Hundreds of bills are introduced each session affecting seniors. While most do not become law, for better and worse, some deserve special focus. One newly arrived offers a lifeline to 100 million diabetic and pre-diabetic Americans, 30 million with type-1 diabetes.
The problem? Insulin prices are going through the roof. Without insulin – self-rationed by desperate Americans who watched prices triple between 2012 and 2016 – death is a certainty. That is why the “Insulin Price Reduction Act” – introduced by Senators Susan Collin (R-ME), Jeanne Shaheen (D-NH), Kevin Cramer (R-ND), and Tom Carper (D-DE) – is a lifesaver.
While many suffer Diabetic Ketoacidosis (DKA) and are admitted to a hospital, admission is expensive. More often, those who cannot afford insulin start rationing, often receiving insufficient insulin to survive – and die. Underreported, the issue warrants the attention it is getting.
Trends are sobering. Insulin is manufactured in the US by three companies, sold to a tight clutch of wholesalers and middlemen – secretive about pricing. When Congress recently sought information on pricing, they were only partially accommodated.
While President Trump has taken on prescription drug manufacturers, demanding greater transparency – insulin is different. The industry is defined by tight relationships, recurring insulin patents and layered rebates. The consumer’s visibility into price-setting is minimal.
From a macro-economic perspective, the pricing structure is not just complex. It appears out of sync with free market principles. Based on congressional reports, non-profit studies, and a top view of the market, the average observer comes away with the opinion that it is convoluted.
By all appearances, the insulin market has unexplained rigidities. There appear no obvious reasons for a near tripling, for example, of prices over a four-year period, imperiling access to life-saving insulin by dependent diabetics.
Why are there only three US manufacturers, 100 years after insulin was discovered? What are the barriers to entry which dissuade other manufacturers? Why is the market not alive with cost-saving generics – as in the case of other drugs?
More, why is pricing
not by established type and volume? Why
a labyrinth of hard-to-track rebates?
Why constant changes in product definition? Why limited availability for some types of insulin,
creating incentives to buy other types? Where is the typical price competition
which should be lowering cost of insulin to end-users?
Stepping back several paces, why do insulin prices – as reported by Congress – appear to climb in lockstep? A congressional report dubbed this “shadow pricing,” but what is behind it? Are prices informally coordinated? The congressionally published step-chart of rising insulin prices appears synchronized – why? As prices rise, dependent diabetics appear to have no control.
While natural monopolies and oligopolies are legal, there should never be any intent to corner a market with anti-competitive practices. There may be none, but what explains the rapid, seemingly synchronized rise in insulin prices? Even Congress seems unclear.
Perhaps this prevailing confusion – and its impact on the day-to-day lives of diabetics – is why a combination of Republican and Democratic Senate and House members hope to change how insulin is priced. They are pressing for increased transparency, greater availability, affordability and an end to rationing, worry about living and dying based on price.
Parallel trends suggest this legislation is timely. A 2018 Centers for Disease Control and Prevention (CDC) report, entitled “Trends in Diabetic Ketoacidosis (DKA) Hospitalizations,” noted “DKA is a life-threatening complication of diabetes …” and “hospitalizations for DKA increased in the United States during the 2009-2014 period among all age groups … the highest among persons over 45 years.” The rate was 6.3 percent annually.
Is it not odd that as insulin prices shot up, hospitalizations for lack of insulin also did? And by six percent a year? Could it be that diabetics were unable to afford expensive insulin, rationed more, and ended up in the hospital? The number of annual diabetes deaths is hard to know, but the insulin crisis is real – and affects at least 30 million Americans.
What else is worth knowing? Only two-thirds of Americans with diabetes know they have it. As diagnosis improves, so will the percentage diagnosed – and needing insulin. The number of those afflicted with type-1 diabetes is also rising, jumping 20 percent between 2000 and 2008.
If more Americans are admitted for DKA, hospitalization costs will rise. CDC reports one-third of those admitted for DKA require readmission, and risk of death rises three times afterward.
The ultimate question is what should be done at a time when the CDC reports 9.4 percent of the US population needs diabetic treatment, another 20 percent are pre-diabetic. America’s population is aging – which raises the propensity for diabetes.
Today, only four percent of those under 44 are diabetic, and only 17 percent between ages 45 and 64 are. But over 65, that number jumps to 25 percent. Rates vary by age, with more men than women diabetic but the need for affordable insulin is not going away – it is growing.
In 2015, diabetes was the seventh leading cause of death in the US. Getting ahead of the insulin curve – not further behind – is smart policy, whatever your politics. That is probably why Republicans and Democrats have produced the “Insulin Price Reduction Act” – to restore market forces, transparency, and insulin availability. This bill aims to get ahead of the demographic curve, stop economic distortions, increase competition, lower prices and assure availability.
Desperation attends not having insulin, yet the disease is preventable and treatable, if we act as one nation – and focus on solutions. In a time of division, this bill is sensible and workable.
That is why the smart money is on passage. While Congress and the Administration press for answers from industry, Americans – many with diabetes – just want affordable insulin. Among hundreds of bills introduced each year, few become law. This may be one that beats the odds, allowing many Americans to do the same.