Americans subsidize insulin for others
Updated: Jan 2, 2022
The cost of insulin is skyrocketing in the USA.
The cost of insulin has skyrocketed over the last decade, as anyone involved in the diabetes business knows. According to one authoritative study published in 2018 by the American Diabetes Association’s “Insulin Access and Affordability Working Group,” the price of insulin in the United States tripled between 2002 and 2013.
Despite the working group’s best efforts, however, they could not figure out why, precisely, the costs of insulin, a life-saving drug, were increasing so rapidly in this country. The price consumers pay is set by opaque negotiations between insulin manufacturers, health insurers, pharmacies, and Pharmacy Benefit
Managers (PBMs), private companies that serve as go-betweens. As the working group noted on pp. 1303 of its report, “After research and stakeholder discussions, it is still unclear to the Working Group precisely how the dollars flow and how much each intermediary profits. In the vast majority of cases, discounts and rebates negotiated between PBMs and manufacturers and between PBMs and pharmacies, which affect the cost of insulin for people with diabetes, are confidential. Even PBM clients are not privy to many of these negotiations, nor do they know the net price obtained by the PBM for insulins.”
As insulin prices soar, many Americans with type 1 or type 2 diabetes are traveling to Canada or Mexico to buy the same insulin at a tenth of the price. According to one 2015 study published by an agency of the US government, about one million Californians travel each year to Mexico for healthcare, including access to cheaper insulin. According to a 2019 article published in Kaiser Health News, Americans can buy a three-month supply of insulin in Mexico for $600 USD, the equivalent of which would have cost $3,700 in the US. In Quebec City, similarly, a box of insulin pens costing $700 in the US went for only $65. The more one American mother of a child with type 1 diabetes traveled “with her family, the more they realized how inexpensive insulin was everywhere except in the United States. In Nuremberg, Germany, she could get that $700 box of insulin pens for $73. The same box was $57 in Tel Aviv, Israel, $51 in Greece, $61 in Rome and $40 in Taiwan.” All of these countries have price controls on drugs such as insulin, preventing the medicine from being sold at the outrageous prices paid by US patients.
Many of the same insulin manufacturers are involved in both the US and non-US markets. This means they are selling insulin cheaply outside the US, but charging much more in this country, forcing American consumers to subsidize the rest of the world’s insulin purchases. Not all of the profits are accused to insulin manufactures, of course, as so much money is lost in the shuffle to intermediaries operating in the opaque US healthcare supply and pricing system. Someone is making a lot of money off the US consumer, but it’s not entirely clear who.
My son has Type 1 diabetes and needs three vials of insulin a month to survive. For now, we are on an excellent health plan from my former employer. Once our 18-month COBRA extension comes to an end, however, I fear that we are in for a rude shock. At that point, it may make sense to start traveling once every few months to Mexico or Canada to pick up our supply of insulin, as well as any other medications we may need. The savings will likely offset the cost of travel.