Will insulin go the way of hearing aids?

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I’ve posted a link below to an interesting Linked-in business view of Insulin from A B-school professor and strategist - Rita McGrath:

Here’s one fact I didn’t know - about 90% of Insulin goes to Type 2 diabetics … A short excerpt below:

Secretive Pricing, poorly served patients and unintended consequences – will insulin go the way of hearing aids?

“Insulin in the U.S. costs on average some 800% more than in other developed economies. And yes, people die for lack of it, sometimes within days or even hours of missing their dose. No one knows how many; data suggests that in the U.S. it’s at least a few every day. Far more may suffer other ravages of diabetes—blindness, heart attacks, loss of limbs.”

A recent analysis found that almost half of all diabetics skip medical care of some kind due to costs."

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Pretty crazy that it has to get this out of balance before there is the chance for market disruption, but hopefully the author is correct and this inflection point arrives. Won’t be a moment too soon.

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If the statistics quoted are accurate, I had no idea the costs of production, research, and sale were so egregiously out of balance. On the risk of being political, I can’t help but ask where the allegiances of ADA, JDRF, and other orgs supposedly operating on behalf of and supporting diabetics actually lay…it would seem to be with big pharma and maintaining salaries for leadership. I used to study and be part of the military-industrial complex…seems very similar!

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It is hard for this to be a divisive political discussion, because both parties support the current solution and happily take the pharma cash. What you touch on is really more of a systematic problem of our Congress, are they working for the people or the corporations? Also, JDRF in my opinion, does some good things but they don’t seem to get much bang for their $16M per year they spend on lobbying and physician experts. I also don’t like charities whose CEO’s make more than $500,000 and Derek Rapp makes $800k per year. Seems like a lot for such a noble pursuit.

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The article you quote is well written, yet part of its argument is built on the underlying Fortune article that you both quote:

Type 2 diabetics account for about 90% of the insulin market

Notice that this is “market”; i.e. expenditure, not “90% of Insulin”, which is what you stated. The figures in the Fortune article are also based on the analogs, and the story of Sa’ra, a T1D, is based the “deductible” on her employer policy (the deductible is never stated). The Fortune article continues, while talking about Sa’ra:

Diabetics typically require two to four vials of insulin a month, sometimes more, so it’s easy to see how a patient with no insurance or a high deductible could have to pay at least $1,000 for a month’s supply.

(I’ve used 1200IU in the last 30 days; perhaps some other readers of this who use a pump can check; I would certainly be interested in the results.) So there is a lot wrong with that statement; it implies that someone with a $1,000 a month deductible is going to pay “at least” $1,000 a month. Earlier the article had sort of clarified this statement:

More recently, as a young adult, she worked at a call center in Indianapolis, a job that provided medical insurance—good news, except that she had to meet a high deductible before the insurance would cover her insulin. Until then she would have to pay cash, which totaled “$1,000 for my 30-day supply.” But given her pay and living expenses, she never had $1,000. Thus the deductible never got paid, and “I just was using whatever donations [of insulin] I could come up with.” Without it, she’d die.

So, wait a moment, this has nothing to do with the price of insulin or, indeed, the price of anything; it’s the US magic of “meeting the deductible” (tr. “meeting the OOPMax”). I.e. having health insurance doesn’t help one iota if you can’t pay the up-front cost of the yearly personal contribution (the OOPMax, frequently and incorrectly referred to as a deductible.)

Suggesting that reducing the cost of insulin will fix this is like suggesting to a man with cancer who is in a swimming pool that curing cancer will stop people drowning, or vice versa.

The original author does not make this mistake, but she relies on quotes (she quotes the Fortune article twice) that she must know (she is clearly very intelligent) are polemic. I wouldn’t have a problem with that except that her core argument is that she wants to fix the deductible problem by reducing the costs of specific items, one by one and she presents arguments that she must know will work without ever fixing the real problem.

I guess if you apply enough paint to the elephant in the room eventually it will disappear.

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An approach I’d like to see would be similar to insurance with each state having a department of ______ that is responsible for pharmaceutical pricing. This issue doesn’t seem solvable in a bipartisan way and it would be great help for some states to have affordable insulin. Overall I think Departments of Insurance are a net positive although I’m sure complaints abound. Interestingly, the reason for their existence parallels the medical industry in that some products are mandatory.

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Thanks Mark and @jbowler for your perspectives. When I think about regulating pharma prices, I wonder why not do it on a national level rather than a state level?

We’ve talked in other forums about Wal-mart’s introduction of generic insulin which might help in accelerating disruptive forces. My suspicion (and preference) is that competition will be able to address the price gouging from Lilly and Novartis - and that prices will come down as competitors make inroads.

It will be interesting to see…

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The car insurance stuff has been consistently backed by an enormous lobby; car users (most of the populace), motor car manufacturers (some of the biggest companies) the transport lobby and so on. I have to agree it works really well for me. I’ve had to get car insurance in the UK, CA and OR.

In the UK as soon as I said “diabetic” they said “no”; I had to go to a special “high risk” insurance company that covered supposedly high risk people; in particular people who had their license suspended, or just got into too many accidents.

In CA and OR both, no problem, very few questions asked (I think none in CA - they just look at your driving record).

So car insurance is incredibly, massively, regulated compared to most other western countries. (It’s difficult to compare with, e.g., Taiwan where insurance is a luxury). Each state micro-manages what people offering vehicle insurance can do.

With health insurance it was completely different. When I tried to get private health coverage in CA before I ghosted my employer to my surprise there was no problem - BCBS just said “yes”, and the premium seemed quite reasonable (compared to the COBRA premium which was enormous, very good policy though…) So immediately after this I moved to OR and it was just like in the UK; “Diabetic”, “No sir, please come back in your next life.” The OR system didn’t depend on regulation of the health insurance industry - that only came in after the ACA - it depended on taxing the insurance companies to cover the cost of us “high risk” guys. I still had to pay a much higher premium than my wife; I was effectively buying a “group” plan myself.

So there is a whole lot going on here and, yes, it’s certainly political and it’s that type of politics that doesn’t depend on having a consistent philosophy because the politicians who back the micro-management of car insurance include those who also oppose any regulation of the health care industry tooth and nail. They also back the US school system, because everyone has to even if they simultaneously try to undermine it yet it is remarkably inconsistent to back it while opposing a similarly organized health care system…

As for regulation of prescription drug prices, CA has the man power to do it (it has a population comparable to that of the UK), but OR certainly doesn’t - look at the mess we made of the ACA setup. (Hey, we can do this ourselves. Web site? We can build anything! Get out the chainsaws guys!)

Of course the CMS does, but I won’t say that because that would be politics.

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I think it might help us move away from analog insulins. After all Lantus is less functional[1] than a pump equipped with Humulin-R and given that pumps are not, per-se, patented they can be made in China for, most likely, less than the canula costs.

It’s an interesting marketing decision; if I owned Walmart I would sell, it’s not obvious why doing this would make their shareholders money, given that so much money is to be made. Maybe they are just fed up with the complexity of the game; eventually you end up with chess, a meaningless exercise in which the only ability that counts is chess.

[1] I think I need to reduce my basal dear, chose one of the options;
1) Just turn your pump off for half an hour.
Thank’s dear.
2) Oh ■■■■.
It’s so nice this axe is double headed, I don’t think I could handle it with just one sharp side.