A Verywell Report: Insulin Price Cuts Barely Move the Needle for Americans

Monthly price caps and more competition may be more impactful for patients than the slashing of insulin list prices.

Fact checked by Nick Blackmer

• The three major insulin manufacturers in the U.S. have announced reductions in the list prices of some insulins by 70% or more—but that still leaves prices considerably higher than in other high-income countries.

• Other initiatives announced by the insulin manufacturers, like $35 monthly price caps, will do more to limit spending for people who need multiple vials of insulin per month.

The three primary manufacturers of insulin in the United States have each announced major price cuts on their products, signaling a shift in notoriously expensive diabetes care:

• Eli Lilly immediately capped out-of-pocket costs at $35 per month at participating retail pharmacies for people with commercial insurance using Lilly insulin. For those without insurance, Lilly is expanding its Insulin Value Program to limit out-of-pocket costs for insulin to $35 a month. The company also said it would reduce the list price of Humalog and Humulin—two of its most commonly prescribed insulins—by 70% by the end of 2023.

• Novo Nordisk committed to reducing list prices by 65% to 75% on insulin brands Levemir, Novolin, NovoLog, and NovoLog Mix 70/30 by January 1, 2024. Novo Nordisk will continue to offer co-pays for as little as $25 to $35 a month for several insulin products for eligible patients in commercial insurance plans.

• Sanofi announced it would cut the list price of its most commonly-prescribed insulin product, Lantus, by 78% beginning January 1, 2024. The company will also reduce the price of its rapid-acting insulin, Apidra, by 70%. At the same time, it will cap out-of-pocket insulin expenses for insured patients at $35 per month. The company has already capped out-of-pocket monthly costs to $35 for those without insurance.

The recent insulin price cut announcements follow 2022 legislation that also caps insulin costs at $35 per month, but only for Medicare beneficiaries—adults aged 65 and older.

Related:How the Inflation Reduction Act Will Reduce Health Care Costs for Seniors

Because people on Medicare make up only 3.3 million of the roughly 8 million insulin users in the U.S., the recent legislation doesn’t really move the needle for the majority of people with diabetes. Now that manufacturer price cuts extend to people with private insurance and people without insurance, are Americans with diabetes poised to be in a better financial place?

According to an analysis of insulin pricing data by Verywell, while Americans will save money thanks to price cuts, insulin prices in the U.S. will still be notably higher than in other high-income nations—over twice as high per vial. That’s why a $35 cost sharing price cap each month is so important, Muhammad Salam, MD, an endocrinologist at the University of Missouri Health Care, told Verywell.

"We are already seeing that patients’ ability to use insulin has improved tremendously," he said.

Insulin is a hormone produced in the pancreas responsible for regulating the amount of glucose—or sugar—in the bloodstream. Because people with type 1 diabetes can’t produce their own insulin, they need to take insulin medication every day, whether through a syringe, pen, pump, or inhaler.

Up to 30% of people with type 2 diabetes may also need to take insulin if their bodies don’t produce enough of it.

Why Is Insulin So Expensive in America?

Data from a 2018 research report by non-profit research organization RAND shows the average gross manufacturer price for a standard “unit” of insulin in the U.S. is $98.70. This is more than 10 times the average cost of insulin in the 38 other high-income countries belonging to the Organization for Economic Cooperation and Development (OECD).

For data in this article, a "unit" of insulin is roughly equivalent to a 3 milliliter container with a concentration of 100 units/milliliter of insulin, the most commonly-used insulin size and concentration.

According to Kasia Lipska MD, MHS, BS, an endocrinologist at the Yale School of Medicine, the U.S. healthcare system is to blame for the uniquely high cost of insulin in America.

"We have a convoluted system in the U.S. in which profit is exacted at every step of the way, from when insulin is manufactured to when it reaches the patient," she told Verywell. "The rising cost of insulin means that people are forced to pay more out of pocket. In Yale’s study based on national data, one in seven Americans reached catastrophic levels of spending on insulin, meaning they spent 40% or more of their disposable income on insulin alone."

While they are paying a lot of money out of pocket, consumers in the U.S. typically don’t pay the manufacturer list price for insulin. Most people with insurance pay a lower net price achieved through rebates and discounts acquired by pharmacy benefit managers (PBMs). Although the specific amounts of these rebates aren’t exactly known—due in no small part to efforts by PBMs to conceal them—estimates place the markdown at anywhere from 23% to 75%.

The upper end of this markdown is nearly identical to the percentage insulin manufacturers are cutting their list prices, Andrew Mulcahy, PhD, MPP, senior health economist and lead author of the RAND study, told Verywell.

Related:Who Will Benefit from Eli Lilly's Insulin Price Cuts?

Because most people are not paying cash for the full manufacturer price to begin with, the overall amount of money insulin manufacturers receive for drug sales won’t change much. Instead of reducing the cost of insulin for the consumer, the manufacturer price cuts are effectively replacing the rebates and discounts PBMs were extracting from insulin manufacturers.

"These price reductions will sting most for PBMs, who no longer will be able to tally up huge negotiated savings from rebates on these insulin products," Mulcahy said.

Even if the U.S. gross manufactured insulin prices were adjusted down 75% like each of the companies have announced, insulin costs will still average $24.68 per unit compared to $12.26 for non-US OECD nations. Since many people with diabetes need two or three vials of insulin per month, costs would soar upwards of $50 in the absence of a monthly price cap.

This price markup in the U.S. holds for every type and timing of insulin, and accounts for the fact Americans tend to buy pricier types of insulin. Long-acting insulin is over 64% more expensive than in other high-income countries, while rapid-intermediate-acting insulin is almost 218% more expensive. Even taking into account a 75% rebate, no OECD nations except Chile had average insulin prices higher than the U.S.

What Will It Take to Truly Level the Playing Field?

It’s clear that cuts announced by manufacturers on their prices are not enough. While $35 monthly caps are a step in the right direction, Mark Pauly, PhD, a professor of economics and health care management at the University of Pennsylvania, said an influx of generic insulins will make the biggest impact on forcing down prices.

In 2021, the Food and Drug Administration (FDA) approved the use of Semglee, a generic insulin option that is hundreds of dollars cheaper than brand name products on the market. Indeed, data from GoodRx suggests that the average retail price of insulin has already fallen about 5% from January of 2020 to October of 2021.

Related:Overview of the Types of Insulin

Insulin prices will likely continue to drop in response to deregulation, legislation, and subsequent industry discounts. But prices in the U.S. need substantial continued markdowns to approach levels comparable with other high-income nations.

While Pauly is of the belief that more legislation won’t help curb insulin costs in America, Lipska thinks anything helps—including brand new channels for insulin production, like the state of California is pursuing.

'The [current] assistance programs from manufacturers do not have a wide reach," she said. "They are not easy to navigate, often involve paperwork, and are temporary solutions for a narrow swath of the population."