by Kasia Lipskafeb, Feb. 20, 2016
NY Times Op-Ed Piece: Break Up the Insulin Racket
In the United States, just three pharmaceutical giants hold patents that allow them to manufacture insulin: Eli Lilly, Sanofi and Novo Nordisk. Put together, the “big three” made more than $12 billion in profits in 2014, with insulin accounting for a large portion.
What makes this so worrisome is that the big three have simultaneously hiked their prices. From 2010 to 2015, the price of Lantus (made by Sanofi) went up by 168 percent; the price of Levemir (made by Novo Nordisk) rose by 169 percent; and the price of Humulin R U-500 (made by Eli Lilly) soared by 325 percent.
Besides these pharmaceutical companies, [s]omething else is most likely contributing to the rising price of insulin: a very powerful and largely invisible group of middlemen, known as pharmacy benefit managers, or P.B.M.s.
The biggest P.B.M.s are out to make a buck. They get “rebates” from drug manufacturers — payments based on sales or other criteria, which look suspiciously similar to kickbacks. The rebates are not publicly disclosed, but they are sizable. Industry analysts estimate that those payments, and other back-room deals, amount to as much as 50 percent of the list price of insulin.
The three biggest P.B.M. — Express Scripts, CVS Health and OptumRx — bring in more than $200 billion a year in revenue. They control over 80 percent of the P.B.M. market.
In much of Europe, insulin costs about a sixth of what it does here. That’s because the governments play the role of pharmacy benefit managers. They negotiate with the manufacturer directly and have been very effective at driving down prices.
PhRMA and the P.B.M.s care making a killing while many patients have a hard time with co-pays for their insulin.