Insulin is a hormone produced in the pancreas that regulates the glucose in the blood. Type One Diabetics take insulin injections (through shots, a pen, or a pump) because their body no longer creates insulin. Insulin can cost anywhere between $90 and $360 per vial (Lee, 2020). A Type One Diabetic needs to replace the insulin their body is not producing and typically use between one and a half to three vials a month, costing them anywhere between $135 to $1080. Over the course of a year, this cost adds up quickly.
- The insulin market is an oligopoly.
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An oligopoly is a market structure where a three or more firms control more than the majority of the market. Oligopolies have high barriers for entry, which means it is hard to enter the market. Novo Nordisk, Eli Lilly, and Sanofi own 90% of the insulin market (8 Reasons Why, 2019). Typically only one of these companies supplies insulin to a country (8 Reasons Why, 2019). If there were more companies in the market then prices would be lowered, just like in India and China (8 Reasons Why, 2019).
- There is no generic insulin.
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Because insulin is a therapeutic biological product (biologic), it is hard to reproduce generically unlike chemically synthesized molecules (8 Reasons Why, 2019). To create something “biosimilar” is very expensive (8 Reasons Why, 2019). The current biosimilar insulin is still primarily produced by Novo Nordisk, Eli Lilly, and Sanofi, and has only reduced prices on insulin by 10 to 15 percent (8 Reasons Why, 2019).
- Patents.
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A patent is a license given by the government for a title for a certain period of time, typically 20 years in the US, to be the sole maker, seller, or user of an intervention. Because there are loopholes in the US patent system, pharmaceutical companies are able to make their patents last longer, which is called evergreening (8 Reasons Why, 2019). This does not allow for competition in the market and keeps prices high (8 Reasons Why, 2019).
- Politics.
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The three main insulin producers, Novo Nordisk, Eli Lilly, and Sanofi, collectively make billions of dollars in profits (8 Reasons Why, 2019). They do spend a lot on marketing but they also spend millions on lobbying (8 Reasons Why, 2019). They pay lobbyists and decision makers to stop them from talking about their use of price gouging (8 Reasons Why, 2019). Price gouging is when a seller increases their prices to an amount that is higher than what seems fair.
Sources:
8 Reasons Why Insulin is so Outrageously Expensive. (2019, Jan 20). Retrieved from https://www.t1international.com/blog/2019/01/20/why-insulin-so-expensive/
How much does insulin cost? (2020, October 08). Retrieved October 14, 2020, from https://www.singlecare.com/blog/insulin-prices/
Lee, B. (2020, October 06). How Much Does Insulin Cost? Here’s How 23 Brands Compare – GoodRx. Retrieved October 14, 2020, from https://www.goodrx.com/blog/how-much-does-insulin-cost-compare-brands/