Eli Lilly’s Insulin Decision Puts Others in Hot Seat

Americans pay several times as much for insulin as people in other developed countries. In any other industry, competition rather than public outrage would fix that problem for a product that no longer enjoys patent protection. But when a little-known nonprofit named Civica Rx announced plans last year to make low-cost insulin, the move didn’t spook the companies that profit from high insulin prices. Though Civica had some high-profile partners such as Blue Cross Blue Shield, insiders knew that many of the industry’s middlemen would resist the push. Pharmacy-benefit managers, which control 80% of the prescription-drug market, profit from high list prices.

Keeping Civica Rx at bay is one thing. It would be something altogether different if, say, one of the huge pharma companies that makes insulin broke ranks and offered a low list price, effectively cutting into potential profits for the middlemen who decide which drugs insurers will cover. That is exactly what happened last week when Eli Lilly decided to drastically cut the list price of some of its insulin products. Its move was a flesh wound for the PBMs. If it were to be replicated with other drugs, it could be a mortal blow.