After considerable government pressure to reduce insulin costs in the US, Eli Lilly recently slashed its prices by as much as 70 percent, followed by competitors Novo Nordisk and Sanofi. While these steps to make insulin more affordable, together with the US Medicare insulin price cap that came into effect in January under the Inflation Reduction Act (IRA), were applauded by patient groups, many argue that insulin prices are still inflated for a country with the highest rate of diabetes prevalence among developed nations. We look at the key facts around the US insulin pricing debate.


There are incentives for everybody, manufacturers included, to maintain the status quo, which really does reward higher list prices and competing on net price, which is what we’ve been doing for a decade or so

David Ricks, Eli Lilly Chairman and CEO


1. The US Leads in both Diabetes Prevalence and Insulin Prices

More than 29 million Americans have some form of diabetes and according to the American Diabetes Association diabetes care accounts for a quarter of all US healthcare spending. While insulin is not the only cost for diabetes patients, some 8.4 million rely on it to regulate their glucose levels.

Because patients in the United States are not covered by a universal healthcare programme, affordable access to insulin varies greatly across the population with many patients on private insurance plans paying hundreds of dollars a month for the drug. This has caused a situation where patients unable to meet the high costs, have risked their health by rationing insulin.

Overall, insulin prices in the US are higher than in other countries. A 2020 comparison study of insulin prices in different countries showed that the unit cost was nearly USD 100 in the United States while it was USD 6.94 in Australia, USD 12 in Canada and USD 7.52 in Britain. Moreover, prices have exploded in recent years. For most beneficiaries of Medicare (the federal health insurance for over 65s),for example, the average out-of-pocket cost per insulin prescription was USD 54 in 2020, an increase of almost 40 percent since 2007, a study from the Kaiser Family Foundation found.


2. IRA Policies Have a Limited Impact

While the Inflation Reduction Act limited monthly cost-sharing for insulin to no more than USD 35 for Medicare beneficiaries, it does not extend these savings to patients who are not on Medicare, or to those who are uninsured, some 30 million Americans. Additionally, patients who have to pay a high deductible on their private insurance plans will not benefit from IRA reductions. The costs for patients with this type of insurance plan are also tied to a treatment’s list price.


3. The Peculiarities of the American System Contribute to Rising Prices

For many, including the pharmaceutical industry, the fundamentally flawed US drug pricing system has caused insulin prices to become inflated. With pharmacy benefit managers (PBMs), the middlemen who work with insurance providers, negotiating discounts paid as rebates from pharma companies and pharma companies raising their prices in response, patients are the ones who suffer.

When Eli Lilly decided to cut its Humalog and Humulin insulin prices earlier this month, lowering the price of its most commonly prescribed diabetes treatments by 70 percent and capping the out-of-pocket cost for patients with insurance at USD 35 per month, David Ricks, company chairman and CEO, presented the move as a way to work with a flawed system to improve patient access. “There are incentives for everybody, manufacturers included, to maintain the status quo, which really does reward higher list prices and competing on net price, which is what we’ve been doing for a decade or so,” Ricks admitted. “But at some stage, that system has become so broken for patients, because they’re bearing the cost in their deductible phase and other phases based on list price, that it’s no longer acceptable,” he added.

In fact, in 2021, a US Senate committee reported that Lilly was unwilling to lower its insulin prices, fearing PBMs would object because the reduced prices would limit their fees and reduce their capacity to meet the rebates promised to clients.

Ricks rallied for the rest of the US healthcare ecosystem, including its competitors and policymakers to follow Lilly’s lead. “We need the rest of the healthcare system to catch up and step up with us to eliminate the existing barriers to insulin access and affordability,” he said at the time. Other major insulin makers Novo Nordisk and Sanofi, followed suit and announced insulin price cuts.

Sanofi said it had made previous efforts with its Lantus insulin product but had faced difficulties inherent to the system. “We launched our unbranded biologic for Lantus at 60 percent less than the Lantus list price in June 2022,” Olivier Bogillot, Sanofi’s US general medicines chief, said in the release. “Despite this pioneering low-price approach, the health system was unable to take advantage of it due to its inherent structural challenges.”

According to some, however, the three insulin makers have always been more or less in agreement over prices. “They’ve been historically raising their list prices for their respective products in lockstep with one another,” Dr Jing Luo, a professor of medicine at the University of Pittsburgh, said. “There hasn’t been a lot of pricing pressure.”


4. There Is More to Insulin Makers’ Price Reductions than Patient Access

With respect to the recent price cuts, pharma companies are not motivated solely by the perspective of improving patient access. While there has been pressure from the government to reduce insulin prices in the US, something president Joe Biden reiterated in his recent State of the Union speech, insulin makers have other incentives.

In fact, the three companies who have announced insulin price cuts are doing so in advance of the new Medicaid (the federal and state program that covers patients with limited income) rules that will come into effect next year to penalize pharmaceutical firms for raising their prices faster than inflation. According to the Washington consulting firm, Veda Partners, the new regulations could result in as much as USD 430 million in charges to Lilly, for example, fees the company will avoid by lowering its prices now.

While Insulin represents about USD 2 billion of Eli Lilly’s annual sales, these sales are declining as the patents on the company’s insulin products expire. The announced price cuts apply to the company’s older products while for newer insulin products, Lilly will continue to aspire to premium prices.


5. Patient Groups Are Optimistic yet Sceptical

We are encouraged that all of the major manufacturers have taken steps to make insulin more affordable, but the fight is not over

Lisa Murdock, American Diabetes Association

While patient advocate groups welcomed the price cuts, many are still sceptical about how consequential they will be in the long run. “It is a win that lower cost options will be available to patients using these insulins,” said Elizabeth Pfiester, founder and executive director of the advocacy group, T1International. “Lower insulin list prices can impact everyone, regardless of insurance status. However, we know that [Insulin] Lispro has historically not been available in all pharmacies or on all formularies. As with any move like this from one of the ‘big three,’ we are optimistic yet sceptical.”

“We are encouraged that all of the major manufacturers have taken steps to make insulin more affordable, but the fight is not over. We will continue advocating for efforts in Congress and states across the country to ensure insulin is affordable to everyone with diabetes who relies on it to survive,” said Lisa Murdock, American Diabetes Association’s Chief Advocacy Officer.

David Kliff, a writer for The Diabetic Investor newsletter, claimed that the people who will be helped by the move to lower list prices are a minority. “This argument that, if they lower the list price that it would change what someone pays out of pocket, is only true if a patient pays something based on the list price,” he said.

In addition, the high cost of insulin is not the only expense those living with diabetes have to shoulder. “Lowering the cost of insulin is only the first step in addressing obstacles to diabetes management,” says Serena Valentine, executive director of the health and wellness non-profit CORE Initiative. Regular doctor visits and diet management to keep glucose levels stable imply additional costs.