'Perverse' tactics in insulin market drive up prices, Congressional report finds

Several "perverse" incentives for drugmakers have led to artificially high prices for insulin, which is placing the lifesaving drug out of reach for patients, according to a bipartisan report released Nov. 1 and cited by The Hill.

The report, authored by Reps. Diana DeGette, D-Colo., and Tom Reed, R-N.Y., argues that several factors drive insulin prices up, while forces that may hinder the increases have been blunted.

The price of insulin has nearly tripled in the past decade. Eli Lilly, Sanofi and Novo Nordisk control 99 percent of insulin supplies across the globe, and health advocates have been asking them to explain their pricing for years. The drugmakers usually shift blame to pharmacy benefit managers, arguing that the list price of insulin isn't what patients pay because it is reduced by secrete rebates negotiated by PBMs. PBMs are the "middlemen" between drugmakers and insurers.

Rising insulin costs have drawn outrage from diabetes advocates and physicians in recent years, prompting promises by drugmakers to halt price increases. However, the cost of insulin is still rising.

"Many cannot live without [insulin], but countless patients struggle to afford it," the report authors said, according to The Hill. "As their out-of-pocket costs continue to rise, the current system is unfairly putting insulin out of reach — placing millions of lives at risk."

The authors detailed several recommendations to combat the rising cost of insulin in their report. Here is a breakdown of their recommendations:

1. Reform the "convoluted" rebate system. DeGette and Mr. Reed argued that the PBM rebate system needs to be changed, because the middlemen reap profits at the expense of the consumer. Rebates are the discounts drugmakers provide PBMs off the list price, in exchange for a place on PBMs' formulary, or list of covered drugs. This system, which has been involved in the debate about drug prices for years, unfairly affects uninsured patients, who are stuck paying the list price without a PBM rebate.

2. Up transparency. The lawmakers recommended Congress introduce legislation requiring PBMs to disclose how much money they get from rebates.

3. Standardize fees. Instead of using the rebate system, the representatives recommended wholesalers, or PBMs, use standardized fees.

4. Stop patent games. To bring more competition into the insulin market, the authors recommended Congress crack down on "evergreening," a process drugmakers use to extend patents on their drugs by claiming new innovations in the formulas.

Read the full report here.

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