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What Eli Lilly's Insulin Price Cut Really Means · CareTalk: Healthcare. Unfiltered.

• 0:00
  David: US drug prices have been soaring for years and insulin is one of the worst offenders.
• 0:05
  David: Its price has gone up 1000% over three decades leading more than 1 million Americans to ration this life-saving drug.
• 0:13
  David: Now, Eli Lilly is slashing prices by 70%.
• 0:17
  David: Have we entered a new era of drug affordability or is this announcement just a lot of hot.
• 0:23
  David: Welcome to CareTalk, America's home for incisive debate about healthcare, business, and policy.
• 0:28
  David: I'm David Williams, president of Health Business Group.
• 0:32
  John: And I'm John Driscoll, the president of Walgreens Health.
• 0:34
  John: David, of course, it's a big deal.
• 0:36
  John: They're cutting the list price across the board by 70%, and the most important thing probably for those who've been suffering from excessively high drug prices is they're capping out of.
• 0:49
  John: Costs for patients at, 35 bucks a month.
• 0:53
  John: And, previously it could cost as much for an uninsured person as a thousand dollars a month.
• 0:58
  John: So that's a big deal, David even for someone, even for a big spender like
• 1:03
  David: yourself, John, I'm gonna have to disagree with you if you can believe it.
• 1:07
  David: So you said they're cutting prices across the board and that's not quite true, John.
• 1:10
  David: They went to some of those.
• 1:11
  David: Absolutely.
• 1:12
  John: Don't you believe everything that Big Pharma
• 1:14
  David: says?
• 1:16
  David: They, they go to some of, like those old models sitting in the back room and they cut the price of those.
• 1:20
  David: John, it's, they're older products.
• 1:21
  David: They're cutting the list price of those by 70%.
• 1:24
  David: So yes, it's true and it is a big deal and President Biden applauded it as such.
• 1:31
  David: And it comes after he's been calling for just such, such a move.
• 1:34
  David: And in fact, in the inflation reduction there, the cost of insulin is capped at $35 per month.
• 1:41
  David: The out-of-pocket for Medicare recipients.
• 1:43
  David: There was a discussion to move it to everybody, didn't happen in the legislation, and now the bully pulpit has achieved it.
• 1:49
  David: So it's a big deal, but it's not across the board.
• 1:51
  David: John, so here's my question to you though.
• 1:54
  David: Yes.
• 1:54
  David: David,
• 1:56
  John: I'm not, I'm I think you're, I think you're I really want you to think about the patient.
• 2:00
  John: What does the price cut?
• 2:03
  John: For Americans who need insulin.
• 2:06
  David: So it's usual.
• 2:07
  David: It's not as big of a deal as what people think.
• 2:10
  David: What it means is that if you are taking the basic form of insulin and you have commercial insurance and you have a program that it that where you have to spend a lot out of pocket, your out-of-pocket cost is going to drop.
• 2:27
  David: However, if you are taking, for example, the prefilled syringe, Price of that is staying unchanged at $530 per vile.
• 2:35
  David: So it doesn't mean all that much to individuals, but it is a big deal perhaps for what it means about price cuts in the pharma space overall.
• 2:45
  David: Yeah.
• 2:45
  David: Ro
• 2:46
  John: Wrong, wrong and wrong again, I think it's a very big deal that the prices are being cut or capped.
• 2:53
  John: This is the beginning of a movement that you and I both identified where I do think that the.
• 2:59
  John: The unhindered increase in costs of drugs that are non-no, between 2010 and 2019.
• 3:09
  John: Just under 10 years, the price of insulin like this tripled for no good reason.
• 3:14
  John: Same drug, same impact insulin was contributed to the world by two Canadian sciences as a gift for two pennies and those that have been manufacturing it and distributing in the us It's probably the most egregious example of excessive overpricing.
• 3:31
  John: 40% of the.
• 3:33
  John: Is pre-diabetic.
• 3:34
  John: We've got an epidemic of diabetes.
• 3:35
  John: Diabetes is a disease of com complexity.
• 3:39
  John: It leads to blindness, it leads to amputation.
• 3:43
  John: It leads to, on many parti, when it's unmanaged a lot of unnecessary visits to the doc, to the doctor, and to the hospital and to unnecessary illness.
• 3:54
  John: I, so I think this is quite a big deal for two reasons.
• 3:56
  John: It's.
• 3:57
  John: It's potentially healing, create, allowing access to healing solutions for a big part of a, so a population that disproportionately is of color and poor, and this is a direct support for them to stay on their drugs.
• 4:12
  John: And it also, to your point, speaks to a different relationship between America as a purchaser of drugs and the manufacturers who, who in addition to inventing the drugs and distributing them, have been overcharging in many cases.
• 4:26
  John: For non-no compounds,
• 4:30
  David: John insulin is a big deal, of course for those that take it.
• 4:33
  David: But most people don't take insulin.
• 4:35
  David: They take other medications, and those have been very expensive.
• 4:38
  David: I think we're seeing actually some broader implications for the pharmacy market and for healthcare policy.
• 4:43
  David: President Biden is being very clever right at the moment, in these game of chicken.
• 4:48
  David: Over the debt ceiling.
• 4:49
  David: He's been accusing the Republicans of planning to cut Medicare and they've been denying it, but they haven't put a plan out there.
• 4:56
  David: Now, president Biden is putting a plan out there that says, Hey, we have the Inflation Reduction Act, which established the principle that you can negotiate drug prices.
• 5:03
  David: And he says, here's how we actually make Medicare sustainable.
• 5:06
  David: Not by cutting benefits or increasing the age, but say let's actually take those drugs that are subject to negotiation and put more of them in sooner so that they'll be more of a savings.
• 5:16
  David: Cap the out-of-pocket, at least for drugs, for chronic conditions at $2 a month.
• 5:20
  David: So I think he's really being clever with this and it may establish some real momentum.
• 5:25
  John: It's the, it's really exciting.
• 5:26
  John: But David, why is Eli Lilly reducing the prices now?
• 5:33
  David: I think what's happened is that they are just really getting the pressure now.
• 5:36
  David: They have not actually increased prices since about 2017, even though we've talked about a thousand percent increase.
• 5:43
  David: Over the last three decades, those have actually plateaued and I think it's direct pressure from the government and from popular opinion.
• 5:50
  David: The Inflation Reduction Act, in particular has brought this to a four.
• 5:55
  David: The news that people are rationing insulin, a million people are more in the United States.
• 6:01
  David: I think the estimates are 1.3 million, and I think the Bully pu pulpit has been effective for President Biden, including in the State of the Union where he called this out fairly.
• 6:13
  David: .
• 6:13
  David: John: Yeah.
• 6:13
  David: David, this is a very big deal.
• 6:15
  David: I You keep poo-pooing it.
• 6:17
  David: I actually think it's, you're suggesting, and by the way yes.
• 6:20
  David: The price for a 10 milligram vial actually did go from about $109.
• 6:26
  David: And you're right, it didn't triple over between 2010 and 2019.
• 6:29
  David: I think it went up to two 90.
• 6:31
  David: So there, so your math is better, but the point still stands that this is egregious.
• 6:35
  David: These are excessively high margin drugs.
• 6:39
  David: For very vulnerable populations and the prices have been going up at unconscionably higher rates.
• 6:44
  David: 30 million people in the US have diabetes, 40% of the population is pre-diabetic, and over 7 million people take insulin.
• 6:56
  David: I think this is a massive win for vulnerable populations.
• 7:01
  David: And I do think, or I do think you're right though, is that there's this almost a structural change.
• 7:08
  David: Potentially in the way the government starts to negotiate in at a time of an unwillingness to raise taxes or truly cut benefits.
• 7:18
  David: the margins for big pharma look pretty attractive.
• 7:21
  David: And I think that there's an opportunity to parse the, those non novel drugs like insulin where I think the government can leverage its pricing power or, and it's app.
• 7:36
  David: Responsibilities as a purchaser and still protect some of the novel therapies that, pharma should be rewarded for, even if we're haven't paying a high price for new he healing therapies.
• 7:47
  David: But David, just contextually, why is insulin so expensive in the United States specifically?
• 7:56
  David: I think it's because of our philosophy in other.
• 8:00
  David: People wouldn't think about healthcare as a business in other countries, the cost of insulin is something like, $10 per vial as opposed to hundreds of dollars.
• 8:09
  David: Here I remember studying economics and one of the first examples they give in terms of trace elasticity is to say, what are things that you really can't choose?
• 8:19
  David: What you're, how much you're gonna buy?
• 8:20
  David: And insulin was the example.
• 8:21
  David: So no matter what the price you're gonna get it, if you.
• 8:25
  David: And so governments have generally translated that into, so therefore you can get it for free.
• 8:29
  David: So you're not abused by the sellers of it.
• 8:31
  David: In the United States, we just have had a different view about that.
• 8:34
  David: You mentioned the inventors.
• 8:36
  David: One of the, in inventors, Frederick Banting, he transferred the patent to the University of Toronto for a dollar.
• 8:40
  David: And he said, quote, insulin does not belong to me.
• 8:42
  David: It belongs to the world, end of quote.
• 8:44
  David: And most people, most countries took that as took that seriously.
• 8:48
  David: And in the United States, we took it a little differently because of how we think about the healthcare.
• 8:53
  David: . So David,
• 8:54
  John: Is it just lil in this game or are there other mania?
• 8:58
  John: Aren't there?
• 8:58
  John: Aren't.
• 8:59
  John: What happens to Novo Nordisk and Sanofi?
• 9:02
  John: Yeah.
• 9:02
  John: And the other folks who are manufacturing it and distributing in
• 9:04
  David: the us So Lilly and Novo Nordisk are the two biggest players by far.
• 9:09
  David: Snowy being the third player and together they have more than 90.
• 9:12
  David: Of the insulin market.
• 9:13
  David: Now, Novo actually introduced its own generic product in 2021 in conjunction with Walmart.
• 9:19
  David: Lilly itself also has a generic product on the market too.
• 9:23
  David: So there has been a little bit of of tinkering and monkeying around, but there's three players and it's an oligopoly Johns what it is.
• 9:30
  David: But there's also the role of the pharmaceutical benefit managers and distributors in this too.
• 9:35
  David: Lilly says on their website that they only.
• 9:38
  David: $43 a vile.
• 9:40
  David: So while you've been talking about $275, which is the list price for the product that that they're cutting, they say, Hey, we only get a few pennies out of this after the nasty PBMs are done with us.
• 9:52
  John: Yeah.
• 9:53
  John: Do you believe that?
• 9:54
  John: Do you buy that?
• 9:56
  David: I don't buy insulin, John.
• 9:57
  David: But you're the expert.
• 9:58
  David: What do you think?
• 9:59
  David: I, you're the buyer.
• 10:01
  John: We know that there is a, that the biggest margins and the biggest dollars are still made on the margins of pharma v versus anyone else in the healthcare system.
• 10:12
  John: So I'm a little skeptical.
• 10:13
  John: I'm sure there are some PBMs in the health plans that are playing games, but I, it's the manufacturers who control where the price starts and where the margin.
• 10:22
  John: Everybody else is participating in this gravy train.
• 10:26
  John: And I think that, I think the roles, I think there's, I think there's mistakes on all, all around, but it's when you're overcharging for something that's effectively a generic already, cuz it's not novel, it's been around for a hundred years, that vulnerable people need and you control the marketing and distribution and you keep increasing the.
• 10:44
  John: They wouldn't keep increasing the price if they weren't continuing to make more money.
• 10:48
  John: And that in the stock prices and the valuations.
• 10:51
  John: So David, what do you think this is going to mean for other drug pricing and other drug companies and frankly, for consumers out-of-pocket costs elsewhere?
• 11:02
  David: John, I think it's good news.
• 11:03
  David: I think this is one of those things where the.
• 11:09
  David: Results of this decision, this announcement are not as big as they've seen.
• 11:13
  David: Yes, they're slashing prices, but it only affects a few people.
• 11:16
  David: It only affects certain products and so on.
• 11:18
  David: However, I believe that it's actually the beginning of something bigger.
• 11:22
  David: It's hard for the public to get their arms around healthcare policy, but when you talk about the price of insulin and say that's gonna be cut in terms of the list price, and you're gonna reduce the out-of-pocket, that is a, and that, that's actually going to be the.
• 11:36
  David: That we're going to make Medicare last longer.
• 11:39
  David: I actually think that's simple enough, powerful enough, and profound enough that it will make a difference to consumers.
• 11:47
  David: The biggest difference it's going to make is it may well extend the life of Medicare, and it may give President Biden the upper hand in negotiations over the debt ceiling.
• 11:59
  John: And you've got really, I think it's a really clever point approach as well, but you've also got broad bipartisan support that pharma prices are too high, particularly those who can't pay.
• 12:11
  John: It's the one thing that.
• 12:13
  John: Bernie and Trump really agreed on, which is the prices are too darn high.
• 12:18
  John: But I gu I guess so.
• 12:20
  John: The farm is the loser here.
• 12:22
  John: H how much money is Lilly gonna lose based on this new policy?
• 12:26
  John: ?
• 12:26
  John: David: John, I'm gonna give a short to close the episode out after that.
• 12:32
  John: The answer is that Lilly's not really likely to lose any.
• 12:35
  John: As a direct result of this, it's tinkering around the margins.
• 12:39
  John: They can still raise prices elsewhere.
• 12:42
  John: It only affects a small percentage of the people that they are selling to it's commercial product.
• 12:48
  John: So to the extent that you get more commercial market share, they're gonna probably be net about even, but it is likely the one that took things too far and will bring down crisis across the drug.
• 13:00
  John: Overall.
• 13:00
  John: That's my thought on it, John.
• 13:02
  John: And that's it for yet another episode of CareTalk.
• 13:04
  John: We've been talking about the dramatic or not price slashing by Eli Lilly on insulin, which makes John Driscoll's dreams come true.
• 13:15
  John: I'm David Williams, president of Health Business Group, and I'm John Driscoll, the president of Walgreens Health.
• 13:21
  John: If you liked what you heard or you didn't, please subscribe on your favorite service.
• 13:25
  John: And yes, it does warm my heart.