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How to Solve the Problem of Insulin Costs

Dec 3, 2016

David Kliff, of the Diabetes Investor newsletter, attempts to explain why the cost of insulin is so high and how to solve the problem.

OK, it’s time to put up and do what no one else seems capable of doing.  Rather than complaining, finger pointing, or pontificating, here are my suggestions for solving this problem. Now to be clear, I have no clue whether they will work or not. My goal is simple: refocus the debate from who’s to blame to how to solve the fricking problem. So here goes:


Just to be crystal clear, my main goal is to lower the out-of-pocket cost of insulin.

  1. Transparency

Since everyone seems to think that insulin companies raising prices in lockstep is part of the problem, and insulin companies counter that list price is not the real price, let’s get everything out in the open. Require that insulin companies disclose the following information – list price, discounts offered, and rebates given. Let’s have them do this on a per-payor basis. For example, is United Health getting one deal while Aetna is getting another?

Have the payors disclose the number of patients covered under each of their various plans. This will reveal just how many patients are impacted. This will tell us how many are covered under high deductible plans, which is part of the problem. This should reveal whether this is a big problem or not.

  1. Retrospective Analysis

Claims data is used for other analyses; why not one that looks at the correlation between the net effective selling price of insulin and outcomes? Now to be clear here, I am not a statistician and can barely use a calculator correctly, but there are plenty of very smart people who can figure out whether there is a correlation between cost and outcomes.

  1. Means Testing

This will likely be controversial, but would it not make sense that the less a patient earns, the less they pay for insulin? Again, it’s way above my pay grade to figure out exactly who qualifies for what, but if the government can and does subsidize health insurance premiums based on various factors, why can they not extend this sort of subsidy to insulin-using patients?

  1. Benefit the patient, NOT the government

Let’s say the insulin companies are found guilty of price collusion: they should do what they did to tobacco companies and have whatever fines are levied help offset the cost of insulin subsidies. This will benefit not just insulin-using patients, but all the taxpayers who do not have diabetes. I’m sorry, but I just don’t believe that those patients who don’t have diabetes should be burdened with higher taxes to subsidize the cost of insulin.

  1. Streamline the approval process for biosimilars

It’s no secret that the two most popular short-acting insulins are about to lose patent protection. Why not make the path for a biosimilar easier? Based on what we have seen already in the long-acting insulin market, this should help drive costs even lower.

  1. Tie prices to outcomes

This also is controversial, but the patient needs to be held accountable, so why not incentivize them? Why not say that the more effectively they manage their diabetes, the less they’ll pay for insulin? Once again smarter minds than mine can establish which metrics are used here, but it does make sense. Unlike everyone else, I acknowledge that the patient does bear the ultimate responsibility for effectively managing their diabetes; high out-of-pocket costs or not.

  1. Education

I hate to get on my soap box here, but even if insulin was given away for free, it means nothing if the patient does not use it effectively. This will not happen with just way-cool whiz-bang technology or apps, although they can be part of the solution. Why not make patient education a real priority, reimbursable event? I’ve said it before and I will say it again, because hundreds of studies have proven this: the most effective tool for improving patient outcomes is patient education.

As I stated when we began this piece, I have no idea whether these ideas will work or not. I do believe that transparency would go a long way towards holding everyone accountable — not just the insulin companies but payors, PBM’s (pharmacy benefit manager), etc. Funny thing how when the light shines on something it’s seen in a much clearer manner. They do this for executive compensation, so why not see what’s going on here? This will scare the insulin companies, payors and PBM’s, but they will, as they did with executive compensation disclosure, deal with it.

Let’s remember the goal here: I am not out to demonize insulin companies, payors or PBM’s. I am not out to exact revenge. What’s important here is that the PATIENT pays less out of pocket for the drug that keeps them alive. That, when used effectively, prevents them from developing costly complications that are wreaking havoc on our healthcare system. Let’s do everything we can to not just make this life-saving drug more affordable, but also used effectively.

IF — and this is a HUGE if – this were to happen, everyone wins. The healthcare system wins with lower costs, employers win with lower costs, the insulin companies win too, as more patients will be using insulin; but most importantly the patient wins, which to me is all that matters. I welcome all suggestions on what can be done to solve the problem. Enough already with all the finger pointing, placement of blame and useless witch hunts. It’s time to get beyond all this and fix the fricking problem.

If you have comments on this article, contact publisher@diabetesincontrol.com

David Kliff , Publisher, Diabetic Investor – www.diabeticinvestor.com