A drastic increase in the price of insulin has become a major issue in the United States. In 1996, insulin cost around $30, but, in 2016, the price shot up to $250. This rise in cost has been so steep that middle class families can barely afford insulin anymore. In many cases, patients have rationed the medicine they need to survive due to their inability to continuously buy insulin.
A vial of insulin only costs around $6 to make, so what has caused such a steep rise in the cost of insulin over the past twenty-three years and how can we efficiently lower the cost to a price the middle class can continuously afford?
There are many reasons as to why the price on insulin is on the rise. A quick point would be the cost inflation of the U.S. dollar in 1996 compared to a dollar in 2019. However, if that were the only factor that would mean insulin today would only cost $48.98.
One of the major reasons that the price of insulin has drastically risen is because studies show that only three pharmaceutical companies, namely Novo Nordisk, Sanofi, and Eli Lilly, control ninety percent of the world’s insulin market. Controlling that much of the insulin market basically means these three companies have an oligopoly over insulin and can set the prices as they please.
These companies have also secured patents on the product of insulin, which makes it impossible right now for a generic insulin to be made. The tactic used by these companies is called “patent evergreening.” These companies have used various different means to extend their patents and protect their monopolies over their products. Sanofi alone has filed over 70 applications for a patent on their product, Lantus. This could potentially give them a complete monopoly over their product for another twelve years and allow them to continue to raise or lower insulin prices as they please.
So, what can be done to lower the price of insulin?
For starters, we could introduce more pharmaceutical companies into the market of insulin. If we deny the big three insulin manufacturing companies the right to continue their patent right now, their monopolies would be rendered void and more companies could begin attempting to produce their own insulin.
Our free market system should not allow a patent to be placed on a product that is required to save lives. The patents are hindering the ability to manufacture new and more efficient forms of insulin and this is resulting in a loss of life.
Perhaps we could create a system in which a pharmaceutical company approaches Congress and the FDA with a prototype of their insulin and asks for the right to sell it. Then more competition could enter the insulin market with a potentially superior insulin product.
In conclusion, the drastic increase in the price of insulin is due to three companies controlling 90 percent of the world’s insulin market and using patent evergreening to extend their patents and continue their dominance of the market. To lower the cost of insulin, we must introduce more pharmaceutical companies into the insulin market to create more competition amongst the three existing companies. If we decrease regulation on insulin production, prices will lower, meeting the needs of millions of Americans.
The views expressed in this article are the opinion of the author and do not necessarily reflect those of Lone Conservative staff.