A new paper in JAMA** looks at the price state Medicaid agencies paid for long lasting insulin over a decade. Near substitutes mattered a lot:
Insulin prices increased by 320% from 2001 to 2014,1,2 partly because of limited competition and barriers to generic entry…
Reimbursement rates for Lantus and insulin determir increased in parallel in 2006-2014 by an average of 13% annually but stabilized following new product entry….
new product entry was associated with a halt in increases in reimbursement levels for incumbent products.(my emphasis)
A bio-similar is a “me-too” or a “copy-cat” drug. It is expensive to develop, it is expensive to go through approval and it seems like a duplication of effort. But it is a counter-vailing force that introduces competition and reduces monopoly rents. Insulin is wicked expensive even with bio-similars but it probably would have been even more expensive without bio-similar introduction. There is a lot of value in near substitutes.
**
Hernandez I, Good CB, Shrank WH, Gellad WF. Trends in Medicaid Prices, Market Share, and Spending on Long-Acting Insulins, 2006-2018. JAMA. Published online March 25, 2019. doi:10.1001/jama.2019.2990
Butch
“Insulin is expensive to produce” goes against everything else I’ve ever read about it. We lost my diabetic dog last week at age 13, and I was able to afford his insulin because I bought Novalin N at Wally World at $24 a vial. I get that it’s a 60-year-old formulation but it IS insulin and I’m not going to believe that Wal-Mart is selling it at that price as a favor to anyone.
Uncle Cosmo
David, why is insulin “wicked expensive”?? I thought some fairly efficient ways to make the stuff had been developed – is the price just a reflection of “haha, we have a monopoly & we’ll extort the last dollar out of you diabetic suckers because we fucking well can” – ?
Walker
@Uncle Cosmo:
My understanding is that not all formulations are equal. People’s bodies get used to a formulation so that they may have allergic reactions or other side effects to generics.
Kristine
@Walker:
That’s true for a number of formulations. I’m hypothyroid and take a well-known brand of levothyroxine. Other formulations can have different release rates or behave differently in my system, so if I switched to another brand, it might takes months for me to adjust. I’ve gone through hypo- and hyper- phases while dealing with the slowing down of my thyroid and stabilization of drug dosing–they’re not fun. So I stick with the branded name I’m used to.
mousebumples
@Walker: Pharmacist weighing in. There are lots of different “types” of insulins – short acting, fast acting, long-acting, and high dose options. (the high dose options are primarily used for Type 2 Diabetics that have significant insulin resistance, so rather than needing to inject themselves with a larger volume of insulin, the same number of units is given in a more concentrated formula) Also, when I worked in retail pharmacy, a lot of insulin drug companies would provide “discount coupons” – save $50 or $100 off each prescription! Despite the appearance of “losing money” (by offering the discounts), I would expect that setup actually made them more money in the long-run.
Hypothetical patient example: You’re on long-acting insulin, which is a branded medication. Whether your MD puts you on Toujeo or Levemir or Lantus (*which hypothetically has a generic, but I’ll get to that in a second), your insurance will charge you the brand copay. Let’s say, that’s $50/month for the preferred brand (Lantus) and $100/month for the non-preferred brand (Levemir). A $100 coupon on Levemir makes that cheaper for you than the Lantus, so while you might otherwise ask your doctor if you can change to the “preferred insulin,” the drug company gets the money off of your prescriptions each month. Also, this is a medication that you need (as evidenced by many sad patient stories that we read in the news/on Twitter), so even if you need to pay your deductible before your copay kicks in, you’re going to pick up the med anyway. So if the $100 coupon is actually a discount off of an original price of $424.18, you’re still going to pick up your prescription.
Basaglar is one of those bioequivalents that David was talking about above. It’s a biosimilar (insulin glargine) to Lantus. Toujeo is a branded more concentrated version of Lantus, made by the same company as Lantus. (300 units of insulin per ml of product, versus 100 units of insulin per ml on Lantus) I wish I had an answer as to “how to make insulins cheaper” (especially the ones that are typically dosed once-daily since they are more convenient for the average diabetic), but the “free market” makes that complicated, unfortunately. :(
Ohio Mom
Ohio Dad has Type 2 and despite being a very compliant patient, including very regular exercise, etc., he progressed to needing insulin.
There is lots of Type 2 on his father’s side for several generations (as far back as we can know) so we have a sense of “this was inevitable.” We’re just grateful the medical science has advanced as much as it has.
The insulin is expensive yes, but the various supplies, such as needles ad testing stripes, add up too. He’d like to move to a pump but he and his endocrinologist haven’t been able to budge the insurance company.
In short, back to where we always end up, the US healthcare system works against patients’ best interests.
And it sounds like it is about to get worse. David, can you explain the DOJ move regarding the ACA? What exactly is going on? Thanks!
Ohio Mom
@Ohio Mom: I see a new post on this very topic. Heading there now.
Victor Matheson
@mousebumples: Thanks for this. Nice to have an expert weigh in.
So, thanks to Mayhew and Mouse, I have a pretty good understanding about why insulin is a difficult drug and why it is expensive. What I don’t understand is why it is 320% more difficult and more expensive than it was 15 years ago. Anyone have an idea? It can’t just be monopoly pricing, because there is no more monopoly power now than 15 years ago, right?
jl
@mousebumples: There is no free market in patented drugs, they are covered by monopoly protections. There is free entry in the race to get a patent and FDA approval/licensing.
To Dave Anderson:
Sorry, I am not impressed. The price reduction from the ‘me-too’ drug is marginal compared to the large increase in average price of insulin overall. So the value added is to the patient, or a provider who takes the price risk’. That is, there is what seems to me to be a small value added from the provider/patient perspective. This research doesn’t provide any evidence at all on value added to society as a whole of these drugs as developed and introduced under the current US patent and FDA approval system.
Also, I don’t think a ‘me-too’ biosimilar is really the same thing as a ‘me-too’ simple molecule drug. Biologics are very complex drugs and I think we need a more precise way of talking about the ‘me-too’ concept.
But, thanks for the article, very interesting, and useful.
LaNonna
Il Nonno is also Type 2 diabetic, over 20 years now. We are very fortunate that ASL (Italian national universal healthcare) covers all his meds, testing kit, strips, lancets and 2 checkup visits per year plus all the blood work. Free, and because he already had a toe amputated due to a diabetic infection, they are happy to help prevent amputations, blindness, heart complications, etc…preventive care all the way. Should he progress to insulin, it would also be free, regardless of brand/type. Italy spends about 2300 eu per person annually for a very good result, we worry terribly about our 3 married children and their families still in the US.
Aardvark Cheeselog
Copycats might be valuable, but letting Medicare negotiate prices would be better.
Putting the Sackler family’s heads on sticks would be better yet.