drug co shenanigans: dm meds

 A recent analysis found huge corporate profits by drug companies that make an array of diabetes meds, far exceeding the actual real costs of their manufacture (see dm meds drug co shenanigans in dropbox, or doi:10.1001/jamanetworkopen.2024.3474)

 

Details:

-- these researchers evaluated the “sustainable cost-based prices (CBPs) of insulins, SGLT-2s (sodium-glucose cotransporter-2 inhibitors) and GLP1’s (glucagonlike peptide-1 agonists), and compared them to their current lowest reported prices in 13 countries.

-- their methodology of determining the sustainable CBPs:

    -- the actual pharmaceutical ingredient (API) cost per unit

    -- the costs of formulation and other operating expenses (including packaging and logistical costs)

    -- a profit margin with allowance for taxes

        -- and the ultimate prices charged should reflect “competitive markets that afford manufacturers sustainable returns, while avoiding excessive profit margins”

    -- the researchers pursued direct solicitation from manufacturer and industry experts to derive their CBPs in order to supplement the above

-- here is their CBP algorithm for the injectable meds:

 

  

-- the 13 countries chosen (all needed to have sufficient information available) included 4 high-income ones (France Latvia, UK, US) and 9 middle-income ones (Bangladesh, Brazil, China [data available only for insulins], El Salvador, India, Indonesia, Morocco, South Africa, and Ukraine)

 

 Results:

-- as an overview of estimated CBPs:

    -- insulin (including the cost of injection devices and needles), per year:

        -- in a reusable pen device: as low as $96 (human insulin), or $111 (insulin analogues) for a basal-bolus regimen

        -- twice-daily injections of mixed human insulin: $61

            -- using human insulin: $50 for a once-daily basal insulin

            -- using insulin analogues: $72 for a once-daily basal insulin

    -- SGLT2s, per month:

        -- all except canagliflozin:$1.30 to $3.45

        -- canagliflozin: $25.00-$46.79

    -- GLP1s, per month:

        --  $0.75 to $72.49

            -- of note, semaglutide was the least expensive, at $0.89 to $4.73 per month (a tad under the $1000 price tag in the US)

 

Here is a graph of the lowest market prices of drugs per month in different countries (where data is available), vs the estimated sustainable cost-based price noted at the bottom of each graph. There are shaded horizonal bars when prices in one country are far above others

-- For insulins, the prices are for using the 100 U/mL formulations and taking 50 U/day. For the SGLT2s and GLP1s, the dose is based on the WHO defined daily doses (an assumed average for the most cost-effective dosage form)

 

 

-- the greatest international spread of prices was seen for regular human insulin in vials (the insulin 70/30 above), with a factor of 103 difference across countries

 

Commentary:

-- as we all know, the incidence of diabetes is increasing internationally, along with its myriad of adverse effects thoughout the body on both quality and quantity of life: the International Diabetes Federation estimated 537 million people had diabetes globally in 2021, and health care expenditures have tripled in the past 15 years

-- the costs of the medications have left many in both high- and middle/lower-income countries without effective access to life-saving meds

    -- there has been a major focus in the US on insulin in the recent past, where ¼ of patients have been underutilizing their insulin because of cost: https://gmodestmedblogs.blogspot.com/2018/12/high-insulin-cost-leads-to-underuse.html

    -- and, given the remarkable therapeutic advances with GLP-1 receptor agonists and SGLT-2 inhibitors (leading to their being recommended as first-line diabetes treatments), their exorbitant costs have proved to be an additional huge increase in diabetes management cost overall (and, even if covered by those with insurance, these and other over-priced drugs have led to accelerated costs of insurance premiums, and increased copays/deductibles/out-of-pocket expenses)

  

-- of course, the issue here is basically one of corporate greed:

    -- A 2012 analysis documented the hugely inflated costs of Research and Development submitted by drug companies to justify their high prices: see https://gmodestmedblogs.blogspot.com/2020/03/medicare-for-all-saves-money.html 

    -- There was an unusual twist on drug pricing with the new hepatitis C drugs that became available about 10 years ago, where the costs were really high (one pill of Sovaldi was $1000, leading to a treatment cost of $84K).  The explicit justification for the high cost was totally disconnected from the actual R&D costs: the mathematics was based on the cost savings by prescribing this drug and the resultant decrease in the costs of taking care of people with end-stage liver disease or hepatic cancer

    -- and this corporate greed overall is a reflection of our times: a recent economic analysis found that 53% of the inflation in the US during the second and third quarters of last year was from huge corporate profits (ie, huge increases in the costs of building materials, food, etc that may initially have reflected supply chain shortages, but continued well after that issue resolved).  This number was in sharp contradistinction to the 11% of price growth for the 40 years prior to the pandemic. And, needless to say, our current level of inflation has profound effects on the population and continues to be one of the top political concerns of the US population: https://www.theguardian.com/business/2024/jan/19/us-inflation-caused-by-corporate-profits

-- here are the annual revenues for Eli Lilly, one of the drug companies with lots of diabetes products including: insulin lantus, insulin lispro, glucagon, humalog and humulin insulins, empagliflozin, and tirzepatide (mounjaro and zepbound).  these revenues are their income minus all costs and expenses

 

 Limitations:

-- much of the information from drug companies is not publicly available.  These researchers noted that there was "a rare glimpse into pharmaceutical companies' internal cost data provided in documents submitted by Sanofi to a bipartisan US Senate inquiry, listing the cost of goods sold (COGC) for 5 insulin glargine pens as $7.11,or about $1.42 each (this is listed an mgmt COGS, presumably describing COGS from the management perspective, as opposed to legal COGS)"; this estimate was similar to what this study found at $1.20 per pen

so, a few comments:

-- it is pretty clear that the US is adding disproportionately to the profits of the diabetes drug makers. why is this so??

    – no doubt, a big part of the problem is that we do not have a single system of health care with the ability to negotiate with drug companies, as is done in the UK and France where drug costs are about 1/3 to ½ that in the US

        – and, the one health system that is relatively coherent and complete in the US is the VA system, where the US Congress created the 340B drug pricing program in 1992 through the Veterans Health Care Act. By the 340B pricing, drugs were available at a markedly reduced rate to veterans. now this system has been extended to many Federally Qualified Health Centers as well.

    -- there is no regulation to drug pricing: eg, semaglutide (with miniscule estimated sustainable cost-based price) is charging pretty much the same as the other GLP-1 meds

-- one likely issue is also the consolidation of drug companies into behemoths, with little competition

-- also, there are the extensive patents that drug companies have to insure very high income for many years, and then these patents are sometimes extended even further: https://gmodestmedblogs.blogspot.com/2023/08/a-couple-more-drug-company-shenanigans.html

   -- we really need to get to the place where there is more availability for generics and biosimilars much sooner

   -- and we really need to have a coherent system of health care, the best for consumers being a single system (eg Medicare For All, but with Medicare able to negotiate drug prices)...

geoff

-----------------------------------

If you would like to be on the regular email list for upcoming blogs, please contact me at gmodest@bidmc.harvard.edu

  

to get access to all of the blogs:  go to http://gmodestmedblogs.blogspot.com/ to see the blogs in reverse chronological order

  -- click on 3 parallel lines top left, if you want to see blogs by category, then click on "labels" and choose a category​

  -- or you can just click on the magnifying glass on top right, then type in a name in the search box and get all the blogs with that name in them

if you would the article, please email me.

please feel free to circulate this to others. also, if you send me their emails (gmodest@bidmc.harvard.edu), i can add them to the list