Why is insulin so expensive in the United States?

This year, 2021, is the 100-year anniversary of the discovery of insulin by Frederick Banting, James B. Collip, Charles Best, and John J.R. Macleod. The patent for the hormone, which was extracted from an animal pancreas with the goal of helping those with diabetes control their blood sugar, was sold to the Governors of the University of Toronto in 1922 for only one dollar. The four men credited with this groundbreaking discovery had no shortage of disagreements — Banting and Macleod chose not to put their names on the patent, with Banting of the opinion that as a physician who had taken the Hippocratic oath, it would be inappropriate for him to patent the discovery of a medical treatment. But even those who did opt to patent the hormone chose not to profit from it, despite facing the prospect of astonishing wealth from their potent and widely-needed treatment.

These scientists knew that administering insulin could completely change the life of a diabetic. The hormone, naturally produced as a protein by specialized cells in the pancreas called beta cells, is a messenger that tells our cells when to open their gates and take up glucose, or sugar, from the bloodstream. People with type I diabetes experience an autoimmune attack early in life, in which their body’s immune system destroys their own beta cells, preventing them from producing their own insulin. Conversely, in type II diabetes, patients start out with intact beta cells, but develop insulin resistance — meaning that insulin signals cells to open their gates and let in glucose, but the gates stay closed until more insulin comes knocking. Beta cells become stressed, having to produce more and more insulin to have any effect on lowering blood sugar, until they fail and die off. Without insulin from another source, cells of diabetes patients don’t know to let glucose from food in. If untreated, these patients can suffer from the effects of chronic high blood sugar and starvation, despite apparently eating plenty.

This was the grim outlook faced by diabetics before 1921. With the discovery of insulin, the deadly threat of diabetes was all but alleviated, allowing diabetics to live long and healthy lives for the first time in human history. Rarely has such a grave disease responded so effectively to one single treatment, and even one hundred years later, insulin is still the most widely used treatment for all types of diabetes.

However, as stated in Macleod and Banting’s 1923 Nobel prize acceptance speech, “We must not imagine that insulin is able to cure diabetes.” Despite this medical breakthrough, insulin is a treatment — not a cure — for a chronic disease. Over 7.4 million diabetics in the United States today require regular administration of this life-saving treatment to manage their disease — and will continue to depend on insulin for the rest of their lives. But over the last century, access to insulin for all who need it has been denied by pharmaceutical companies aiming to profit from the demand.

Since its discovery, insulin has actually become cheaper to produce. Most insulin on the market today is recombinant, meaning that the human gene responsible for making insulin is inserted into bacteria or yeast, which then churn out human insulin proteins like tiny factories. This method works just as well as the original strategy of isolating insulin from animal pancreases, and is far more cost-efficient. If the price of insulin amounted solely to the manufacturing cost, each person with diabetes would pay a maximum of $6 for insulin each month. The enormous disparity between this estimation and the much more expensive reality is attributed to price gouging by pharmaceutical companies.

Today in the United States, the monthly cost of insulin is estimated between $120 and $400. Eli Lilly, the first company to mass produce recombinant insulin under the brand name Humalog, first sold the medicine at $21 per vial in 1996. In 2019, Humalog cost $275 per vial — 8 times the 1996 price when adjusted for inflation. Even with health insurance, treating diabetes can put a serious financial strain on individuals and families in need of insulin. Many diabetics have no choice — without this hormone, they face the same bleak prognosis that patients faced a hundred years ago.

The significant increase in the cost of insulin has resulted in a 2017 class-action lawsuit, in which the three companies that manufacture the majority of global insulin (Eli Lilly, Sanofi, and Novo Nordisk) were sued for illegal price gouging. This case is ongoing, and was initiated when people noticed that these pharmaceutical companies were raising the price of insulin in parallel with each other, and getting away with it because of the near-monopoly they hold on the market for the drug. This means free market competition does not account for the spike in insulin prices, nor is it attributed to inflation, higher production costs, or the increased demand placed by rising incidence rates of diabetes.

In the United States, more people are in need of insulin now than ever. Diabetes is diagnosed in over 30 million Americans (nearly 10% of the entire population), many of whom have low incomes and minimal insurance coverage. In fact, poverty and low socioeconomic status is strongly associated with diabetes incidence and is identified as a risk factor for diabetes. Type II diabetes, specifically, is projected to continue its overwhelming increase in prevalence in the American population and particularly among low-income Americans. This means that the people who need insulin are often those who cannot afford it.

In addition to serious health consequences, the prevalence of diabetes also places a staggering economic strain on American society. In 2017, the collective cost of all diagnosed diabetics (including medical care, reduced productivity and lost labor, and early mortality attributed to the disease) was $327 billion — a 26% increase from 2012. The prevalence of diabetes, and therefore the collective cost of diabetes, is projected to continue its upward trend in this country.

To this day, insulin is still the most effective treatment for all types of diabetes, and the increasingly restricted access to insulin directly worsens the degree of its severe health and economic consequences. This is the outcome the discoverers of insulin were hoping to prevent a hundred years ago, and a wrong that can still be righted, in the greater interest of everyone. Frederick Banting’s purported stance that “insulin belongs to the world” has been turned upside-down by modern manufacturers, resulting in needless suffering of millions of Americans who rely on this treatment. Lawmakers are fighting to cap the cost of insulin and hold drug companies accountable for their relentless pursuit of profit. Education and raising awareness of diabetes, insulin, and pharmaceutical companies are important measures to take in order to help make insulin as accessible as it was always meant to be.