What Does Insulin Cost and What's Behind the Skyrocketing Prices?

Over 37 million Americans have diabetes, a group of conditions where there is too much sugar in the blood. Of those patients, over 7 million require some form of insulin, a medication based on the naturally made hormone that helps regulate blood sugar. One of the biggest concerns for patients and healthcare providers is the rising price of insulin.

In the past decade, the cost of insulin has tripled in the United States, with out-of-pocket costs doubling. One in four patients say that they ration their insulin because they can't afford it.

“If someone has type 1 diabetes or if someone has had damage to their pancreas, these are instances where their body doesn’t produce any insulin,” Stephanie Redmond, PharmD, CDE, BC-ADM, founder of Diabetes Doctor, tells Verywell. “Without a doubt, insulin is lifesaving, and just a day or so without it will require hospitalization and could lead to death for those patients.”

How Has the Government Impacted Insulin Prices?

On July 24, 2020 former President Donald Trump signed an executive order that included language aimed at lowering insulin and other drug prices for Americans. This order became effective on January 22, 2021.

“As with any legal order, the devil's in the detail,” Robin Feldman, Arthur J. Goldberg Distinguished Professor of Law at UC Hastings College of Law San Francisco, tells Verywell. She also noted that we are "...going to need some systemic changes to try to address the problems that are driving drug prices higher in general, and insulin prices higher specifically.”

On June 16, 2021, under the Biden administration, the Department of Health and Human Services published in the Federal Register their plan to rescind this 2020 rule. They cited various reasons for doing so:

• It created high administrative costs for impacted health centers.
• Impacted health centers had difficulty maintaining new rules to determine patient eligibility for receiving medications at lower prices.
• The new rules led to a decrease in staff available to help with critical and emergency services.
• Covid-19 added additional stress to these impacted health centers.

On March 1, 2022 in the State of the Union Address, President Biden discussed capping insulin prices at $35 a month. He also mentioned lowering the prices of prescription medication.

What Factors Impact Treatment Costs for Diabetes?

People with diabetes have over two times the healthcare costs of Americans who don't have this condition. On average, the medical costs related to diabetes can reach over $9,500 per year.

One of the most influential factors driving that difference is the cost of insulin. How much people pay out of pocket for insulin depends on many variables. This includes whether they have insurance, what kind of plan they have, and coverage details such as the plan’s deductible. How much and what types of medication an individual needs can also impact cost.

In her experience as a physician and pharmacist, Redmond says that most patients need about two vials of insulin per month or one to two packs of insulin pens. Each pen pack is equivalent to about one and a half vials. As of March 2022, the price for a vial of insulin ranges from $50 to over $1,000, and a pack of pens ranges from $45 to over $600.

“Prices are too high,” Redmond says. “Not just for insulin but for most diabetes medications. All of it is still insanely expensive.”

What Is the Cost of Insulin With Insurance?

The American Diabetes Association Insulin Access and Affordability Working Group report found that nearly half of Americans have employer-sponsored health insurance. About 20% are insured through Medicaid, and 14% are insured through Medicare. Approximately 7% of Americans purchase health insurance on their own. About 9% of Americans remain uninsured.

Diabetes is considered a pre-existing condition, which is a condition you have prior to applying for health insurance. According to research, about 1.9 million people with diabetes who didn't have insurance gained coverage after the Affordable Care Act (ACA) went into effect in 2010.

Still, having insurance doesn't mean insulin is affordable. Insured patients will often pay a copay or a percentage, rather than the list price, for their insulin. Redmond says that cost could range from $30 to $50.

In cases of high-deductible health plans, patients have to pay the list price for their insulin until their deductible is met. This could mean thousands of dollars out of pocket. “Many patients just have a problem paying that much,” says Redmond.

How Have Drug Companies Responded to Criticism?

Pharmaceutical companies have responded to criticism about high prices. For example, some companies offer discount cards. However, Redmond explains that doesn't help every patient. “You can’t use them if you have Medicare, and many of them cap at $100-$150,” says Redmond of the discount programs. “So if you have a high deductible of thousands of dollars, these coupons are not that helpful, because that patient may still be paying $300 out of pocket for their insulin or more until their deductible is met.”

Some drug companies have assistance programs for individuals with low-income. “These are good options but take a lot of time and a knowledgeable doctor who is willing to take that time and help them with the forms,” says Redmond, adding that many clinics don’t have certified diabetes care and education specialists (CDCES), social workers, or care coordinators who can help.

Many insulin makers created programs in response to COVID-19. As of March 2022, these programs were still in effect:

• In April 2020, Novo Nordisk began offering a free 90-day supply of insulin to patients who had lost their health insurance during the pandemic. 
• In May 2020, Sanofi began offering a temporary access program to patients experiencing financial hardship who qualify for a 30-day supply of their medication.
• In April 2020, Eli Lilly launched its Insulin Value Program which offers a $35 copay card for individuals without insurance or for those with commercial insurance. 

Why Is Insulin More Expensive in America?

Three pharmaceutical companies—Novo Nordisk, Sanofi-Aventis, and Eli Lilly—control the market. “The big three produce 90% of the global insulin supply and close to 100% of the U.S. insulin supply,” says Feldman. “Observers have noticed that the big three tend to mirror each other’s insulin price increases. When one raises prices, the others quickly follow.”

Feldman says the companies have become adept at what’s called evergreening. “Evergreening involves various techniques to extend protection on a drug and block competition that can reduce prices."

Many brand name drugs have a generic that becomes the preferred, cheaper alternative. However, the Food and Drug Administration (FDA) has historically treated insulin as a drug and a biologic, which have different regulatory pathways.

Medications that are treated as highly similar to a biologic, or a medication made from living things, are called biosimilars, not generics. Biosimilars must go through a specific approval pathway.

The original brand name insulins went through the drug pathway rather than the biologic pathway. This meant competitors could not introduce a biosimilar insulin.

In March 2020, the FDA moved to label insulins as biologics, which opened the door for new biosimilars. However, hurdles remain. Feldman says that the approval process is more complicated for biosimilars than for generics, and the substitution process at the pharmacy is more difficult as well.

State laws allow pharmacists to automatically substitute a generic version for drugs, but that automatic substitution is not available for biosimilars unless certain conditions are met. 

“It’s a huge impact,” says Feldman. “Because automatic substitution is the way that generic drugs traditionally make inroads in the market and bring prices down.”

The FDA approved a long-acting biosimilar insulin called Semglee in July 2021. However, patients and physicians must specifically request the biosimilar because of the lack of automatic substitution. Feldman says that historically, that doesn’t happen.

Additionally, intermediaries along the insulin supply-chain can drive up costs or keep new drugs from gaining a foothold. “Existing players with large market share can use volume discounts to discourage [pharmacy benefits managers] and health plans from covering the new entrant,” says Feldman.

The bottom line is that the three-company monopoly is hurting people with diabetes. “Insulin is a very old drug,” says Feldman. “We've known about it for a long time. Patients shouldn’t be paying through the nose for it now a hundred years later.”

Summary

Insulin prices have gone up significantly over the past decade. However, the government has responded in an attempt to make this medication more accessible.

Treatment costs for those with diabetes are greatly impacted by the price of insulin. This is largely driven by the three major companies that produce it. Insurance plan details can also impact the price an individual pays for their medication.