Under pressure from politicians and patient groups, diabetes pharmaceutical giants have been taking action in recent weeks to limit the effect of rising insulin prices on patients.
On Tuesday, Eli Lilly and Co. announced that, starting in January, patients who pay full retail price for insulin will be able to access a 40 percent discount. Earlier this month, Novo Nordisk said it would limit its price increases on insulin to a single digit percentage per year.
The Eli Lilly discount program will only help people without insurance or who are in the high-deductible phase of a health plan. But the action is part of a widening public discussion among drug companies in response to scrutiny of its pricing policies.
Insulin prices have increased well above inflation over the last two decades. A version of insulin with a list price of $17 a vial in 1997 is priced at $138 today. A two-decade-old insulin that launched at $21 a vial has been hiked to $255.
Some industry leaders have argued that unless pharmaceutical companies address problems of access and affordability, they may face government actions that don't benefit them. President-elect Donald Trump recently said that he plans to intervene, although the details of what he might do are not clear.
“I’m going to bring down drug prices,” Trump told Time. “I don’t like what has happened with drug prices.”
Eli Lilly said that it decided to offer the discount program after months of meeting with leaders in the patient community. People will be able to order the discounted drug through a company called Blink Health, which operates a website and app.
"We understand the burden people face when paying full price for insulin," Mike Mason, vice president of Lilly Diabetes said in a statement.
Lilly makes several insulin products. Its 20-year-old insulin, Humalog, has increased in list price from $21 a vial in 1996 to $255 today. Last month, Sen. Bernie Sanders (I-Vt.) and Rep. Elijah E. Cummings (D-Md.) requested an investigation into the lockstep price increases of competing insulins, suggesting the companies might be coordinating on pricing.
Insulin companies have denied any collusion and Lilly has argued that despite list price increases, the rebates it grants have washed out the effect of price increases since 2009.
The companies have also taken the opportunity to highlight the convoluted system of middlemen and reimbursement systems that help determine how much a drug costs for insurers and patients, arguing that to focus on the steady list price increases that have become standard practice is misleading.
"The health care system is incredibly complex, and we hope this program is a first step that will drive more thinking and innovative solutions for people with diabetes," Enrique Conterno, president of Lilly Diabetes said in a press release. "A more extensive solution will require leadership and cooperation across many stakeholders, including manufacturers, pharmacy benefit managers, insurers and patients. We're committed to seeking additional solutions so that everyone who uses insulin has reasonable access."
Health insurers hire pharmacy benefit managers to negotiate secret rebates on their behalf. Patients typically pay a portion of the drug price through a co-pay or coinsurance. That is the backbone of how most people with insurance have historically gotten access to their drugs. With a shift toward high-deductible plans and a wave of criticism by politicians, drug companies have shown growing impatience with the system, as it has become clear that some patients are being directly affected by list prices.
Novo Nordisk's U.S. president, Jakob Riis, said on his company's website that the drug pricing system needs to be transformed.
"As the manufacturer, we do set the 'list price' and have full accountability for those increases. However, after we set the list price, we negotiate with the companies that actually pay for the medicines," Riis wrote. "All in all, we’ve simply tried maintaining a profit margin that has been dropping significantly since health policy changed in the U.S. With that, we also need to work together to improve the system and create more transparency."