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Human Rights Research Center
Sep 107 min read

The Insulin Crisis: America's Issue with Inaccessible Life-Saving Medications

Author: Shirley Lin

September 10, 2024


The phrase “American Healthcare System” often evokes negative connotations as its effectiveness is constantly questioned. A quick Google search reveals concerns about why life-saving medical treatments are so expensive, raising doubts about whether healthcare in America is viewed as a fundamental human right or merely a privilege. A stark example of this troubled system can be seen in the cost of insulin from its discovery in 1921 to present day. Frederick Banting and Charles Best originally developed insulin as an affordable, life-saving treatment for diabetes. To preserve their vision of making insulin accessible to all, they sold the patent to the University of Toronto for just $1. However, as insulin production became commercialized, pharmaceutical companies increased its price. By 2016, insulin prices in the United States had skyrocketed to $5,705 per vial (SingleCare, 2023). As of 2023, without insurance, Americans may pay between $174 and $300 per vial (Cefalu et al., 2018), forcing many to make difficult financial sacrifices for this essential medication. However, a potential shift occurred when Eli Lilly, a Cambridge pharmaceutical company, announced plans to cap the cost of insulin at around $35 per month, signaling a possible change in the landscape of insulin pricing. This article aims to demonstrate the failures of the American Healthcare System through the lens of insulin pricing, explore the dissonance between the system and the United Nation's Right To Health principle, and assess whether Eli Lilly’s initiative has successfully disrupted the commercialization of insulin.

 

To understand the role of insurance in the cost of insulin, it is essential to explore the privatization of insurance. Health insurance emerged in the 1930s when people sought coverage for medical expenses in case of illness or inability to work. Over time, as healthcare technology advanced, the demand for hospital treatments grew, leading to the broader concept of healthcare coverage that includes medications and in-person visits (Niki 2024). In addition, employers also saw the economic incentive of offering health benefits to employees. ​​Over time, the use of healthcare insurance became entrenched into the fabric of the healthcare system, evolving into a standard means for individuals to access and afford medical services, including treatments, medications, and hospital visits.


Aside from a historical perspective, there is also an economic perspective, one where the privatization of healthcare ensures government-run programs remain efficient as competition amongst private insurers improves service quality and innovation and lowers costs. This insight reveals that, as America is a market-oriented or free-market economy, privatizing health insurance allows for better resource allocation. As healthcare privatization may be economically efficient, there is one downside: patent protections and market exclusivity for insulin products maintain elevated prices to reduce competition. The privatized nature of the healthcare market in the U.S. also means that patent protections and market exclusivity for insulin products can limit competition, keeping prices high.


To illustrate the disparity between the cost to manufacture and the cost to buy insulin, the production cost is approximately $2-4 per vial (Crawford 2023). This results in a markup of about 7400%-8600%, depending on the initial cost of a vial without insurance. For those with insurance, the price typically ranges from $25 to $100 per vial (SingleCare, 2023). Despite insurance coverage, this cost can still cause significant financial strain, as insulin is a life-saving medication essential for many individuals with Type 1 and some with Type 2 diabetes. With 70% of Americans living paycheck to paycheck as of 2023 (Batdorf and Benninger 2023), this price disparity highlights the growing gap between the cost of essential medications and the financial capacity of many individuals. Ultimately, the high cost of insulin underscores broader issues of healthcare inequality and the need for reform in drug pricing.


When considering the high insulin prices, one can see a connection between the United Nation's Right To Health principle and the inaccessibility of insulin caused by its cost. Such a principle ensures everyone can access essential medicines and health services without discrimination (O.H.C.H.R., n.d.). However, there is a dissonance as high insulin prices can be interpreted as a barrier to accessing essential healthcare, impacting one’s health and well-being. The declaration even mentions the topic of affordability as it denounces that the state is using its financial situation as an excuse as to why affordable healthcare cannot be implemented (O.H.C.H.R., n.d.). In other words, even if a state lacks resources, it must still respect the declaration’s goal of providing affordable healthcare to citizens of participating nations. This interpretation suggests that if America fails to take appropriate measures to regulate the cost of insulin, it could be viewed as a violation of the United Nation's Right to Health principle. While the high price of insulin is generally not due to a lack of resources in America, it is still influenced by market forces that companies such as Eli Lilly are trying to help control, showing a move towards meeting the Universal Declaration of Human Rights regarding healthcare. Now, it is just a question of whether Eli Lilly has succeeded.


On March 1, 2023, Eli Lilly announced revolutionary news that, in recognition of Americans unable to afford insulin, they would be cutting their insulin prices. The company “announced price reductions of 70% for its most commonly prescribed insulins and an expansion of its Insulin Value Program that caps patient out-of-pocket costs at $35” (Eli Lilly and Company, 2023). This monumental news meant Americans budgeting for life-saving medication could shift their budget toward other daily utilities. This shift in pricing was meant to push other companies to lower their prices and push policymakers to pass legislation that lowers the price of insulin. However, this choice was made as statistics show that “7 out of 10 Americans do not use Lilly insulin” (Eli Lilly and Company 2023). As this move was highly courageous, one positive outcome was that large competitors of the company, such as Novo Nordisk and Sanofi, followed the leader. To visualize the impact of Eli Lilly’s decision to cut prices, examining market shares provides insight into its significance. Novo Nordisk holds 52% of the market share, Sanofi holds 17%, and Eli Lilly holds 23% (Knox 2020, 9). As Eli Lilly holds the second largest share of the three companies, the other two companies felt pressure to ensure their product still stood a chance in the market. Novo Nordisk followed up, reporting that they had slashed prices by 75% following Eli Lilly’s announcement (Constantino, 2023). Sanofi even followed to match Eli Lilly’s price, cutting to $35, showing a decrease of 78% from the original price (Sanofi 2023). However, Sanofi's price is for those with commercial insurance, which differs from Eli Lilly’s stance on those who purchase their insulin out of pocket. From the standpoint of 2024, one can see Eli Lilly lived up to their promise as they not only reduced prices for those with commercial insurance but also ensured that those purchasing insulin out of pocket could benefit from the lower costs, making their efforts more inclusive and impactful across different patient groups.


As Eli Lilly is leading in making life-saving medications like insulin more affordable, the company’s commitment to reducing out-of-pocket costs to $35 reflects a deep concern for the well-being of those who depend on their products. This move also proves that pharmaceutical companies can lower prices without jeopardizing their financial stability. Beyond insulin, this effort aligns with the United Nations Right to Health principle, advocating for accessible healthcare. However, the affordability crisis extends to other vital medications like Epinephrine Auto-Injectors (EpiPen), H.I.V. treatments, and cancer drugs. While Eli Lilly’s actions offer hope, other pharmaceutical companies must follow suit, prioritizing patients’ health over profit margins.


 

Glossary


  • Disparity: A noticeable and usually significant difference. There is a gap between how much consumers of insulin are charged and how much it costs producers to make insulin.

  • Dissonance: Dissonance refers to the lack of harmony between how the healthcare system within America operates and the United Nations' Right to Health Principle.

  • EpiPen: EpiPen is a medical device that delivers epinephrine, also known as adrenaline, quickly to combat severe allergic reactions that can lead to anaphylaxis.

  • Free Market: In a "free market," prices for goods and services are determined by competition between private businesses. More government intervention is needed to facilitate open competition in this environment.

  • Patent-Protection: Patent protection allows pharmaceutical companies to develop insulin formulations or delivery methods and to retain exclusive rights over their products. This exclusive right prohibits other companies from stealing their products and producing cheaper versions.


 

Sources


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