Can COVID-19 Help Cut Insulin Prices Permanently?

Can COVID-19 Help Cut Insulin Prices Permanently?


As the new coronavirus pandemic continues to disrupt life across the country, there may be a unique opportunity to permanently address the insulin price crisis, as journalists and politicians are now paying unprecedented attention to the issue of healthcare affordability.

There has already been enough pressure to temporarily force the hand of the major insulin manufacturers. Most notably, Eli Lilly has temporarily limited insulin co-pays to $35. The decision has prompted both gratitude and a fair measure of outrage, as best encapsulated in this tweet by Minnesota representative Ilhan Omar:

 

A vial of insulin costs about $5 to make, and it is widely suspected that Eli Lilly will continue to reap handsome profits even when selling at a severely reduced price. If Eli Lilly remains profitable and solvent throughout the COVID-19 crisis, as it should, the company will look even more “unconscionable” if it later chooses to increase prices back to previous levels. Those high prices have for years contributed to the shockingly widespread practice of insulin rationing, an extremely dangerous and occasionally deadly cost-cutting measure. In a survey by the non-profit T1International, the US had “by far the highest insulin rationing of any high-income country,” about four times the prevalence of its geopolitical peers.

With stories of price-gouging and profiteering thick in the news – think, for example, of the Tennessee man that stockpiled hand sanitizer to sell on Amazon at highly inflated prices – it has become increasingly plain to see that people with diabetes have been victims of price-gouging for years. Our nation’s laws are replete with rules against price-gouging during an emergency, but what is daily life for someone with type 1 diabetes if not an endless state of emergency? We cannot simply do without insulin in an effort to negotiate lower prices, or seek some alternative medicine. We will die.

This idea is the heart of a creative legal strategy that was recently sketched out in Slate by anti-trust litigator Ben Steinberg:

“One solution might come from a novel legal strategy that would test the limits of what constitutes illegal price gouging. It seeks to use the price gouging laws in effect in many states to not just freeze insulin prices, but to force insulin-makers to reduce them during the pandemic.”

Insulin manufacturers have arguably been charging “unconscionable” and “excessive prices” all along. The argument is that what was legal capitalism months ago is now, during the state of emergency, illegal profiteering. The theory is “bold and untested,” in Steinberg’s own words, but could offer a way for an ambitious attorney general to force the insulin manufacturers to reduce their prices.

In the weeks since the article was published, Novo Nordisk joined Eli Lilly in announcing a major change in response to the pandemic by offering free insulin to workers affected by COVID-19. With two of the three major insulin manufacturers now making their products substantially more accessible during the pandemic, Steinberg’s novel lawsuit would admittedly be “less viable.” But he said that he hoped that his argument may have put at least a little fear into the Novo Nordisk legal department and helped contribute to the decision.

Lost perhaps in the flurry of coronavirus news over the last few months was the news that many states have passed landmark legislation limiting the out-of-pocket costs for insulin. Beginning in March, five new states signed insulin co-pay caps, joining two that had done so in 2019, often in bipartisan efforts. In Steinberg’s view, “legislative fixes are the biggest threat” to the insulin companies’ pricing structure.

When we surveyed the state of insulin politics last year, we noted that though federal lawmakers of both parties essentially agreed that the high insulin prices were intolerable, national efforts to address the crisis were hampered by squabbles and turf battles, both across and within the major political parties. Since that time, it has emerged that state-level solutions are a more realistic option.

Colorado was the first state in the nation to sign an insulin price cap into law, limiting monthly out-of-pocket costs to $100. The 2019 bill went into effect on January 1 of this year. (Unfortunately, the cap has been less effective than advocates hoped for. A variety of loopholes and exemptions have kept prices sky high for some patients. And the author of the bill himself was surprised to see insurance companies limit costs to $100 per prescription, which left those prescribed multiple types of insulin paying multiple hundreds of dollars every month.)

In November, Illinois passed a similar law to Colorado’s. The trend really began to snowball in March, when Virginia, New Mexico, Maine, West Virginia, and Washington all passed laws capping insulin co-pays. In April, Utah joined the party too. Most or all of these laws take effect on January 1, 2021. Similar bills have been proposed in many other states, and it is well worth noting that the list above includes reliably red and reliably blue states, as well as swing states.

Steinberg is hopeful that the COVID-19 emergency might help win permanent price relief for people that need insulin. Years of pressure on the insulin companies was already coming to a head in 2020, before the coronavirus struck. Now, with skyrocketing unemployment rates and widespread loss of health insurance, and the plight of people with diabetes has been thrust even more into the spotlight. As it becomes increasingly clear how important good diabetes management is in the face of disease, the spotlight should only grow brighter.

“They doing what they should have done years ago, making it affordable.”





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