentially have a party who’s getting every company to compete on who is
willing to sell at the highest list price who’s driving negotiations against
the producers who only stand to gain by higher prices.

The American system is rotten to the core.

------
refurb
Interestingly, Walmart sells generic insulin. The same stuff used decades ago,
for only $25 a vial.

However, the advances in insulin since then mean it’s a much more burdensome
therapy.

[https://insulinnation.com/treatment/why-walmart-insulins-
are...](https://insulinnation.com/treatment/why-walmart-insulins-arent-the-
answer-to-high-insulin-prices/)

~~~
Eridrus
So this implies that the articles blame on greedy drug manufacturers tweaking
formulas to keep patent protection isn't really correct since they have made
progress in actually improving the drug.

Not to say there is no greed here, but our policy has been that if you do the
work of making a new drug, you get to charge whatever you want for an extended
period of time.

This is the result of the policies we have chosen.

~~~
refurb
Correct. What we may view as a marginal tweak to create a new product, might
mean better blood surgar control, fewer sticks and better health for diabetes
patients.

------
hirundo
> This pricing is, of course, hidden from most patients, except those without
> insurance, who have to pay full freight.

The rest of the story flows from this. The ordinary price mechanism is broken
because the patient isn't the customer, and the customer is paramount to any
business. As long as most patients don't care what it costs most of the time,
it will stay broken.

~~~
HarryHirsch
* As long as most patients don't care what it costs most of the time, it will stay broken*

Say what? With insulin it's "your money or your life".

~~~
talltimtom
As a patient, you don’t care if the drug costs 25$ with 20 covered by
insurance or 2005$ with 2000$ covered by insurance. That is what he means.
List price doesn’t matter to insured patients.

------
AlexandrB
The reason seems pretty clear from contrasting these two passages:

> The pricing is all the more infuriating when one considers that the
> discoverers of insulin sold the patent for $1 each to ensure that the
> medication would be affordable.

> The bigger issue, however, is that companies tweak their formulations so
> they can get new patents, instead of working to create cheaper generic
> versions.

~~~
ddingus
There is a great living for someone to make a generic.

No need to make bazillions.

Crowd fund it.

Or, regulate.

Both would be just fine with me.

~~~
refurb
A generic already exists - Walmart insulin. Apparently it’s not that great.

~~~
maxerickson
It's Novo Nordisk, not Walmart. Walmart just charges a low, no nonsense, cash
price for it.

Know how pharmacies work and you can get it for about the same price
elsewhere:

[https://www.goodrx.com/novolin-n](https://www.goodrx.com/novolin-n)

------
rbobby
Why is insulin not an over the counter medicine? Would having it OTC cause
problems on the scale of alcohol? What's the "value add" of having a doctor
renew an insulin prescription?

~~~
syn0byte
The number of unexplained but apparently natural heart attacks in middle aged
people with disgruntled partners would sky rocket.

Weight trainers can and probably already do (ab)use insulin to maximize their
gains by manipulating blood sugar levels during workouts.

self-diagnosed and self-medicated diabetics showing up at hospitals that have
no indication of this and pump them full of glucose.

~~~
conanbatt
> The number of unexplained but apparently natural heart attacks in middle
> aged people with disgruntled partners would sky rocket.

Are you saying that insulin has to be prescribed to prevent murder?

------
Zimahl
I can't read the article, it's behind a paywall. But from the comments I get
that people don't truly understand that there isn't just one thing called
'insulin' that is universally the same. As the husband of a type-1 diabetic
who has been on $25 Walmart generic insulin and $1000 name-brand insulin (we
have insurance, obviously we don't pay that amount), I can tell you they are
not the same. For my wife, she never has unexpected highs/lows on the more
expensive insulin.

So, sure, non-generic insulin is probably more expensive than it should be.
But there was serious research and development done to make these better
insulins, and thankfully someone did because they can make life just that
easier to manage for a type-1 diabetic.

~~~
refurb
This is a great point. They might all be insulin’s, but the “tweaking” the
author refers to means real benefits to patients.

------
en4bz
For those wondering I found this on WebMD.

> In 2000, the first long-acting synthetic insulin was approved by the U.S.
> Food and Drug Administration.

Looks like it will still be at least another year before a viable generic
enters the market.

~~~
kgwgk
It has been available for a couple of years already:
[https://investor.lilly.com/news-releases/news-release-
detail...](https://investor.lilly.com/news-releases/news-release-
details/basaglarr-insulin-glargine-injection-100-unitsml-long-acting)

More competion may be coming (or maybe not):
[https://www.fiercepharma.com/pharma/mylan-pressing-
forward-l...](https://www.fiercepharma.com/pharma/mylan-pressing-forward-
lantus-biosim-prevails-patent-challenge-against-sanofi)

------
pkaye
> The bigger issue, however, is that companies tweak their formulations so
> they can get new patents, instead of working to create cheaper generic
> versions.

Wait don't the patents eventually expire on the old formulations?

~~~
SpikeDad
Exactly. And that's why drug companies spend 100% of their advertising and
promotional budget on the new patented drugs. It's well worth it if they can
get doctors to switch prescriptions to the new medications with huge profits
and no generic than continue to prescribe the in some cases identically
effective old drugs that are now cheap and generic.

And it works. Not to be a big insurance company shill but they're often the
last line of defense against your doctor trying to prescribe an identical,
brand name product for the equivalent generic.

------
dhruvp
This is a common problem in healthcare and I think it comes down to these
issues:

1\. Pharmaceuticals have natural monopolies on these drugs (due to regulation,
market power, etc.).

2\. The public and end consumers are largely unaware when these monopolies are
exercising their power to increase costs. This is because there is no one
price, you don't actually pay the actual price (if you're on insurance), and
it's difficult to actually realize what the price of a drug is.

3\. Many insurance companies don't have strong incentives to combat price
increases. [1] As these prices increase, consumers become more and more
reliant on insurance. [2] Insurance companies have targets for what percent of
their expenses they are allowed to devote to administrative costs (buildings,
salaries. etc). As the cost of drugs rises, they can increase salaries etc.
while keeping the percent devoted to administrative costs constant. [3]
Insurance companies are also largely monopolies. End consumers usually take
whatever their employer gives them and in most states there are only a few
providers. As such, they don't have much pressure to have more competitive
plans.

4\. Pharmaceuticals companies respond to demands to increase shareholder value
by increasing drug prices. This is exactly what we'd expect them to do as per
their incentives.

\------

The solution to me is the following:

1\. Allow the safe import of drugs from overseas to create a more competitive
market (the US has strong regulations against importing drugs mainly due to
safety concerns). See this([https://www.pbs.org/newshour/health/u-s-make-
easier-import-p...](https://www.pbs.org/newshour/health/u-s-make-easier-
import-prescription-drugs)).

2\. Regulate pharmaceuticals and insurance companies as the monopolies they
are, or dramatically lower the barriers to entry in the space.

3\. Reduce the power of pharmaceutical companies to lobby and reinforce the
regulations that help them preserve their monopolies. They have every
incentive to lobby for protection and it's no surprise that healthcare
industry has by far the biggest lobbying spend in the US - nearly double that
of Oil & Gas
([https://www.opensecrets.org/lobby/top.php?indexType=i&showYe...](https://www.opensecrets.org/lobby/top.php?indexType=i&showYear=a)).

\------

The book American Sickness([https://www.amazon.com/dp/B01IOHQ9LO/ref=dp-
kindle-redirect?...](https://www.amazon.com/dp/B01IOHQ9LO/ref=dp-kindle-
redirect?_encoding=UTF8&btkr=1)) discusses just how far we are from any type
of perfect competition in this industry and the resulting effects on
consumers. I really enjoyed it and it's a great book if you're interested in
the space.

------
MrTonyD
Maybe 20 years back I remember reading an article describing how many generics
were intentionally ineffective - missing key ingredients - and secretly
created by the drug manufacturer themselves in order to increase sales. It was
a big article in the New York Times if I recall.

------
tracker1
While not for everyone, there's religious-like contention on all sides... but
a ketogenic diet and fasting focus can help most people get off of insulin. It
isn't easy and takes more effort for some than others.

I've been mostly off of insulin for well over a year, though I do keep a vial
in the fridge for emergencies, I tend to have a spike once in a while.

Personally, I think it's about time for medical patents to all but be
disbanded. The terms are too long, revision patents should not be allowed, and
there should be dual-sourcing requirements for FDA approval. If there aren't
two mfg's (cannon have a shared parent owner), you cannot sell the thing.

~~~
myrryr
For type I diabetics, that option is off the table.

It isn't that they are resistant, it is they don't produce any at all.

It is insulin or death for them.

~~~
tracker1
I understand that... but most diabetics (by a large margin) are type 2. Even
for longer term type 2, with lower production (damaged beta cell production),
it's necessary to monitor and have insulin on hand just in case.

> ... can help _most_ people get off of insulin

