Compared to other developed nations, insulin costs in the U.S. are five to ten times higher,
setting immense pressures on health insurance systems and patients. As universities provide
students with health insurance plans, many educational institutions lose funds yearly for
students with diabetes, even with co-pay. As some states enacted legislation to cut these co-
pays to $25-$35, universities end up even more burdened by these costs. In the meantime,
insulin manufacturers and Pharmacy Benefit Managers (PBMs) gained significant profits from
artificially inflating insulin costs and taking advantage of discount premiums.
The Impact of Surging Insulin Costs on Students
Research conducted at Yale University on the effects of insulin prices on patients indicates that
25% of patients resort to insulin rationing while 14% of patients spend almost half their income
on insulin. Data from Charity RX further indicates that almost 80% of patients struggled with
covering insulin costs, while 4 out of 5 patients had to take on credit debt to afford these prices.
For students, given the limited availability of income in this group, the impact is substantially
higher. Students who can no longer afford insulin are thus more likely to resort to rationing, with
severe health implications. Inadvertently, complications emerging from uncontrolled diabetes
limit students’ ability to continue their education, and as a result, this impacts universities, which
will lose tuition money once students withdraw from higher education.
Illinois Insulin Caps and Impact on Private University
Health Plans
Illinois recently introduced new legislation that caps insulin at $35, making this drug more
affordable for many residents. However, these caps mean that the difference in costs will be
covered by insurers, with staggering costs. For example, the federal state also issued caps
through the Inflation Reduction Act 2022 only for those with Medicaid and Medicare insurance. In Illinois, the costs saved by patients but paid by the federal government if the Act had been
implemented in 2020 were estimated at $30.9 million.
Considering current insulin caps in Illinois and university status, these caps apply to both private
and public organizations. Notably, these universities have limited options to support insulin
costs for students with diabetes. Herein, universities can charge premium prices for healthcare
plans for students with diabetes or simply cover the costs and run at a loss. As one in eight
Americans has diabetes, for universities with self-funded employee and student health
insurance plans, sustaining these costs becomes impossible.
Concomitantly, although the Affordable Care Act (ACA) prohibits outright discrimination based
on pre-existing conditions, loopholes exist in self-insured university plans, which can, in effect,
leave students with diabetes uninsured. One of these options is to offer plans with high insulin
costs or minimal chronic illness support, which simply deter students with diabetes from opting
for these plans.
What is driving the surge in insulin prices?
The cost of manufacturing insulin in America is between $2 to $4, yet this life-saving medication
reaches shelves at costs of up to $200 for a week’s supply. Manufacturers argue that these
costs are related to inflation and R&D. However if accounting for additional costs on the insulin
supply chain and inflation rates, these costs should not exceed $130 for a whole month’s
supply. This estimation further aligns with research conducted by RAND, noting that, in contrast
to other 33 developed nations, insulin in the U.S. can reach costs up to ten times higher.
Therefore, the manufacturers’ arguments cannot justify these exorbitant prices.
Instead, investigations into the U.S. insulin market demonstrate that while insulin list prices have
soared, actual revenue for manufacturers has declined due to massive rebates negotiated by
preferential insurers and PBMs. From 2012 to 2019, insulin sales doubled to $27 billion, yet net
earnings dropped by 40% as manufacturers offered rebates exceeding 80%. These hidden
discounts benefit only some insurers and PBMs, while private and public insurers outside this
scheme, including universities, are left paying the full price.
Multidistrict Litigation and Federal Regulation
Burdened by the increasing price of insulin, patients, universities, and other insurers took this
matter to court. The Multidistrict Litigation (MDL No. 3080) accuses major insulin manufacturers
and PBMs of artificially inflating insulin prices through secret rebate schemes. Plaintiffs argue
that companies like Eli Lilly, Novo Nordisk, and Sanofi colluded with PBMs to manipulate
pricing, driving up costs for everyone outside the preferential group.
The trial has several indications that it will be successful, as there is sufficient evidence to
indicate that the pricing strategy was coordinated and maintained over time, directly violating
trade and market legislation. However, even so, this phenomenon points to a deep problem
within the system, namely the absence of federal regulations that would prohibit companies
from overcharging for life-saving medication. In this context, this trial should serve as a catalyst
for the federal state to develop legislation that would protect the interests of patients and
insurers against corporate greed.
About the Author
Yahn Olson is an experienced attorney at Environmental Litigation Group, P.C., focusing on
corporate misconduct cases. He dedicates himself to representing individuals and organizations
impacted by unethical business practices and holding corporations accountable.
