Questions for Chairman Sanders
Insulin costs will move center stage this week when top executives of three leading manufacturers of the drug will testify before Sen. Bernie Sanders’ Health, Education, Labor, and Pensions Committee (HELP) during a hearing on lowering insulin costs.
If the committee’s failed markup session last week is any indication, it should be a lively and likely contentious discussion. The markup session dissolved in dispute as Ranking Republican Bill Cassidy accused Sen. Sanders of abandoning “a carefully balanced, bipartisan piece of legislation we negotiated over the last several weeks.”
And making this Wednesday’s planned hearing even more dramatic will be the addition of heads of Pharmaceutical Benefit Managers (PBMs) who are locked in a battle with pharmaceutical companies over cost issues.
Yes. Expect fireworks.
The postponed markup session will now be held on May 11—the day after the HELP drug cost hearing.
But first, we have a few questions for the chairman:
- What about the draconian price controls on prescription drugs that Congress enacted just this last August through the so-called Inflation Reduction Act? Does Sanders think those won’t be enough?
The Centers for Medicare and Medicaid Services is racing ahead, without any meaningful input from citizens or companies, to impose and expand IRA drug price controls that will quickly impact most major brand name drugs. With that door wide open, Sanders is on track to inject even more government control and distortion into the prescription drug market with this new bill. - Will the HELP committee try to legislate lower prices without looking at the underlying reasons for the high costs? The current arrangement between pharmaceutical companies and PBMs provides a strong incentive for higher drug costs. Here’s a great video that explains how the “rebate” system works.
Basically, higher-rebated drugs get priority placement on PBM formularies where more patients are likely to have access to the drugs. Every time a prescription is filled, the PBM gets a rebate from the drug manufacturer, which is a percentage of the list price. That’s a built-in incentive for PBMs to favor higher list prices—which also result in higher co-pays for patients.
Sen. Roger Marshall of Kansas plans to offer an amendment to the Sanders/Cassidy bill that would delink PBM reimbursement from the price of a drug. Good start. - Do political leaders care that they are stifling innovation? The most important recent research on this issue is being done by Tomas Philipson, former chairman of the White House Council of Economic Advisers and now a professor at the University of Chicago.
Philipson’s work shows that Medicare’s expected savings from the IRA price controls will be a fraction of the added health costs and loss of life years from the new drugs that simply won’t be developed as a result of the IRA. Sanders’ bill could make it worse.
“The [IRA] would reduce drug industry research and development by about $663 billion, resulting in 135 fewer new medicines. This will amount to a loss of 330 million life-years, about 30 times the loss from COVID-19 so far,” Philipson writes.
This is especially important regarding insulin. It is not an exaggeration to say that insulin is the most innovative drug on the market today.
Nineteenth century researchers studying the causes of diabetes found that when a pancreas gland was removed from a dog, it would develop diabetes and die.
In 1921, a young surgeon named Frederick Banting and his assistant Charles Best figured out how to remove insulin from a dog’s pancreas. A year later, Leonard Thompson, a 14-year-old boy dying from diabetes in a Toronto hospital became the first person to receive an injection of insulin. Within 24 hours, Leonard’s dangerously high blood glucose levels dropped to near-normal levels.
But today’s drugs could not be more different—and superior to the 1921 version.
Every decade since then has seen major advancements: Insulin was the first human protein to be chemically synthesized in 1963. The world’s first insulin preparation identical to human insulin was launched in 1982, followed by insulin pumps, disposable insulin syringes, ultra-rapid and ultra-long acting insulins, and more. Decades of research give people with diabetes a variety of formulas and delivery methods to fit their individual needs.
So, when you hear people say this is a 100-year-old drug and it shouldn’t cost so much, ask them if they understand the untold billions of dollars that have been invested since then to make insulin the sophisticated life-saving drug it is today.
Eli Lilly, Sanofi, and Novo Nordisk are the major manufacturers of insulin today and are expected to testify before Sen. Sanders on Wednesday. They can and should tout the 70% - 80% reductions in insulin prices they recently announced.
Let’s hope they also talk about the vital importance of continued investments in research to find not just better treatments, but cures. More price controls and government interventions would be a major barrier to that progress.
Grace-Marie Turner runs the Galen Institute which promotes market-based solutions to problems in the U.S. health sector. She can be reached at gracemarie@galen.org. Follow her on Twitter @gracemarietweet
