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.

10 Countries, 10 Global COVID-19 Perspectives

This blog post was originally published on the T1International website on April 10, 2020. I am highlighting it here on Hugging the Cactus because 1) I think it sheds a lot of light on the healthcare systems in other countries and 2) it’s a reminder that we’re all in this together.


Hear from ten people living with type 1 diabetes as they share their perspectives about the impact of the coronavirus on their country and their health.

Bolivia – Laura
Things are complicated here, and our health system is already problematic. There are no masks and a lack of other correct equipment to treat patients. The government has been very careful about prevention, and quarantine has been going on for several weeks already. Many people are poor and live day by day with what they earn. The government began to give money and food aid to older people and families who receive other types of government bonds, but not everyone can receive it and many say that they do not have enough money to eat. Based on the numbers on our identification, we know when we can go out to get groceries or medications – only on specific days. Still, there is a lot of ignorance and people are not following instructions. There are 200 cases confirmed, with 15 deaths and it is increasing every day. People who have to travel long distances to get medicine do not have good options. I have a friend who has no blood glucose test strips and her blood sugar keeps going too high, but because she does not have test strips, she doesn’t know it. It is very dangerous.

Costa Rica – Dani
Our small country is on lockdown, with only 10 people in ICU at the moment. The country is making at-risk patients a priority and currently even shipping their medicines to them to prevent them from going to the hospital and getting infected. Families have been given extra insulin for the next two months, and the community is supporting each other if there is an urgent need for support or extra supplies.

Germany – Katarina
Germany has one of the lowest COVID-19 related death rates so far. A lot has been undertaken to prevent the virus from spreading – test centres have opened their doors to the general public, hospitals are increasing their capacities for intensive care and ventilation, and research teams are working hard to improve diagnostics, therapy and find preventative methods. The pandemic is challenging our healthcare system, our economy, and our society, but it also opening new pathways. A lot of diabetes care centres are transitioning to telemedicine, and people with diabetes can get prescriptions and supplies by mail. Being a doctor on the frontline and a high-risk patient at the same time is not easy – I am constantly torn between my profession and my wish to self-isolate and stay safe.

Ghana – Yaa
With the rise in COVID 19 cases in Ghana, the government made it mandatory to close down schools for a month, to limit the number of people to no more than 25 in a social gathering, and to start a two week partial lockdown in contiguous districts (3 regions). This means no one is allowed to go out unless it is to buy food and drugs. Borders are closed, and importation of goods are restricted. For people with type 1 diabetes who get supplies at the government hospital using the national health insurance scheme, they still have to go all the way to the hospital for their supplies. The hospital is a major reservoir of the virus, so it increases the chances of people with type 1 who are already at high risk. The only other option is to go buy from the pharmacies, where there is currently a surge in prices. People with diabetes were asked and encouraged to stock up on their diabetes supplies, but not everyone was able to do this. We fear for the unknown and the long term impacts.

India – Apoorva
As a medical doctor I have been working and seeing new cases, but now my entire department is in isolation. I took steps back to prevent getting sick. Delhi is one of the hotspots, and we had sudden surge in cases. Rural impoverished areas are problematic due to people living in close quarters. Our government initiated a lockdown, but many tried to leave quickly, especially migrant workers who come and go from the city centres because they lost their livelihoods. This caused the virus to spread despite drastic measures taken by the government. Currently, there are no insulin shortages as all medical services and pharmacies are operational, but we have seen a possibility of analogue shortages and hope to try to ensure that does not happen. Our main aim is to support the actions of the government and I plead everyone to stay home and protect their families.

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Kuwait – Mohammad
We have been on lockdown for four weeks, and people who came to Kuwait from other countries were tested. If someone had symptoms, they were put in quarantine. Cases have been contained and so far, there has only been one death. It is interesting that there is now a COVID-19 database that was created rapidly, but there has never been a database of people with type 1 diabetes in Kuwait. Our medications tend to be provided and some are being delivered. Overall, things are OK now, but we are concerned about access to medication and food supply in the long term because most of it is imported.

Lebanon – Cyrine
Our country has been facing tricky political problems for the past five months, since we had a revolution in November. The banks have no money, and there is no money from the government. We can only have access to a specific amount of our money per month. We are facing shortages of medical supplies including ventilators and medical protective equipment. The whole country is in an emergency state now and there are military personnel on the streets. As cases continue to rise, people are only allowed to go out at certain times and we can only walk. I have been on self-quarantine for the past few weeks. What worries me most is the people who already struggled to afford their basic insulin and supplies. With 80% or more of the population having lost their jobs, what are those who cannot afford their insulin doing now? I am trying to help those I know about, but there is no government plan for people with type 1 diabetes. People do not have money anymore, so how can they cover their insulin costs?

South Africa – Estelle
Testing here is slow. On April 2nd, I heard only 46,000 tests had been done, which is not even 1% of the population. It looks like we have small numbers of diagnosed patients but there is so much unknown. Apparently there is enough stock of medication for up to a year. Medical aid, our version of insurance, said they will cover all treatment related to COVID-19, so that is a relief. A large proportion of individuals might not be taking it seriously enough. The biggest concern is keeping the virus out of the rural areas, which are densely populated. If it spreads there, it could be catastrophic because we do not have enough hospitals.

Tanzania – Johnpeter
We only have about twenty cases identified so far. I am currently in Serengeti which means I am far from cities where cases were confirmed and spreading. I am staying put and I had to cancel my doctor appointments and other appointments. I have had to reduce my insulin dose because I cannot get any insulin here in this rural area. I have some insulin in Dar es Salaam that my doctor gave to my brother for me. So right now I am working with my brother to try to find a way to get the insulin. I am not supposed to travel to cities to risk my health, but I am risking my health by staying here without insulin. It is incredibly stressful on top of the challenges I already face accessing and affording my insulin.

USA – Karyn
In Georgia, where I live, we are also on lockdown, with cases increasing every day. The biggest issue is shortages of ventilators and protective equipment for hospital staff. Cost and affordability issues are already a problem in the USA and this will likely be an even bigger challenge now. Due to the broken healthcare system here, it’s uncertain if people will even get tested if they go to the doctor. Some people are getting billed for the test even though it has been said they shouldn’t be. Last year around this time, I went to Canada to buy a year’s supply of insulin. I have a bit more, but I’m not sure what I’m going to do without being able to travel abroad this year. I already struggle a lot with the costs. Many people are losing their jobs, and therefore losing their insurance, which will inevitably also impact their ability to afford essential medicines.

Why I Decided to Become a Digital Advocate for T1International

When I started Hugging the Cactus, I knew I wanted to do more with it than just use it as a platform to share my diabetes story.

I also wanted to make change.

I wanted to do more for my diabetes community.

I wanted to become the best advocate that I could possibly be.

But for a long time, I was stuck on how exactly to go about doing that.

During this time in quarantine, I’ve been able to spend more time thinking and researching ways that I could get more involved.

And that’s what lead me to T1International.

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#insulin4all means FOR ALL.

As I mentioned in a blog post earlier this month, I’ve sort of known about T1International for a long time now. I knew that they were the organization behind the well-known hashtag #insulin4all, but I was curious to learn more about them and their mission.

As I discovered, T1International works to support local communities by giving them the tools they need to stand up for their rights so that access to insulin and diabetes supplies becomes a reality for all. They have a plethora of materials and information on their website that helps those who are interested become well-versed in this issues surrounding insulin and diabetes supply accessibility. In addition, the T1International team keeps site visitors up-to-date with their blog that contains articles on everything from global stories to legislation explanations.

It wasn’t long before I realized I wanted to work with T1International. So I reached out to their team and applied to become a digital advocate, and less than one week later, I completed my orientation. It’s official: I’m a proud T1International digital advocate.

This is meaningful to me because now I feel more empowered to advocate about the issues that matter, such as the #insulin4all movement. This movement is so important because access to insulin, no matter who you are, where you’re from, or what type of diabetes you have, is critical to the health of all individuals who rely on insulin to live.

Before I dive more into the insulin crisis, let me first acknowledge that I am extraordinarily lucky and privileged: Insulin affordability has never been a personal issue for me. Sure, I’ve had to pay way more out of pocket than I’d like to in order to cover the cost of insulin, but I’ve never had to make the impossible choice between paying for a month’s supply of insulin OR paying for monthly rent.

Many people have had to make that sort of choice, though. And that’s simply not okay.

Whether you’re familiar or unfamiliar with the current insulin crisis, consider the following facts (provided by T1International):

  • Since the 1990s, the cost of insulin has increased over 1,200%, yet the cost of production for a vial of analog insulin is between $3.69 and $6.16.
  • Spending by patients with type 1 diabetes on insulin nearly doubled from 2012 to 2016, increasing from $2900 to $5700.
  • A study of rising drug prices over the decade ending in 2018 found that list prices of insulins increased by 262%, with net prices increasing by 51%.
  • One of every four patients with type 1 diabetes has had to ration their insulin due to cost. Many have died.

These statistics are more than alarming. They’re downright disgraceful, unjust, and have forced patients to resort to drastic measures to stay alive.

Change needs to happen.

This is why I’m humbled, fired up, outraged, and beyond ready to join the T1International digital advocates team and become one more voice who helps to make the issues regarding insulin access and affordability heard.

27 Acts of Kindness: Days 24 and 25

It is officially the month of May! Say what?!

This means that I’m rapidly approaching the last few days of my acts of kindness challenge…though I certainly do have some ideas on how to keep the positive vibes going in the near future.

Speaking of, I think that Wednesday’s act of kindness will definitely help me make that happen…

Wednesday, 4/29 – Act of Kindness #24: So this one’s really special to me. For months now, I’ve expressed to many people how I want to become a better diabetes advocate. Sure, I have this blog and it’s one form of raising diabetes awareness, but I want to do more. I started looking into some options on Wednesday and it brought me to the T1International website. I’ve had a vague awareness of T1International and their work for some time now – that website is where I purchased my awesome #Insulin4All sweatshirt – but I wanted to understand what they do to a greater extent.

Turns out, they have a pretty awesome mission: T1International works to support local communities by giving them the tools they need to stand up for their rights so that access to insulin and diabetes supplies becomes a reality for all.

After clicking around their website some more, I found out that they are seeking digital advocates who can help spread the word about their organization and its goals…so I decided to sign up to become a digital advocate for T1International and I couldn’t be more thrilled about it.

I’m learning more about what I will specifically be doing this weekend, but as for now, I’m just excited about the chance to advocate for a cause that I’m very passionate about, which is access to insulin for all. Because like it says on the T1International website, life with diabetes is complicated enough…nobody should have to worry about access to vital insulin, diabetes supplies, or medical care on top of it.

Travel Buddies
Water and insulin are two very important liquids that not all people have access to…and that’s not okay.

Thursday, 4/30 – Act of Kindness #25: You know what else everyone should have access to, but unfortunately, many people in the world do not? Clean water.

Access to clean drinking water is absolutely something that I take for granted…and it’s simply unfathomable to me that 785 million people – which is to say, 1 in 9 – lack access to safe water. How wild is that? Water is crucial to so many aspects of life, and there isn’t one single human on this planet that can survive without it.

So after a conversation with my mom yesterday about causes that are near and dear to our hearts, in which she reminded me that for years now she’s been hoping to build a water well in a place that it’s greatly needed, I donated to water.org. Talking with my mom and hearing the dedication in her voice made me want to do what I could to help her support a cause that means a lot to her, so I happily made the donation in her name and even got to send her an eCard notifying her of it. Hopefully, it makes her smile and reminds her that she does have the ability to get that well built one day because those closest to her will support her every step of the way.

Whether it’s insulin, water, food, shelter…there are simple basic needs that all human beings deserve to have access to, and its an injustice that they don’t. Fortunately, there are amazing organizations out there like T1International and Water.org that work tirelessly to change this, and it’s humbling to be able to support them in any capacity. I linked to their websites in this post – hover over their names above – I encourage you to check them out and consider the ways you might be able to help them, too.