Drug Manufacturers’ Recent Drop in Insulin Prices in the United States

The prevalence of diabetes in the US is incredibly high and affects more than 10% of the population. Patients living with diabetes rely on insulin to manage their blood sugar levels and maintain a healthy life. Over the past 20 years, drug manufacturers have increased insulin prices by more than 300%. In recent months, insulin prices have experienced a significant drop due to public pressure and recent legislation.

Insulin list prices from 2022 to 2023

*Numbers are adjusted for inflation

Recent Drop in Insulin Prices:

This spring, drug prices made the news due to a surprising drop in insulin product pricing. Three major manufacturers of insulin announced significant price cuts, a rarity in the US pharmaceutical industry. Eli Lilly began the insulin price drop by cutting the price of its most prescribed insulins by 70%. In addition, Lilly expanded its Insulin Value Program to cap patient out-of-pocket costs at $35 per month. Several weeks later, Novo Nordisk and Sanofi followed suit. Beginning in January 2024, Novo will reduce the list price of Novolog by 75% and Sanofi will lower the price of Lantus by 78% and cap out-of-pocket costs for patients with commercial insurance to $35 per month. 

What caused these extreme price decreases?

Biosimilars

The change in the insulin pricing market was spurred by the pressure of competitively priced insulin biosimilars in the pipeline. In 2021, interchangeable biosimilar insulin products by Viatris and Biocon were approved. The company’s biosimilar is interchangeable with Sanofi’s Lantus. Viatris launched an unbranded version of the biosimilar that was 65% cheaper than Lantus’ list price. They also launched the biosimilar with the brand name Semglee that is only slightly cheaper than Lantus. The rationale for launching an unbranded and branded insulin biosimilar was to provide insurance payers the opportunity for a low price, low rebate product (unbranded) or a high price, high rebate product (Semglee).

Non-profit Competitor

In March of 2022, Civica, a nonprofit pharmaceutical company, announced its plan to launch an interchangeable biosimilar insulin in 2024. The state of California has entered into an agreement with Civica Rx to manufacture its own insulin and offer it at a reasonable cost. Civica plans to list its insulin at a maximum price of $30 per vial and $55 per package of 5 pens (injection devices that are preloaded with insulin). Civica is aiming to reduce costs for not just insulin consumers, but the entire healthcare system.

Inflation Reduction Act

The most significant push for price decreases in the insulin sphere was the Inflation Reduction Act (IRA) passed in August of 2022. The cost of insulin was one of the key targets for drug pricing reform in the IRA. Beginning 1월 1, 2023, insulin copays were capped at $35 per month for diabetes patients covered by Medicare part D. Read our white paper to learn more about how drug developers are navigating the IRA.

Following the passage of the IRA, large pharmaceutical companies were subject to public scrutiny regarding insulin prices. President Biden as well as other politicians called out Big Pharma for “making record profits” from insulin sales. This political pressure likely led Eli Lilly to cut the list prices of some of their insulin products and provided additional pressure for Novo Nordisk and Sanofi to follow.

Public Response:

For many patients, the decrease in insulin prices is life changing. For diabetes patients, the $35 per month cap will make an important impact on monthly expenses. Currently, commercial patients are paying over $100 per month for insulin while noninsured patients are paying the list prices for 2-3 vials a month.

Critics of large pharmaceutical companies note that while the drop in insulin prices is a good start, there is more to be done. While pharmaceutical companies have slashed the price of some of their insulin products, there has been no guarantee that the prices will not undergo a large increase again. Additionally, others recognize the benefit of insulin price decreases to the manufacturers. Cuts to the list price of insulin products will allow Big Pharma companies to avoid the cost of additional rebates and increase earnings.

How will this affect the price of other pharmaceutical products?

While price drops have only hit the insulin market so far, many see this as potential for price decreases in other expensive drug areas. Given that insulin was the only product to be called out specifically in the IRA, the demand for change was more influential than in other categories.

Although other products were not explicitly called out in the IRA, other aspects of the act may spur change. The Medicare Drug Price Negotiation Program to negotiate maximum fair prices for high-cost drugs that meet certain criteria has the potential to pressure competitors of these high-cost drugs to cut their prices as well.

Public pressure and response to these price cuts could lead to pressure for other infamously expensive drugs such as epinephrine to be targeted next.   

How can our experts help your drug program? 

The IRA and public response to high-cost drugs will significantly impact how new drugs are marketed and prices are established and negotiated. Negotiating drug pricing while preparing for lower reimbursements can be challenging to even the most experienced companies. Since these policy changes and recent highly publicized price drops will have a large consequence on the healthcare system, the assessment of potential impacts is now more crucial than ever before.

Certara works with you as a partner, providing evidence-based strategic guidance, and keeping you informed of changes so that you can respond to them quickly. Our dedicated consultants are speaking with managed care professionals, physicians, and patients every day to ascertain the commercial impact of legislative and regulatory changes, new product launches, and market events such as competitor and loss of exclusivity.

Learn more about our market access and pricing services.