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Consumer Confidential: Soaring insulin prices reveal clout, and greed, of healthcare middlemen

David Lazarus, Los Angeles Times on

Published in Business News

Politicians for years have been making a show of wringing their hands over sky-high prescription drug prices. And no drug has drawn more scrutiny, or calls for action, than insulin.

Insulin was discovered 100 years ago by a trio of Canadian scientists. They sold the patent to the University of Toronto for a mere $1.

The patent was made available royalty-free to drug companies to foster widespread use of the life-saving hormone.

Drug companies, in turn, did what they do best: They cashed in.

After decades of steady price hikes by manufacturers, a vial of insulin now costs about $300 — roughly 30,000% more than the original cost of the patent.

"Insulin has been the poster child for illogical drug pricing for some time," said Geoffrey Joyce, director of health policy for USC's Leonard D. Schaeffer Center for Health Policy & Economics.

 

And now comes new research showing that the three drug companies that dominate global insulin sales — Novo Nordisk, Eli Lilly and Sanofi — may not be entirely to blame for the soaring costs to people with diabetes (including myself).

Blame a profit-hungry hoard of middlemen as well.

Researchers at USC found that drugmakers' share of revenue from insulin sales has declined in recent years — and a greater share is being siphoned off by pharmacy benefit managers, drugstores, wholesalers and insurers.

In 2014, the researchers determined, 30% of insulin revenue went to middlemen. By 2018, those same middlemen were receiving 53% of insulin expenditures.

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