Do You Know How Shareholders Benefit from Insulin Price Increases?

This post was originally published on the T1International website on May 6, 2020, and was written by Rosie Collington. I am sharing it on Hugging the Cactus because to be quite frank, I never understood the many issues surrounding insulin price increases. After reading this post, I had an “aha!” moment as I finally began to understand how the profits from insulin price increases are distributed. It’s an important issue to understand: with increased awareness comes an increased drive to make change.

Patients living with type 1 diabetes have known for years that the list price of insulin in the United States has soared. They’ve paid the price – in insurance premiums, in upfront costs, and also, tragically, in some cases with their health.

But until recently, it has been difficult to prove just how much the list price of insulin has increased, and what proportion of the higher costs for patients have gone to the three main insulin manufacturers – Eli Lilly, Novo Nordisk, and Sanofi – versus other companies in the US prescription drugs supply chain, like insurance companies, pharmacies, and pharmacy benefits managers. Information about pricing negotiations is considered a trade secret, meaning that the actual data is difficult to access. Instead, researchers and patient groups have had to more or less rely on guesswork to estimate the value of price increases, or the highly selective data published by the companies themselves, which do not paint the full picture.

The lobby group representing pharmaceutical companies in the United States, PhRMA, has suggested that pharmacy benefits managers (PBMs) have been the primary beneficiaries of the sharp list price increases of many prescription medicines in recent years. The American Diabetes Association’s Insulin Access and Affordability Working Group similarly reproduced selective data released by the three insulin manufacturers on the differences between the list and net prices – the amount the manufacturer receives – of a few insulin medicines, suggesting that the additional profits accrued by the manufacturers was low relative to intermediaries like PBMs.

 

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But in March of this year, researchers at the University of Pittsburgh provided evidence that the net price of insulin medicines in the United States had also soared – by 51% between 2008-2017. This indicates that while other intermediaries had benefited from list price increases, the manufacturers had too. This may seem obvious, but having data to prove it is important.

For my research with Bill Lazonick, funded by the Institute for New Economic Thinking, it has been key to mapping how the profits from higher insulin sales revenues have been distributed. We wanted to find out whether insulin list price increases in the United States had contributed to higher research and development (R&D) investment by the companies, as they so often claim is the case. What we discovered was that as the list price of insulin has increased in the past decade, the ratio of spending on R&D relative to what the companies distributed to shareholders had actually decreased. While over the period of 10 years, the companies spent $131 billion directly on R&D, crucially we found that during the same period, the companies had distributed $122 billion to shareholders in the form of cash dividends and share buybacks.

Cash dividends are the means used by all publicly listed companies to distribute money to shareholders as a reward for holding shares. Share buybacks work quite differently – companies can buy their own shares from the market, which inflates the value of existing shares on the market. Share repurchasing can also benefit company ‘insiders’, like executives, who often receive pay in shares, because they can decide to time when they sell their shares to get the most value. This is not technically illegal, though it was once upon a time. In the last year, some lawmakers in the United States, including Bernie Sanders and Elizabeth Warren, have called for stock buybacks to be banned.

Fundamentally, the system should not have permitted shareholders to profit in this way as diabetes patients were struggling to access their life-saving prescription medicine. As coronavirus continues to spread around the world, the pharmaceutical industry is facing more scrutiny than ever before of its financing and drug development processes. By understanding how value is extracted by shareholders in the pharmaceutical industry, and what relationship this has to patient access, we can, hopefully, create a better system.

Reflecting on NDAM 2019

November ended a couple short weeks ago: just enough time to allow me to reflect on how I feel about National Diabetes Awareness Month (NDAM) 2019. My experience can be summed up with the following three sentiments:

It was exhausting. It might not seem like it takes a lot of effort to post daily on Instagram, but for me, this was a major commitment! It was pretty tough to come up with an engaging post for every single prompt of the Happy Diabetic Challenge. I wanted each of my posts to not only generate interest in learning more about diabetes, but I also hoped that others would notice the thoughtfully written captions and, more importantly, blog posts that went with a handful of them. I’m not sure if I succeeded, but I was proud of myself for keeping at it. But man, I still feel like I need a bit of a social media cleanse after all that posting, liking, and commenting.

It was educational. This may have been one of the most enlightening Novembers I’ve ever experienced, diabetes-wise. I feel like I heard and listened to many diverse voices in the diabetes community – and not just the T1D ones. In particular, I found myself paying closer attention to T2D perspectives, especially on Twitter. By doing that, I realized that I need to make it a point to be more inclusive when describing diabetes, in general, to others. In the past, I think I’ve made the mistake of talking about certain experiences about life with diabetes in a way that sounds exclusive to type 1, and that simply isn’t always the case. So it’s my new mission to make sure I represent other types of diabetes as best as I can on social media and in person, going forward, so that I can do my part to end diabetes stigma about all forms of it.

Happy Independence Day! (1)
National Diabetes Awareness Month 2019 was a jam-packed 30-day period…to say the least.

It was empowering. Although NDAM 2019 kind of kicked my butt in terms of showing me how much I have to learn and triggering a social media burnout, it still doesn’t mitigate the fact that our amazing diabetes online community really comes together during this period of heightened awareness and advocacy. There’s something special about all of our interactions during diabetes awareness month: Whether they’re comments about how one person can relate to another, or a story about how someone changed someone else’s perspective, there’s power in these exchanges. Plus, it’s pretty neat to see how sharing the most mundane aspects of life with diabetes can result in positive change and growth.

Now that I’ve reflected on it, I’m ready to put the insanity of NDAM 2019 behind me…and feeling thankful that I have another 11 months to prepare for NDAM 2020 to make it an even better experience for myself and others.

TypeOneNation, Boston: A Wicked Fun Family Reunion

St. Patrick’s Day is a favorite holiday of mine because I enjoy celebrating my Irish heritage. Almost every year, I eat a traditional boiled dinner, listen to Irish music, and wear an excessive amount of green.

This year, though, was a little different. In addition to all of the above, I attended the TypeOneNation summit in Boston. The event was organized by JDRF and just about 900 people with diabetes attended, along with their families and caregivers.

There’s nothing like being in Boston on St. Paddy’s day, even if it is for an event that has nothing to do with the holiday’s shenanigans. The spirit of the day made it slightly less painful to wake up at the crack of dawn in order to catch an early morning commuter rail into the city. As I sipped an Irish cream iced coffee from Honey Dew (absolutely delicious) on the ride, I got myself pumped up for what would surely be a fun day.

Once we arrived at the Back Bay station, I was one frigid (and mercifully short) walk away from the event space: the Boston Marriott Copley hotel. I went straight to the registration table so I could receive a name tag and itinerary, then made a beeline for the vendor hall. You can never have too much free diabetes swag, am I right?

Within the hall, I recognized many familiar faces and happily made the rounds to chat with some of my T1D friends in attendance. I couldn’t help but feel like I was at a family reunion of sorts as I reconnected with people who I don’t get to see often enough.

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I was pumped to see some friends I’ve made through the CDN at the summit!

Before long, the events of the day got into full swing as the keynote speaker, Nicole Johnson, addressed the crowd. Nicole won the Miss America pageant in 1999 soon after she received her diabetes diagnosis. She’s done many incredible things since earning that accolade, and she delivered an inspiring speech about living life with diabetes to the fullest. As she spoke, I looked around the room and noticed all the little kids who were there. It warmed my heart to see how they received Nicole’s words. Many of them looked at her in absolute awe. It was obvious that they thought she was pretty great, and I bet that having diabetes in common with her helped them to feel just as cool. Nicole is definitely a wonderful role model!

The rest of the day went by much too quickly as I went to two different talks offered at the summit. One was about going to college with diabetes, and the other was about sex and drugs – the “taboo” diabetes topics. Even though I’ve already experienced what it’s like to go off to college with diabetes, I wanted to go to this talk because it was given by my friends from the CDN. I also wanted to meet the parents and children at the session because I was curious to learn about their concerns. As someone who went to a very similar talk seven (?!) years ago, I felt that I could potentially offer reassurance to these families, especially since the whole college experience was so recent for me. And it turned out that the woman seated next to me was an anxious mom who seemed receptive to the words of encouragement I spoke to her at the end of the panel. While I believe that the session could’ve lasted many more hours (everyone was so engaged in the conversation), I think that the session acted as a good launching point into future discussions for many families who are going to make this transition soon.

I wolfed down a quick lunch – I loved seeing the food labeled with carb counts – before heading to the next session. I chose it because, c’mon, a title like “Sex, Drugs, and Rock n’ Roll” can get anyone’s attention. Plus, I feel very strongly that the touchier diabetes topics SHOULD be talked about more often. They can be scary to approach, but it’s important to know what to expect in certain situations in which diabetes can play a major role. I had to duck out of this one a bit early to catch the commuter rail back home, but they were delving into some pretty juicy stuff when I got up to leave. I give major credit to all of the panelists in that one – it can’t be easy to talk about highly personal intimate matters in a room filled with strangers!

Although my time at the summit was truncated, I’m so glad that I took the time to go to it. It’s no secret that I enjoy talking with other people with diabetes. Hearing their stories and sharing experiences makes diabetes feel less isolating. And I’m thrilled that I finally got to meet a few people I knew from the DOC but had yet to see in person!

Diabetes conferences, meet-ups, summits…they’re the types of family reunions you actually get excited about and want to attend.