Insulin and the Free Market: A Brief Inquiry

The Washington Post tells the story today of Lija Greenseid:

Her daughter, who is 13, has Type 1 diabetes and needs insulin. In the United States, it can cost hundreds of dollars per vial. In Canada, you can buy it without a prescription for a tenth of that price. So, Greenseid led a small caravan last month to the town of Fort Frances, Ontario, where she and five other Americans paid about $1,200 for drugs that would have cost them $12,000 in the United States.

The cost of insulin has been soaring for a long time. It’s doubled just since 2012:

That chart is from 2016, and the price of insulin has kept going up since then:

The pharmaceutical companies will tell you that this is all just list price and doesn’t represent the true price of insulin after discounts and rebates. Pay no attention to this special pleading. Here is the average out-of-pocket cost of insulin for Medicare patients:

And as the price of newer forms of analog insulin rose, guess what happened to old-school products that had been on the market for years?

U500 is a highly concentrated form of insulin for insulin-resistant patients. Between 2010-2014, it suddenly skyrocketed in price from $12 to $59. That’s a 400 percent increase in five years.

There are multiple suppliers of insulin, but as you can see from the top chart, they all increased their prices in lockstep. There appears to be not a single pharmaceutical company with any interest in lowering their price in order to win a bigger market share. It is a mystery to me how these companies continue to avoid an antitrust action from the federal government.

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