When Frederick Banting, Charles Best, and James Collip filed for a U.S. patent on insulin in 1923 and sold it to the University of Toronto for $1 each, they did it because, as Best once said, “insulin belongs to the world.”
They also believed that securing the patent was a form of publication, and wrote to the university president, “When the details of the method of preparation are published anyone would be free to prepare the extract, but no one could secure a profitable monopoly.”
Sadly, they were mistaken.
Today, three companies — Eli Lilly, Novo Nordisk, and Sanofi Aventis — control virtually the entire global market for insulin. This oligopoly, which may have colluded to fix insulin prices, charges exorbitant amounts for a medicine that people with type 1 diabetes cannot live without. Since the 1990s, they have raised the price of insulin more than 1,200%.
In the past few years we’ve learned about the tragic and preventable deaths of 20-somethings who simply couldn’t afford their insulin, even with insurance. Diabetes-related complications like amputations are on the rise again after decades of decline, and many people who depend on insulin to survive are sacrificing their rent, their cars, and their dignity just to get by.
It’s an unconscionable evolution for a drug developed almost a century ago in a public lab, in the public interest. How did it come to this?
The private pharmaceutical industry has every incentive to game the patent system, extract the highest prices it can, and delay the market entry of competitor drugs as long as possible. With the largest lobby in Washington and a well-oiled revolving door to its regulators — hello, Alex Azar! — large pharmaceutical companies have deftly evaded attempts to rein in their excesses. That’s how Eli Lilly, Novo Nordisk, and Sanofi Aventis have managed to keep their stranglehold on insulins and charge ever-higher prices for years.
In addition to having potentially catastrophic effects on the lives of patients, profit-maximizing strategies responsible for these eye-watering price tags also result in differential pricing practices with discriminatory effects, unnecessary financial strain on the U.S. health care system, and contribute to growing corporate power over our democracy. But as one of us (D.B.) argues in a report released Tuesday, if we act now to institute a public option for pharmaceuticals, we could ensure that this terrible story is never repeated.
By public option we mean the creation or expansion of publicly owned institutions to function across the entire pharmaceutical supply chain — from research and development to manufacturing to wholesale and distribution — in order to assure a safe, consistent, and accessibly priced supply of essential medicines.
It is sorely needed because the private pharmaceutical industry is failing us on a number of fronts. It operates on an extractive model that contributes to inequality and increasingly produces drug shortages, inefficiency, lagging innovation, misinformation and misuse of medications, and, most famously, the world’s highest drug prices.
Essential medicines like insulin, antibiotics, anti-allergy medicines, and more could and should be developed and sold by public institutions in the public interest. A number of other countries, including Sweden, Brazil, Thailand, and Cuba, have successful publicly owned pharmaceutical companies spanning any and all links in the supply chain. It’s high time the U.S. joins their ranks. Moreover, Americans across the political spectrum already support public production of essential medicines.
The incentives for a pharmaceutical industry in the public sector would be radically different than for a pharmaceutical industry in the private sector. Free from the need to satisfy hungry shareholders with ever-higher quarterly returns, public pharmaceutical companies could be designed to ensure that public health needs are the priority.
In fact, the public already funds the majority of the basic research leading to the development of new drugs in the U.S. through the National Institutes of Health and other public entities. Directing those funds to public institutions specifically designed to develop new essential medicines based on society’s greatest needs would be more efficient and effective at ensuring we get true innovation, and not a glut of “me-too” drugs structurally similar to existing products.
A public pharmaceutical R&D institute could patent its inventions and keep them in a public-interest patent pool in order to stimulate further scientific advancement and safeguard those advances from profiteers, thereby securing long-term affordable access to the medicines developed. The private pharmaceutical sector would be welcome to compete with this public sector on the development and production of essential medicines, or it could choose to focus on lifestyle drugs.
Publicly owned manufacturers at the state, local, and regional levels could make new medicines developed by a national R&D institute and also produce low-cost generics. These manufacturers would then work with publicly owned wholesale distributors to assure the medications are available at hospitals and retail pharmacies nationwide — all at the same low price. It could even leverage existing public institutions like the U.S. Postal Service and the Veterans Health Administration, both of which have important experience in pharmaceutical distribution, to ensure that cost-effective medications are delivered directly to patients and clinics in every community.
Unlike private pharmaceutical companies, publicly owned pharmaceutical companies would be subject to existing transparency laws for public entities and could be further required to publish their prices — or even charge all purchasers the same price. By doing so, they could significantly improve transparency in the entire pharmaceutical supply chain, giving citizens and lawmakers real information about where the money goes when medications are bought, empowering everyone to make more informed decisions about future policy and regulations.
Pharmaceutical science’s promise — that it can, through human ingenuity, end or treat the diseases our flesh is heir to — is a modern miracle. But keeping this miraculous promise for everyone means we need to rethink at a fundamental level an industry content to let our friends and families die in the service of its bottom line.
Dana Brown is the director of the Next System Project at the Democracy Collaborative and author of the report “Medicine for All: The Case for A Public Option in the Pharmaceutical Industry.” Elizabeth Pfiester is the founder and executive director of T1International, a global, patient-led advocacy organization fighting for affordable access to insulin and supplies.
Excellent article!!
Although I trained in psychiatry, I found far more success treating patients with psychotherapy than drugs. Helping people understand themselves and their lives was not only enjoyable but was very productive.
Unfortunately drug companies produced misleading advertising convincing psychiatry that emotional disorders were due to brain disorders, and drugs were necessary to correct these physical disorders.
They have made huge sums from this, and probably caused the epidemic of mental illnesses and addictions that we see today.
It’s no mystery as to why prices are cheaper in other countries. These countries refuse to pay a reasonable price for innovation and they mooch off the US prices. At non-US prices, no new discoveries would be made. The US is paying for worldwide pharmaceutical innovation. Companies are faced with a choice regarding non-US prices: a) accept prices which are below the full cost (including R&D) of the product but above the marginal cost of producing an additional product (i.e., they don’t lose any money on internatonal sales, but they don’t make enough for survival as a research based company) or b) denying people products they desperately need. The companies take the ethical position and sell below full cost in international markets. If they lowered US prices to international levels they would go out of business. Yes, the international markets need to pay more and the US less, but an individual company cannot solve this dilemma on its own. It will take trade negotiations between governments. But as the president is learning, these countries have mooched off the US for so long, they are not simply going to stop.
“Horse flop” is what that “op-ed” is. To wit:
1. The insulin of the distant past, is not the insulin of today.
2. There are two major types of insulin today. Op-ed does NOT explain — it is beyond worthless.
3. The “inventors,” they “gave” their work away? Bull. They were employees. They had ZERO inventive rights of ownership. Look it up, you’ll learn something.
4. “Public option?” Like Solyndra? Another $500,000,000 loss? Are they insane? Have they lost their minds?
5. There is ZERO mention of the FAILURE rate in clinical trials. Even more Solyndras? Even Communist Russia and Communist China will not do that!
6. It appears clear, the “writers” have ZERO experience, actually MAKING pharms. They know nothing. Why should anyone sane, follow them?
The Democrats will ruin USA medicine, which has subsidized global medicine for 75 years.
They will never succeed. They cannot force and coerce others to bend to their inexperience and low-quality education. Just try, we dare you.
Need to be more specific when we quote prices. A consumer can get a vial of insulin at Walmart for $25 a vial. The average price for Novolin was $93 in quarter 2, 2019. Most of these costs are covered by insurance. If they can, Canadians come to the US for series healthcare treatment.
A few points:
* There is no company named Sanofi Aventis.
* Novo, Lilly, and Sanofi all sell their products in (most) other countries at greatly reduced prices. It could be that they hate the US. More likely, it is the fact that the US — despite our love of capitalism — has created a non-competitive market that favors pharma, device makers, and even hospitals.
* Setting up a shadow pharma industry seems like a horrible idea. First, there are literally thousands of life-preserving pharmaceutical products and new ones entering the market every month (to say nothing of devices). Second, even a publicly owned pharma company can’t violate a private companies “patent thicket”. Third, while government funds pay for a lot of the basic research (relatively cheap), industry pays for clinical research (very expensive).
* But, you’re right, we need reform. It is up to us to vote in politicians that will reform the system. Cutting costs by half should be easy. Just do what other countries do.
The real collusion is between our government and our corrupt politicians. As a great nation we deserve better than this. How is it possible that our youth dies because of greed from the same people that took a hippocratic oath but then sold out to greedy profiteers. In Canada a much less wealthy country ours you can buy a retail vial of insulin for as little as $25 compared to upward of $300. Where are the antitrust collusion laws. Sadly our politicians do not work for us and young people are allowed to die because they cant aford the cost of a daily life saving medication. Shame on our government.
That’s absolute WRONG.
Generic insulin is available at Walmart for $25/vial.
Newly-invented digital insulin is priced differently.
It was a pleasure, correcting your errors of fact. You are welcome.
It would be nice if you checked your facts before writing this article. There are numerous false statements, starting with the premise that anyone has patent control over insulin. Generic insulin as well as biosimilars insulin analogs are available on the market at greatly reduced prices from the latest patent protected products. These products arguably include the gold (glargine). Another statement, presented as fact without any evidence, is that these companies “colluded to fix insulin prices.” A link brings you to a politically driven lawsuit which likewise lacks any facts. If we want to control pharmaceutical prices, which we need to do, we need to agree to start speaking factually and not with a series of false statements meant to drive anger and not solutions.
It would be interesting to see what rebates are paid to the PBM’s for insulin placement on their formulary and after backing out the rebates what the net cost of insulin truly is. I agree that just three manufacturers leads one to believe a monopoly however there is more to prescription pricing than what the drug companies charge….it is ultimately what is paid.
@John McDonald, I couldn’t agree more. With PBMs acting as a black box for pricing, how can you really know if a medication’s true price? I am unsure, but do PBMs exist in Europe or places other than the US?
” .. how can you really know if a medication’s true price?”
How utterly absurd. One just “google’s” for the information. Medical care is one of the most heavily-regulated sectors in the world. It is awash in data. Any competent high school graduate can find the data — how did ESPN and porno become so big? With DATA trails ..
This truly has been a waste of effort, time and resources.