Eli Lilly and Company, a drugmaker, announced Wednesday that it will significantly lower the sticker price of several of its lifesaving insulin drugs that diabetic patients use and whose prices Lilly repeatedly raised in the past.
To calm out outcry over excessive drug prices, Lilly said that it would limit at $35 per month what patients pay from their own pockets to the company for insulin. This was despite the fact that the company already had such an insurance policy.
Lilly is a major contributor to the soaring cost of an injection that millions depend on to maintain their blood sugar levels. This announcement comes as drug companies are under increasing pressure from politicians to curb what critics and lawmakers call abusive profiteering.
For example, over nearly three decades Lilly has increased the list price of Humalog, its most popular insulin product, by more than 1000 percent.
Many patients have had to reduce their insulin supply due to the high insulin costs incurred by Lilly and other drug company -- out-of pocket payments for certain high-deductible plans can exceed $1,000 per month.
President Biden lashed out at drug companies last month in his State of the Union address. He stated that "Big Pharma has been unfairly billing people hundreds of dollars, $400-500 a month and making record profits."
Wednesday's Lilly announcement was hailed by Mr. Biden as "a big deal" and "a time when other manufacturers should follow suit."
Lilly hailed its decision as a victory in favor of patients. However, Lilly's actions are actually more limited than what appears at first glance. Privately insured patients will have greater access to Lilly's $35 limit on out-of pocket payments. However, the Wednesday policies will have little or no effect on how many people actually pay.
Lilly was already charging insurers a fraction of its expensive list price, when taking into account rebates and discounts.
Lilly's chief executive David Ricks acknowledged Wednesday in an interview that there was no guarantee that insurers would pay less for Humalog despite the fact that he had expected that to happen.
The lower list prices will only be applicable to older insulin products by Lilly.
Stacie Dusetzina from Vanderbilt University School of Medicine, said that "I don’t think these prices look quite as impressive when you first see them." It doesn't necessarily mean Lilly is taking a huge financial hit to do so.
Over 30 million Americans suffer from diabetes. More than 7 million of these people rely on insulin. Patients without insulin can either die or suffer serious health consequences, including kidney failure and amputation.
Lilly's price reductions follow years of pressure from Washington officials and state capitals, but also from a well organized community of insulin-loving patients who have pleaded for insulin to become more affordable.
Lilly's announcement comes after a Medicare patient change went into effect in the beginning of this year. Congress set a $35-per-month limit on insulin copayments for Medicare patients last year under the Inflation Reduction Act.
Lilly stated that it would reduce the list price for Humalog by 70% in the final three months of the year.
A vial Humalog, which is often used by patients to go through many vials each month, has a price list of $275. Lilly plans to lower that number to $66. According to the company's website, the average price Lilly charged for a vial Humalog or its generic variant in 2021 was $43, after rebates and discounts.
Humalog's $66 new list price will be more than three times the original 1996 price. (Lilly stated that it will also reduce the price of Humalog's generic version and another insulin product, Humulin.
Lilly stated that one of its Humalog products, a prefilled insulin pen with a $530 list price, would not see its price drop. Basaglar, a long-acting insulin product that was approved for use in 2015, would not be reduced.
Lilly's announcement does not necessarily mean that everything is resolved or the situation has improved, said Elizabeth Pfiester. Elizabeth is a diabetic and the executive director at T1International. This group has been advocating for a federal limit on the prices of insulin.
She said, "This is good news to some, but regulation is needed to ensure that companies don't change their minds and raise the price."
Patient advocates also advocate for legislation to require insulin manufacturers in the United States to charge less than elsewhere. Insulin costs are much lower in countries where government negotiates prices directly with drug makers.
Ricks stated that Lilly opposed "price setting by the federal government," and that his company and other drug manufacturers need incentives to invent and create better insulin.
When asked if Lilly would prohibit further price increases on Humalog or other products it announced price cuts Wednesday, Ricks declined to answer. He stated that the company has not raised the price of its insulin products' list prices since 2017.
Since insulin was first invented, the price of lifesaving products has been a sensitive topic.
Frederick Banting, who helped to create the substance over 100 years ago, refused to sign the first patent application. He felt that it would contradict the Hippocratic Oath he had taken in his capacity as a physician. In the hope of making the product as accessible and affordable as possible, the inventors quickly transferred the patent to University of Toronto for $1. Famously, Mr. Banting said that "Insulin doesn't belong to me." It belongs to the whole world.
This is not the way it ended up. The three major insulin producers -- Novo Nordisk, Sanofi, and Lilly -- have steadily raised their prices and replaced older products with more expensive versions in recent years. The three companies together control approximately 90 percent of America's insulin market.
According to researchers, a vial insulin could be manufactured for less than $7 and sold at a profit of less than $9. Responding to a Senate inquiry about high insulin prices in 2019, Sanofi admitted that it cost less than $2 to produce one of its insulin pen, which was at the time listed at $75.
Representatives from Novo Nordisk and Sanofi would not comment on whether they would follow Lilly's steps, but they said that they have programs that substantially limit out-of-pocket expenses for most patients.
Christine Hauser, Sheryl Gay Stolberg and others contributed reporting.