So, with this week's news focused on other areas (like the Supreme Court), I thought it might be appropriate to focus on something which is still very broken, yet seems poised to be resolved by good old fashioned market forces: insulin prices.
The U.S. "market" for insulin is bedeviled by the same problem that causes all U.S. prescription drug prices to be so high: Pharmacy Benefit Managers ("PBM's") are manipulating prescription drug discounting behind-the-scenes in order to enrich themselves at everyone else's expense. Most discounts PBM's collect come in the form of cash rebates, which are paid by pharmaceutical companies to secure an exclusive place on PBMs' (and, by extension, insurance companies') preferred drug formularies.
Today, the top three PBM's are vertically-integrated with large healthcare insurance companies — Cigna's Evernorth unit/Express Scripts, United Healthcare Group's Optum and CVS Health's Caremark (the company also owns the health insurance company Aetna) — collectively process more than 77% of all prescriptions delivered to Americans according to the Drug Channels Institute. These PBM's are classic oligopolies, where just a handful of companies dominate a market, arrogate disproportionate profits for themselves, deliver marginal value to justify enormous fees, and exercise undue leverage over other businesses dependent on the market they dominate.
As might be expected, PBM's prefer to operate without attention; yet, when confronted, they forcefully argue that they are invaluable to payers and consumers (even while the data they use to justify their savings is often questioned by lawmakers). Yet the PBM's are notorious for price gouging, which not only impacts patients' wallets and access to prescription drugs, especially on brand-name medications, plus PBM's are also adversely impacting prices on the emerging U.S. biosimilars market. Generic drugs tend to be the one segment of the market where the PBM influence is not completely dominated by PBM's because generics happen to be the segment of prescription drugs not technically subject to PBM rebating ordinarily used to secure formulary placement. Generics generally receive no rebates, which is partially why they are less costly (in addition to having no almost no R&D costs).
The U.S. Federal Trade Commission ("FTC") needs to investigate PBM's and their corporate affiliates (commercial health insurance companies), and should partner with the U.S. Department of Health and Human Services ("HHS") to eliminate extortionate fees and abusive business practices which are so detrimental to consumers and competition. The FTC recently deadlocked on formally studying PBM contracting practices, but such a study still needs to happen. And, once the FTC studies it, the FTC and ultimately, the U.S. Department of Justice will likely need to sue to dismantle the PBM-insurance company oligopoly in an effort to dismantle their monopoly on drug discounts.
I am old enough to remember when they did that to the old "Ma Bell" telephone company monopoly called the Bell System known as AT&T back in 1982/1984. the breakup of the old Bell System was mandated on January 8, 1982, by an agreed consent decree providing that AT&T Corporation would, as had been initially proposed by AT&T, relinquish control of the regional Bell Operating Companies that had provided local telephone service in the country. For the record, the company known as AT&T today is the result of the Baby Bell known as SBC acquiring most of the pieces (excluding the company today known as Verizon; it was previously the regional bell operating companies for the Middle-Atlantic [PA, NJ, NY] and New England states) after the historic break-up. That will take a number of years.
That said, more recently, there are some signs the market has responded with some positive directions.
In 2019, for example, in response to widespread patient complaints over runaway insulin prices, two of the three biggest insulin manufacturers (Eli Lilly and Novo Nordisk) both introduced so-called "authorized generic" versions of their blockbuster prandial insulin varieties. See the Lilly press release "Lilly to Introduce Lower-Priced Insulin", PR Newswire, March 4, 2019, https://www.prnewswire.com/news-releases/lilly-to-introduce-lower-priced-insulin-300805560.html and the Novo Nordisk press release "Novo Nordisk launching additional US insulin affordability offerings in January 2020", PR Newswire, September 6, 2019, https://www.prnewswire.com/news-releases/novo-nordisk-launching-additional-us-insulin-affordability-offerings-in-january-2020-300913167.html for more.
At the time of those press releases in 2019, the two insulin manufacturers told the press they would sell lower-priced versions of some of their blockbuster rapid-acting analogues for half price. At the time Lilly Insulin Lispro https://www.lillyinsulinlispro.com/ and Novo Nordisk Insulin Aspart https://www.nnpi.com/ hit the market in 2020, savvy patients very quickly discovered they could actually buy those insulins for considerably less than half-price, and instead buy them for about 70-75% off the artificially-inflated cash retail price by simply using a readily-available GoodRx coupon.
A year later, Lilly announced (see https://www.prnewswire.com/news-releases/lilly-again-reduces-list-price-of-insulin-lispro-injection-as-latest-change-to-affordability-options-301386117.html) that the company would further reduce the price of Lilly Insulin Lispro by an additional 40%. Today, patients can buy that particular insulin variety for $35/vial even without insurance, although patients do require a Lilly manufacturer coupon from https://www.insulinaffordability.com/ in order to get that lower price. Incidentally, that price is STILL about $5 MORE than what patients in Canada pay for Humalog. I paid $37.79 in Canadian dollars for a vial of Humalog when I visited Montreal in November 2021 -- based on the currency exchange rate at the time, that worked out to $30 U.S. dollars. So, insulin was still cheaper in Canada.
So far, the two companies only offer "authorized generic" (the FDA defines an "authorized generic" as an approved brand-name drug that is marketed as a generic product without the brand-name, or trade name, on the label), "unbranded biologic" (as Novo Nordisk refers to its Novo Nordisk Insulin Aspart) or "non-branded insulin" (as Lilly calls Lilly Insulin Lispro) for just a few of their bestselling prandial insulin products. Most of their other insulin varieties (including basal insulins) currently do not have authorized generics. If the manufacturers are truly committed to the branded/unbranded strategy, every single insulin variety they now sell should also have authorized generic versions. This is a request for Lilly and Novo Nordisk to step up on that; it's been several years. Novo Nordisk boasted to investors in its 2021 annual report that the company's "affordability options" in the U.S. supposedly helped over 1 million "vulnerable" Americans in 2021; just imagine how many could be helped if the company had unbranded versions of every insulin they now sell? For the record, Lilly seems to have concluded that it can achieve sales growth mainly via the unbranded (and un-rebated to PBM's) product, and recently told investors that since being introduced less than 2 years ago, Lilly Insulin Lispro now accounts for 30% of U.S. Humalog sales. Think about that: in just 2 years, nearly a third of U.S. Humalog sales are the un-branded, un-rebated version of the product. Apparently, it's cheaper for Lilly to sell an un-rebated version of the product to patients than it is to bribe PBM's with billions in cash rebates. Especially since Humalog has now lost patent-protection in the U.S.
One biosimilar-maker has so far also introduced both a branded and unbranded version of a biosimilar insulin. That branded/unbranded strategy was necessitated by the PBM demand for cash rebates needed to place the biosimilar on drug formularies. Viatris which sells biosimilar insulins manufactured by Biocon (Biocon recently announced the company was acquiring all of Viatris' share of their U.S. joint venture) of Sanofi U-100 Lantus which is branded as Semglee. Recognizing that it is a biosimilar, an unbranded version called simply Viatris Insulin Glargine also sells -- reportedly at 65% less than Semglee sells for -- in U.S. pharmacies. The two (Viatris/Biocon) now have a biosimilar version of Novolog/U-100 insulin aspart currently pending FDA approval, as well a biosimilar version of Sanofi's U-300 insulin glargine which Sanofi calls Toujeo (also still pending FDA approval). To my knowledge, they do NOT currently have a biosimilar of Humalog pending approval at this time. The reason for the branded/unbranded strategy is so the biosimilar-maker can also compete in PBM rebates which mainly benefit PBM's and the insurance companies which own them. A heavily-rebated product could achieve substantial sales overnight by landing the biosimilar on a PBM formulary. That happed last year, when Cigna's Express Scripts announced it was dropping Sanofi Lantus from its formulary and adding Semglee instead. The unbranded version of their products also enables the company to sell a less costly product as well. But, as might be imagined, it has caused widespread confusion among patients and pharmacists alike.
In September 2019, JDRF CEO Aaron Kowalski was interviewed by the American Journal of Managed Care ("AJMC") about the organization's position related to insulin pricing legislation (see https://www.ajmc.com/view/jdrfs-kowalski-sees-hope-in-bipartisan-support-for-insulin-pricing-reform for the article), and he told AJMC that JDRF's official position was that action was needed not only by Congress, but also by insulin makers, health plans, and the executive branch. The most important goal: ending a crosspayment scheme that many blame for potentially deadly insulin price increases. Behind the scenes, JDRF helped persuade Civica Rx to enter the biosimilar insulin space (more in a forthcoming paragraph).
Several (not ALL) insulin manufacturers have made moves to lower the list price of insulin by simply bypassing the PBM rebate mess completely. Still, in the current system, drug companies give discounts to pharmacy benefit managers and health plans, while increasing prices at the pharmacy counter. Lilly offers a manufacturer coupon for patients does enable them to buy Lilly Insulin Lispro at a cost of $35/vial. But Novo Nordisk, Sanofi and Viatris/Biocon have all failed to do the same. And, Lilly only offers the lower prices on Lispro and some old-school biosynthetic insulin varieties, but not on its Basaglar or a second glargine biosimilar to be branded as Rezvoglar, nor on its newer Lyumjev faster prandial insulin.
So with that said, the March 3, 2022 announcement from Civica Rx https://www.civicainsulin.org/ that the nonprofit drug company plans to (in collaboration with the JDRF and the Helmsley Charitable Trust to name a few) sell biosimilar versions of insulin glargine, aspart and lispro (possibly as early as 2024 assuming it receives regulatory approvals in a timely fashion) at one low, transparent price for all, basing the prices on the cost of development, production and distribution. When those biosimilars hit the market (planned for 2024), the Civica Rx insulin varieties will sell for no more than $30 per vial and no more than $55 for a box of five prefilled pens. The Civica Rx press release can be read at https://www.businesswire.com/news/home/20220303005321/en/Civica-to-Manufacture-and-Distribute-Affordable-Insulin/. The insulin will actually be cultured offshore in bioreactors at partner GeneSys Biologics Pvt. Ltd. facilities in Hyderabad, India. The insulin then will be shipped (in bulk) to Civica Rx's new 140,000 square-foot "fill & finish" facility, now being built in the vicinity of 2820 North Normandy Drive in Petersburg, VA 23805 (just south of the state capital Richmond) where the insulin will be put into vials and pens, with mandatory FDA labeling and placed into boxes, and then shipped to pharmacies nationwide.
Both JDRF and Civica Rx published information documents about the arrangement. I combined them into a single document which can be seen below, or by visiting HERE.
The Civica Rx move stands to fundamentally disrupt what could arguably be called a price-fixing racket (or ponzi scheme) to fix insulin prices at artificially-inflated prices. I suspect we may see Lilly and Novo Nordisk respond by correspondingly reducing their own insulin prices, or to simply stop making the now out-of-patent prandial insulin analogue products and simply retire them. I've experienced the manufacturers "retire" many insulin varieties I once used. Right now, they already have newer, marginally-faster products (NN Fiasp and Lilly Lyumjev) which are patent-protected, and they could theoretically just sell authorized generic versions of those products instead. We could also see biosimilar-makers respond with price reductions of their own when they receive FDA approval on their biosimilar versions of aspart and U-300 glargine now pending approval (right now, Biocon and Lannett have ones pending approval which will be made in Malaysia and China, respectively).
In that scenario, the losers will be PBM's which have been manipulating prices behind-the-scenes to enrich themselves. The PBM's really deserve that. No one should worry about the PBM's. They'll just make up for it on other drug categories.
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