37 million people in the United States have diabetes, seven million of whom require insulin.  Insulin* is a hormone that regulates the level of blood sugar in the body and is necessary for life.  The cost of insulin for insured patients ranges from $334 to $1000 per month, and this cost represents a tripling in the last decade.  These prices are the highest in the developed world.  In Canada, for instance, the cost per unit of insulin is $12, whereas the cost in the U.S. is $98.70.  

Early this year, the House of Representatives passed President Biden’s Build Back Better bill, which would cap the cost of insulin at $35 for a 30 day supply.  It stalled in the senate.  A recently negotiated “Inflation Reduction Act” (action pending in Congress as of this writing) promises to cap out-of-pocket drug expenses at $2,000 per year for those enrolled in Medicare drug plans and cap insulin costs at $35 per 30 days (There would be no effect on the cost of insulin in private insurance plans).

I will let an endocrinologist (a physician who specializes in the care of diabetic patients) from Mayo Clinic illustrate the consequences of not being able to afford insulin:

Alec Smith was 23 when he was diagnosed with type 1 diabetes. He worked as a restaurant manager in Minnesota. At age 26, he could no longer stay on his mother’s health care insurance plan and needed to find his own coverage. On June 1, 2017, he was on his own. The insurance available to him came with a $7600 deductible and a monthly premium of approximately $440. Because he could not afford this, Alec decided to temporarily forego insurance coverage and purchase insulin with cash. Unfortunately for him, the cash price of insulin was far beyond his means.  He decided to try and ration the amount of insulin he took till he had enough savings to purchase insurance. Sadly, on June 27, 2017, he was found dead in his apartment of diabetic ketoacidosis

Of course the big question is WHY IS INSULIN SO EXPENSIVE in the United States?

The pharmaceutical industry says that the high cost of developing drugs is the reason for the high prices.  Of course insulin has been in medical use for a hundred years, and the most commonly used preparations currently (“analogs”) have been available for about 20 years.  So I do not understand how recent research has caused the price of insulin to triple in the last decade.

I think a better explanation for the high price of insulin lies in the fact that three companies control 90 percent of the insulin market.  This virtual monopoly “serves” a vulnerable population that  must buy the preparations, regardless of the cost, or risk the fate of Alec Smith.  

Or maybe lobbying has something to do with it (do you think?).  In 2021, $3.77 billion was spent to lobby Congress and federal agencies.  At the top of the list of industries that spent the most on lobbying was the “Pharmaceutical Research and Manufacturers of America,” coming in at $187,414,530 in expenditures.

Consumer Medical Decisions in the Marketplace  

There is nothing illegal about any of this.  The drug companies are simply maximizing profit, an activity on which our market driven economy is based.  The underlying question is whether healthcare should even be subject to the rules of capitalism.  

There are many advocates of making healthcare more market based, that is, confer more decision making power on the consumer.  If people can research washing machines before purchasing one, why not let them, unrestrained by labyrinthine insurance rules, shop for a cardiac surgeon?  

The trouble is that healthcare does not obey the rules of the marketplace.  Insurance policies limit choice, and geographical constraints also restrict alternatives.  And of course, even for the most sophisticated medical consumers, trying to penetrate the fine print in insurance policies is almost impossible.  

But there are even bigger obstacles to informed medical decision making.  If you find yourself in an emergency department with acute appendicitis, how can you be expected to look around for a surgeon you like?  And of course emotion clouds judgment.  How can anyone be expected to make rational decisions for an incapicated loved one with a life threatening illness?

The marketplace mostly works admirably when it comes to buying a car.  For healthcare, the marketplace is an awkward fit at best.

*For the sake of simplicity, I will use the term “insulin” to include its natural form and the analog form, which mimics the action of natural insulin with advantages in absorption, distribution, metabolism, and excretion.