Insulin Is Way Too Expensive. California Has a Solution: Make Its Own.
One in six Americans with diabetes (like Laura Marston, pictured here in 2016) who use insulin say they ration their supply because of the cost. Jorge Ribas/Washington Post via Getty Images
Insulin’s cost crisis is spurring states to pursue a public version of an essential medication.
by Dylan Scott
There are few better emblems of the failures of the US system of medical care than its inability to consistently provide insulin to Americans who need it.
The drug was discovered 100 years ago, and it provides essential and ongoing treatment for millions of people living with diabetes, one of the most common chronic diseases in the country. And yet one in six Americans with diabetes who use insulin say they ration their supply because of the cost. Some people end up spending nearly half of their disposable income on a medicine they must take to stay alive.
Though insulin generally costs less than $10 per dose to produce, some versions of the drug have a list price above $200. This is in part because, in the US, a warped market has allowed three companies to dominate the insulin business.
But if some states have their way, that may be about to change.
With California leading the way, a handful of states are considering trying to disrupt the market for essential medications, starting with insulin. The plan would be to manufacture and sell insulin themselves for a price that is roughly equivalent to the cost of production.
Their premise: Take away the private market’s profit motive and maybe states can deliver affordable insulin as a wholly public enterprise, run by civil workers, that does not need to make money. Because these states buy a lot of drugs too, through their Medicaid programs and the health plans for government workers, they would also reap the rewards if those drugs are cheaper.
“If we can drop the cost of insulin, we don’t have to make money on selling it. We get the savings as a purchaser,” said Anthony Wright, executive director of Health Access California, which has been a leading advocate of the public insulin plan and provided guidance to state legislators and Democratic Gov. Gavin Newsom’s office.
As his colleague Chris Noble, who has Type 1 diabetes, put it: “Just providing an actual at-cost alternative has the potential to really be disruptive for the pharmaceutical industry.”
States have become more ambitious in their policies for tackling the insulin affordability crisis because the scale of the problem continues to grow and the federal government seems capable of taking only limited action to address it. The price of some insulin had grown by 1,000 percent over the past 20 years, far outpacing inflation. And the number of Americans with diabetes is projected to grow to nearly 55 million by 2030, from the current figure of roughly 37 million.
Medicare, the federal health insurance program for seniors, is about to institute a $35 per month cap on insulin costs for its beneficiaries, a provision of the Inflation Reduction Act that Democrats passed last year. But, because of the Senate’s arcane rules, they could not establish the same cap for private insurance, which covers more than half of Americans. During his State of the Union address, President Joe Biden called for Congress to cap prices for all, but in the short term, state action seems more likely than federal.
A few states have passed their own out-of-pocket caps, but even a small cost burden, as little as $10, can discourage people from taking necessary medications. States have also sued the drug companies that currently produce insulin, asking the courts to intervene and stop the unfair market practices that they say inflate the drug’s price.
But those are half measures, chipping away at the high cost without fundamentally altering the market that has allowed a drug, which costs a few dollars to produce, to be sold at an enormous markup. A publicly produced insulin — a public option, you might call it — would be a consequential innovation. And if successful, it could open the door for more public projects to produce essential medications more cheaply than the private sector.
“I think there’s a window open now because federal action has been so limited,” Dana Brown, who has developed ideas for public pharmaceutical production in her work at the Democracy Collaborative, told me.
Why insulin is so stubbornly expensive
Insulin was discovered in 1921 by four men: Frederick Banting, James Collip, John Macleod, and Charles Best. They extracted the hormone insulin from the pancreas of a dog and gave it to another dog with diabetes, to see if it could control the second animal’s blood sugar as a substitute for the insulin it would normally make on its own. They then quickly tested the extract on a human, a young man who had Type 1 diabetes, and found that it was successful in managing blood sugar in a person too.
It was an enormous breakthrough: Before the discovery of insulin, people with Type 1 diabetes could expect to live less than three years. The inventors recognized the significance of their discovery and sold the patent for insulin to the University of Toronto for $1, with the hope of making it as easily available as possible.
“Insulin belongs to the world,” Banting reportedly said.