Rising insulin prices drive higher diabetes care spending

Type 1 diabetes has become a more costly disease to manage, thanks in large part to insulin costs nearly doubling over five years.

All in all, Type 1 diabetes costs rose from $12,467 in 2012 to $18,494 in 2016, according to a report released Tuesday by the Health Care Cost Institute. The group found the increased cost of insulin accounted for 31% of per-person healthcare spending in 2016, as the average annual out-of-pocket spending for insulin jumped from $2,864 to $5,705 in that same time frame.

By contrast, medical expenditures for inpatient and outpatient care as well as professional procedures made up 47% of total healthcare costs in 2016, while the cost of diabetes drugs that weren't insulin accounted for 22%.

But while the share of each one of those non-insulin expenses as a proportion of total healthcare costs decreased over time, insulin costs continued to climb, accounting for 47% of the $6,000 increase in total per person spending over the period.

HCCI researchers analyzed health insurance claims from more than 16,000 Type 1 diabetes patients who used employer-sponsored health insurance. They tracked prices for every insulin product on the market between 2012 and 2016 and found that prices increased in all cases, with the average sales price increasing from 13 cents per unit in 2012 to 25 cents per unit in 2016.

The report found that average daily insulin use rose only 3% over the study period.

More than 1.2 million Americans live with Type 1 diabetes, according to the American Diabetes Association, and an estimated 40,000 new cases are diagnosed annually. Unlike the majority of patients with Type 2 diabetes who can improve the impact of the disease and lessen their dependence on insulin through healthier diet and exercise, Type 1 patients do not make insulin at all and require several doses a day.

"You literally have a captive, near helpless customer base when it comes to Type 1 diabetics and insulin," said Niall Brennan, CEO of the institute. "There are few if any segments of the American economy where a manufacturer could raise prices by 92% and have people consume the same quantity of that product."

The rising cost of insulin has sparked outrage among both patients and lawmakers in recent years and put pressure on drugmakers to justify the price hikes. The average cost of a prescription has risen from $405 in 2013 to $666 in 2016.

Pharmaceutical companies have in the past argued high drug prices are needed to pay for the cost of researching and developing new innovative products. But insulin has been on the market since the 1920s, and the most recent innovative breakthrough was made 20 years ago.

"These aren't increases in prices for innovative products; these are increase in price for the exact same thing and for things that have been around for decades," said Jean Fuglesten Biniek, the report's lead author and a senior researcher at HCCI. "And to the extent that there has been innovation, we're talking about minor tweaks."

Both state and federal lawmakers have sought ways to address the high cost of insulin. Last November, the Congressional Diabetes Caucus released a report that recommended 11 policy changes to address high insulin costs that included ways to increase market competition and pricing transparency, as well as changing patent laws.