Understanding the costs of insulin

Insulin is a life-sustaining drug for people who depend on it to safely manage their diabetes. However, the costs of insulin have skyrocketed in the United States over the last decade, garnering attention from not just the patient community but also legislative bodies, politicians, and healthcare activists.

It's well-known why insulin is essential — but many people who live with diabetes are left wondering why the costs of insulin are so high.

Ultimately, several factors can influence the price of the drug. Here's a closer look at how these expenses relate to each other.

How much does it cost to produce insulin?

Research estimates that the cost to produce a vial of most analog insulins as the modern standard of care is between $3.69 and $6.16. Meanwhile, older human insulins (like Regular and NPH) are estimated to cost between $2.28 to $3.42. These cost estimations take into account ingredients, production, delivery, and other factors. With this in mind, researchers assert that people with insulin-dependent diabetes could pay up to $133 for a year's worth of analog insulin.

With the actual cost of production in a reasonable range, there's a large gap between those numbers and the amounts that U.S. patients pay — with monthly amounts often landing upwards of that yearly estimate.

What factors contribute to the high costs of insulin?

The cost of producing insulin doesn't account for the high prices, so it's important to understand the additional elements that add to the equation. While this is a complex topic with many factors, a few reasons why insulin prices are so high in this country include:

• Market share and alleged price-fixing. Three companies (Eli Lilly, Novo Nordisk, and Sanofi) hold nearly 90% of the global insulin market. The list prices for insulin from all three of the major manufacturers have risen exponentially, nearly in unison. Given the immense market share these three companies hold, they've been able to work with pharmacy benefit managers (PBMs) to increase the costs of insulin over time.
  
• Patents. Manipulation of the patent system in the U.S. can make it easier for manufacturers to hold onto competition-free production for decades at a time, with minimal to no significant changes taking place in the formulation (meaning there are limited, if any, research and development costs to be considered here).
• No imitation. Unlike other pharmaceuticals that can be accessed in generic formulas with more favorable pricing, insulin isn't able to be easily synthesized into a generic offering. Biosimilars are the closest thing to a generic, and they can be more complicated and expensive to create.

What is a biosimilar?

On March 23, 2020, the Food and Drug Administration (FDA) moved insulin from the "drug" category to "biologic" category within its regulatory framework. This action paved the way for biosimilar and interchangeable insulins.

Biosimilar insulins (also known as biosimilars or follow-on biologics) are designed to be very similar to the original drug they're based on. Basically, manufacturers use a similar manufacturing process to grow a product that works almost identically to the original. This is different from a generic drug, which is chemically synthesized and proven to be the same as the original. The biosimilar is grown through a biological process, which is slightly less predictable than the chemical process due to the variability of living organisms but is otherwise interchangeable with the original reference product.

The initial hope was that introducing biosimilar insulins would help bring more competition to the market, thus bringing down the price overall. So far, this vision hasn't come to pass just yet — but many are still optimistic.

What to know about the impact of insulin costs

The issue of insulin pricing in this country is complex, but the danger of insulin rationing for people with diabetes is clear and simple: Not taking insulin or rationing insulin in any way is extremely dangerous and can be fatal. There are more effective ways to balance the costs of diabetes.

If you're struggling with insulin affordability and have questions about your options, consult your physician to ensure that you're receiving up-to-date information and guidance that's personalized to your medical needs. It's imperative that patients and the individuals and systems who care for them continue to work on understanding the costs of insulin and how to improve affordable access.

Looking for budget information that takes into account the cost of living with diabetes? Explore ways of balancing the cost of diabetes within your monthly budget on the Edgepark Health Insights blog.