T

he insulin market, dominated by old drugs that have skyrocketed in price, is on the verge of a shakeup.

The first “follow-on” insulin for diabetics, similar to a generic medication for synthetic drugs, will hit the market in December. It’s expected to be followed in the coming months and years by a wave of new follow-on and “biosimilar” insulins that have the same protein structures as brand-name products.

Experts predict that these new insulins will carry lower prices — but it’s far from certain that the competition will drive down costs overall.

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The stakes are high: About 6 million Americans with diabetes use insulin, either alone or in combination with an oral drug. The annual cost of insulin reached $736 per patient in 2013, up threefold since 2002. Diabetes medicines, including insulin, are the second most expensive category of prescription drugs, according to Express Scripts, the big pharmacy benefits manager.

Here’s what you need to know about how insulin prices got so high — and what you should expect from the coming shifts in the market.

What’s on the market now?

The vast majority of diabetics who need insulin choose from a menu of a half-dozen “analog” brands, which are chemically altered from natural human insulin. They’re manufactured by just three different drug makers: Novo Nordisk, Sanofi-Aventis, and Eli Lilly. Some are long-acting insulins, injected once or twice a day; others act rapidly and patients inject or deliver them with a pump as needed. Many patients use both.

A few of these products — like Novo Nordisk’s Tresiba and Sanofi’s Toujeo, which are both long-acting — have only been on the market a matter of months, and aren’t yet widely used. But the others have generally been around for at least a decade, and sell for list prices in the neighborhood of $250 per vial. (The actual price that consumers and insurance companies pay is often much lower.)

A small percentage of diabetics use lower-priced “human” insulin brands, which are manufactured to mimic the insulin naturally made by the human body. Walmart, for instance, sells such a product (under the brand name ReliOn) for less than $25 per vial. A Walmart spokesperson didn’t respond to a query about how much of it the retailer sells.

With all that competition, why aren’t prices dropping?

You’d expect competition to lower prices, but it hasn’t worked out that way in the insulin market. If you track the list price of the best-selling analog brands in recent years, you’ll see something remarkable: Prices of directly competing brands have been going up in lockstep by the amount at about the same time, in a practice known as “shadow pricing.”

Jeffery DelViscio/STAT Source: Truven Health Analytics

So what’s going on here? Experts say there are a number of factors at play.

Drug makers have said they don’t collude on pricing in advance, but move to match their competitors’ price hikes.

They point out that the net price — how much revenue they get from each sale — has been rising fairly modestly, as detailed in a recent report from the Wall Street Journal.

The list price has been going up more steeply, in part because the middlemen who stand between the manufacturer and the patient — such as pharmacy benefits managers — demand ever-larger rebates.

“Rest assured there is great competition on insulin pricing” — but that’s taking place at the net pricing level, said Mike Mason, vice president of Lilly’s US diabetes business.

Another key factor: Compared to other drug categories like cholesterol or pain relief medicines, there’s an unusual degree of reluctance among patients and physicians to switch between insulin brands. “These products are not completely substitutable, and manufacturers perceive that, and so they exercise monopoly power over pricing,” said Rena Conti, a health economist at the University of Chicago.

Other reasons that analog insulin prices have not declined: Demand is up. And there are increasing regulatory demands on the manufacturing process.

The cumulative effect of many gradual price hikes “snuck up on people,” said Dr. William Herman, who practices internal medicine at the University of Michigan. “The prices just went up and up and up.”

Why are we only just now getting ‘generic’ insulin?

Insulin has been around for nearly a century. But it’s hard to develop knock-off biological products, and for a long time there wasn’t a lot of incentive to do so.

Key here is the difference between synthetic drugs like statins and those made from biological materials like insulin. It’s easy to develop chemically equivalent copies, or generics, of the former. By contrast, biological materials are more variable and, as as result, more complicated to duplicate.

Patents have also a lot to do with it. For a long time, insulin makers have been able to make incremental improvements on their branded drugs that allowed them to extend the patent life on their products. But for some insulins, that gambit has run its course.

The patent expired last year on Sanofi’s drug Lantus, known to scientists as glargine. And Lilly’s rapid-acting insulin, sold as Humalog, saw its compound and formulation patents expire in 2013 and 2014, respectively.

With the patents expiring, some manufacturers are rushing to make “generic” versions of their competitors’ branded insulin. Lilly, for instance, has made an approved version of Sanofi’s glargine, known as Basaglar.

What’s going to happen when the first ‘generic’ insulin hits the market?

Basaglar will hit the market on Dec. 15. The company hasn’t set a price yet, but analysts expect Basaglar to carry a list price 10 to 20 percent lower than Lantus, which is listed at about $250 per vial.

CVS and Express Scripts have both said they’ll list Basaglar on their formularies. (CVS, notably, said it would no longer cover Lantus.)

Experts don’t expect Basaglar’s launch to mean much in the way of cost savings for patients, though they say it could mean big rebates and discounts for middlemen within the black box of drug pricing.  

For patients without insurance or for those facing high deductibles or copays, “I don’t think they’re going to see major improvements,” said Dr. Irl Hirsch, an endocrinologist at the University of Washington.

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OK, then, will prices go down when more ‘generic’ insulins become available?

Don’t bet on it, though we’ll probably see slightly more savings.

The likeliest candidate to follow Basaglar onto the market is another follow-on glargine product, from Merck. The drug maker in August filed for approval with the Food and Drug Administration, and Merck spokeswoman Doris Li said the company expects to receive a decision in the first half of next year.

Sanofi is working on a follow-on insulin that would mimic Lilly’s Humalog; that’s in late-stage clinical trials, according to Sanofi spokeswoman Anna Robinson. Mylan also has several knockoff insulin products in the pipeline.

Meanwhile the so-far futile quest continues for what experts say would be a tremendous innovation — an insulin pill. Novo Nordisk, for instance, has such a molecule in early stage trials.

So are insulin prices just going to keep going up forever?

Probably not; in fact, there are already signs they’re tapering off. Express Scripts reported that the unit cost of Lantus dropped by nearly 14 percent last year.

“The manufacturers are beginning to feel the heat with respect to the prices of insulin,” Herman said.

But Herman emphasized that questions remain unanswered about how to properly price a drug that many diabetics need to stay alive. “What is the value of insulin? It’s the value of a human life,” he said. “So how do you set a fair market price on it?”

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  • I have been a diabetic for nearly 45 years. I have seen the insulin prices go up hundreds of percent but the more costly insulin doesn’t make me any healthier. They don’t want to find a cure because with the growing number of diabetics this is an easy way to make money and rip off those with the diabetes. Generics should be granted and get this problem out of the political arena.

  • There is an ultra rapid acting insulin for mealtime that is inhaled called Afrezza and since it was FDA approved in 2014 price has remained the same. Unfortunately, Sanofi licensed it then gave up on it because it focused on Toujeo formerly Lantus. Now Mannkind, the developer of Afrezza, has regain the rights to Afrezza and is not even mentioned on this article. Mannkind is struggling on getting Afrezza to market after Sanofi terminated license agreement in 1/2016. Insurance and endocrinologist are also to blame because they don’t want to prescribe or cover #afrezza. Diabetics are having a hard time getting this miracle drug. I believe Big Pharma also force or buyout insurance companies on pushing their products over anything else i.e. generic, inhaled, etc. Anyway check out afrezza on Twitter and see how it’s changing lives for diabetics. Maybe the author of this article can cover why insurance companies and endocrinologist are not prescribing afrezza.

  • I take lantus once daily. My problem is waste. By the time I have to reorder I have only used 1/8 of a vial before disposing of the rest of it.

    Why don’t they have smaller vials for people who need smaller doses. I only use 5 to 6 units per day?

  • It is beyond my comprehension why insulin is not produced by yeast in this day and age. The DNA sequence has long been identified and insertion into microorganisms is not difficult. This stuff should be cheap by now.

  • Insurance company discounts at Pharmacy are based on Retail pricing
    By that, as I understand, Medicaid Medicare and all commercial insurance
    So if you have a particular insurance you will get a set discounted price
    This set discounted price is sometimes higher if you paid cash ( like I have to with 7200 deductible) with your insurance discounts than with say for example with SAMs discount or Walgreens discount card !
    Totally messed up system !
    However, problem is that when you don’t have insurance and no other discount. You will pay a highly inflated retail cost at pharmacy on which all the discounts are based.
    Pharmacy has to charge you that amount cause if they charge you discounted price ( like they do insurance companies) they will be accused of price goaching to Medicare and insurance companies
    We need one price model – all negotiated and level copays – depending on plans
    This will never happen- politicians and pharma lobby in short –

  • These prices are amazingly inflated compared to what the English NHS pays. A single payer can negotiate far lower costs, and if it’s the government it means no “middleman”. For me, as a T1D for 40 years, it means my doctor prescribes the insulin that is best clinically for me, cost is not a consideration. Every way you look at it, universal, tax funded healthcare is the best solution. Incidentally, the NHS is open about costs (they are published online) and medicine usage (monthly pseudonymised data is published of *every* prescription dispensed), public oversight and scrutiny is an important aspect.

  • An investigation of the middleman or pharmacy benefit managers should be undertaken . The entire job they play and the exorbitant pays they garner should abolished and replaced with a system directed toward better patient care.

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