A man approaches a pharmacy window. This may be in any pharmacy in any town or city in America. He’s picking up a prescription, a prescription of medication without which he will die in short order.
But there’s a problem: filling this prescription will cost him more than $800. And the medication he’d get will only last about a month. When the calendar turns again, he’ll need to come up with another $800. And again, and again, month by month.
This man has health insurance, but high deductibles means that he’ll spend thousands of dollars a year in order to obtain medicine he needs to live. If he can’t make those payments, he will not survive.
This story is far from a hypothetical. More than one million Americans suffer from type 1 diabetes, with another nearly 30 million having type 2 diabetes. For diabetics, the medication insulin is necessary in order to regulate their blood sugar, and without insulin diabetics face complications up to and including death.
Prices for insulin have been skyrocketing in the United States, and many diabetics are finding the cost of supplying themselves with insulin is becoming increasingly unbearable. Some have turned to crossing the border to Canada, where insulin is far less expensive. But that type of solution isn’t available to most Americans.
Rising Cost of Insulin
From 2003 to 2013, the price of insulin rose by over 300%, far above the rate of inflation. There are two major issues at hand: Why is insulin so expensive, and why have prices risen recently?
The first question is more baffling than it first appears. Insulin was first invented in the 1920s. Drug manufacturers are able to file patents on medications, and for the life of the patent no competitors can produce cheaper generic versions. But patents for pharmaceuticals only last 20 years in the United States. How can insulin still be patent protected?
The reason insulin is still under patent essentially comes down to pharmaceutical companies making small improvements to insulin over the decades, which allows them to keep the medication under patent. For many years, insulin required beef or pork to create, but in the 1970s synthetic insulin formulas were developed.
This amounts to large pharmaceutical companies manipulating the patent system to keep insulin under patent for nearly a century. While the developments made to insulin’s formula do make it a more effective and long-lasting medication, they also keep its price far higher than if it were now a generic medication.
In recent years, the price of insulin has been rising, and there’s no particularly good reason why. A bipartisan congressional study found that “”the structure of the insulin delivery and payment pathways create several incentives for entities along these pathways to artificially raise the price of insulin.”
In other words, pharmaceutical companies, distributors and middlemen have been able to generate more profits from the sale of insulin by raising its price, and there are no downward pressures forcing the price of insulin to come down.
The Diabetes Sufferer’s Dilemma
People with type 1 diabetes require insulin on a regular basis to live. The far more common type 2 diabetes can be managed without insulin, and many type 2 diabetes sufferers can get by with only periodic insulin treatments.
An estimated six million Americans are taking insulin at any given time. While that number is large, it represents only 2% of the US population. In comparison to certain other medications, diabetes is more of a niche market.
Yet it’s also an inelastic need for the people who require it to live. And it’s a constant need, too – type 1 diabetes sufferers need to obtain more insulin on a monthly basis, with dire results if they don’t take it.
This situation is one that the large pharmaceutical companies which manufacture insulin have been able to take advantage of by increasing prices. Certain drugs will be in demand nearly regardless of the price, and insulin is one such drug.
When the alternative is death, what options do diabetes sufferers have other than to pay whatever prices are being charged?
For some, the choice is to funnel money from other areas to cover the increasing cost of staying alive. This means putting off buying a house, buying a car, saving any money at all. It may mean not setting aside money for a child’s tuition. It may mean going into debt.
Some Americans with diabetes are able to scrimp and go without and manage to pay for their insulin.
Others end up rationing their insulin, using as little as they can get away with and risking severe health consequences. Several tragic stories tell of people with diabetes who have died trying to stretch their insulin out or who weren’t able to make it to the next paycheck to re-up their prescription.
For some, the answer has become traveling across the border to Canada to buy insulin where it’s far cheaper. In Canada, government regulation strictly sets the price at which insulin can be sold for. This means that Canadians can buy insulin for around 10 times cheaper than it costs in the United States.
Diabetics living near the Canadian border have started to make monthly treks north to buy insulin from Canadian pharmacies. It’s reached the point where entire caravans of medicine seekers go north seeking medicine.
This method of obtaining insulin has murky legality with the United States government. But people seeking insulin have little choice if they can’t afford to buy it in the US.
Why is the Market Broken?
In the end, there’s no particularly good reason for the market for insulin to be so dysfunctional. There are a handful of main culprits, all of whom shoulder some of the blame.
First, pharmaceutical manufacturers have been profiting exorbitantly from the sale of insulin for decades. By extending their patents by tweaking the formula of the drug, they’ve been able to keep insulin out of the generic domain.
Second, the current state of the United States healthcare system means that tens of millions of Americans are either without insurance or in health insurance plans with massive yearly deductibles. Because many Americans with health insurance providing better coverage don’t ever see the bill for the massive prices pharma manufacturers charge, they don’t see these price increases as an issue.
But for those who don’t have insurance or are saddled with thousands of dollars in deductibles, the inflated cost of insulin is crippling.
Finally, US lawmakers have shown little inclination to hold large pharmaceutical companies accountable for their rampant profit-seeking at the expense of millions of Americans who need insulin to survive. And these pharmaceutical companies have shown that they’ll prioritize maximum profits over the lives of the people who need the drugs they sell.