Why diabetes drugs keep getting more expensive
Credit: Francis Ying, Julie Appleby, Stephanie Stapleton, National Public Radio
The ever-increasing cost of diabetes drugs and products such as insulin, Glucagon, GlucaGen, glucose test strips, and Victoza means that many people with diabetes cannot afford the diabetes medicines and healthcare products they need to stay alive. Patients ration insulin, buy test strips on gray markets or simply forgo expensive treatments. The unaffordability of diabetes drugs and products is creating a health-care disaster in this country.
Diabetes drug and product manufacturers are partly to blame for the unaffordability of diabetes care. But they are not acting alone. While manufacturers set a drug’s price, known as the list price, another player in the prescription drug supply chain is to blame as well.
Pharmacy benefit managers (PBMs) are supposed to manage formularies (lists of covered drugs and pricing tiers) for health plans and make sure prices are controlled. They also negotiate rebates with drug companies for buying drugs in bulk for their clients, which are insurers and self-insured employers, as well as union health plans.
However, while PBMs claim they lower drug prices, they have used their role as gatekeepers in the pharmaceutical supply chain to extract larger and larger rebates for themselves and, in the process, they have driven drug prices up. Manufacturers raise list prices to satisfy PBMs’ demands for rebates to secure their position on drug formularies.
Under this pricing scheme, the more expensive a drug, the fatter the “rebates” and other “fees” the PBM can extract. And by raising the list price, the manufacturers ensure that their profit margins are not impacted negatively — and may be greatly enhanced — by the hikes in list price and payments they are making to the PBMs to ensure sales to vast pools of health-plan participants.
The diabetes drug and product manufacturers and the PBMs are gaming the system and causing tremendous harm to diabetes patients. Instead of competing on price to gain access to the PBMs’ drug formularies, the diabetes drug and product manufacturers are competing on the size of the kickback paid to the PBMs while lining their own pockets with greater profits.
Left out of the picture are patients who are forced to pay higher and higher prices for diabetes drugs and products that are affordable in other countries. It is a cycle of corporate greed and abuse that imperils the lives of millions of Americans.
Facts About Diabetes and Drug Costs in America
- Nearly 30 million Americans live with diabetes, and another 86 million suffer from prediabetes, meaning that they have a significant chance of developing Type 2 diabetes.
- The condition is a significant source of health-care costs. One in five health-care dollars nationwide is spent caring for people with diabetes.
- There are 6 million people with diabetes who depend on insulin. (See http://care.diabetesjournals.org/content/36/4/1033.full-text.pdf.)
- This population of people is also at risk for hypoglycemia — which means they need access to emergency glucagon.
- In addition, many diabetes patients, whether or not they are insulin dependent, must monitor their blood sugar to manage their condition and need to purchase and use blood glucose test strips to do so.
- Additional medications, such as Victoza or Invokana, may be used to stabilize blood sugar in people with Type 2 diabetes.
- Many of these diabetes-care treatments have been subject to extreme price inflation even though they are not new drugs or technologies.
- This problem is unique to the United States. In other countries, the cost of insulin and other diabetes drugs and products is massively lower. For example, insulin costs outside the United States are essentially one tenth of U.S. prices — for the same drugs made by the same manufacturers.
Find out more what Keller Rohrback is doing to address the price inflation of diabetes care.