Why is Insulin So Expensive in the United States?

Over 34 million Americans (roughly 10% of the population) are currently living with diabetes. Of those, about 8.3 million have been prescribed insulin to help manage their condition.

Insulin is commonly prescribed to diabetic patients because it helps them regulate their blood sugar. This life-saving drug has been around for over 100 years, yet instead of the price going down, which typically happens, prices have continued to remain high or even increase. 

Smuggling Insulin From Mexico?

It is puzzling, however, when you consider you can get some of the same brands of insulin in Mexico for much less than you can in the U.S. 

For example, Lantus comes in a box with five pens and each pen lasts about a month. In the U.S., this box is priced at $425, roughly $84 per pen. 

However, Lantus is also sold in both Mexico and Canada for only $12 per pen. 

These price differences are so stark many find smuggling insulin across the border a profitable endeavor. 

So why is insulin so expensive in America, considering you can get the same item elsewhere for much less?

There are a few different reasons for this.

Higher Regulations & Standards

In Mexico, insulin is sold over the counter with no prescription needed. This means less oversight into the selling of the medication, and less money spent by drug companies complying with regulations. 

In the U.S., a prescription is needed to purchase insulin, so the patient is dependent on the doctor’s decision. One reason insulin is so expensive in the United States is that doctors are writing prescriptions for brands that cost more, with many doctors receiving benefits for secretly being salesmen for those manufacturers. 

While improvements to formulas are great, it may be more important for the patient to be able to choose to use an older version of the drug if it means they don’t have to struggle to afford their medication. 

In other countries, manufacturers also don’t have to comply with FDA regulations when selling in other countries. In fact the FDA is responsible for blocking many life saving medications and medical appliances from entering the country, which are in use in many developed nations, including covid vaccines and tests.

Higher regulations and standards doesn’t always mean better quality. I’ll explain.

Lack of Competition

Pharmaceutical lobbying is often used to create arbitrary rules that prevent newer and better products from entering the market, which may disrupt an established corporation’s expected cash flow.

In the U.S., the bulk of the insulin market is cornered by three companies, Eli Lilly, Novo Nordisk, and Sanofi.

Some countries have domestic insulin producers that compete with U.S.-based firms and keep costs lower. As of today, most of the 47 manufacturers worldwide are not allowed to sell their insulin in the U.S. Many of these companies would happily sell to the US for half the price of the current market. This would be a substantial profit for them considering the cost of production is about $3 for what currently sells for about $100.

Patent Loopholes

American drug companies that produce insulin aggressively patent their products to keep competitors out of the market as long as possible. A process called patent evergreening allows companies such as Sanofi to extend their patents much longer than the typical twenty years. 

For example, Sanofi filed for 74 patents on the drug Lantus, which means they have an exclusive right to produce it for the next 37 years. 

Another patent loophole that exists is ‘pay for delay.’ Sanofi sued Merck when it announced a drug similar to Lantus. As a result, Merck withdrew its product from the market. 

This legal intimidation also acts as a deterrent for other companies to try their hand at making generic products.

Too Many Middle Men

In the U.S., pharmacy benefit managers negotiate insulin contracts with health insurance providers. They often insist on high prices, so they can offer rebates or coupons to health insurance companies. 

Pharmacy benefit managers often earn fees for selling products that are a percentage of the cost of the product. They are naturally incentivized to want high prices on those products.

Solutions

The issue of high insulin prices in the United States is multi-faceted and complicated. Much of the problem is caused by lack of competition, over-use of patents, burdensome regulations, and a lack of transparency in how drug prices are set for health insurance companies. 

In the long term, the solution involves rolling back over-regulation, re-considering the current use of patents on life-saving drugs, and more transparency into how drug prices are set by health insurance companies. 

In the short term, patients in need of cheaper insulin could consult with their doctor to prescribe more affordable products. Such a product was recently offered at Walmart, for example. 

Some who are in desperate situations have resorted to smuggling their medication across the border, or even purchasing insulin from veterinary clinics. Less regulation and looser standards mean drugs indicated for animals are more affordable to produce and sell. 

However, make sure you know what you are getting into when it comes to either of these activities. 

Laws differ from state to state and there could be consequences for smuggling drugs across the border; especially if you intend to sell said drug for profit.

Organizations like Free Healthcare are fighting to expose the true cause of the high cost of medicine in America and proposing legislation to fix the biggest problems. Supporting them and their policies will help turn these ideas to reality.