A Very Pharma Christmas

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On December 10th, 2021. The U.S. House of Representatives Committee on Oversight and Reform released a 192 page report on the pharmaceutical industry's pricing and business practices. Over the nearly three year investigation, they reviewed more than 1.5 million pages of internal company documents. It's a long report, obviously. So I called up Hannah Crabtree and Laura Marson to help me sort through it all.

You'll remember Hannah from some earlier podcast episodes where we discuss the Dexcom Superbowl ad, copay caps and Beyond Type 1, deciding to take money from insulin makers.

Hannah: I was reading it and I was like, honestly, captivated. I found it like very fascinating, the extent there is in this like strategy, in the U.S., for pricing drugs so high.

Craig: Laura Marston is a longtime advocate on Twitter, whose story about not being able to afford insulin was published on the front page of the Washington Post in 2016, which propelled this issue to the public. She was later invited to the White House by President Obama to discuss insulin prices and the Affordable Care Act.

Laura: Nothing in this surprised me, but if all of this is this blatant in a committee report, then what else is there?

Craig: Like If the government is so aware of, to put out 192 pages documenting these abuses, like then what are they going to do?

Laura: Yeah. What are they going to do about it? Exactly. And on top of that, I'd add that it's unique to the U.S. and this shows that our governmental representatives know that it's happening, but the solutions that have been proposed to date, don't address the harm that pharma's done Why is it that this is a problem only in the U.S.?

We've had more lax antitrust regulation specifically in this country over the past, I'll say decade, two decades. That's when insulin prices have skyrocketed. Oh, and by the way, in the past decade, the Supreme court passed Citizens United, which made companies able to give essentially endless funds to politicians. So I think you've got just rampant conflict of interests and crony capitalism And it's permitted. There seems to be a lot of public pushback against it, but not within the establishment.

Craig: So it's not just that pharma is bad, it's that the people who are supposed to be regulating pharma are in on it.

Hannah: And we've seen that with pharma. We've seen that with other industries. There's a revolving door of professionals moving from industry to regulators and back again. And that's coming from someone who like went to a regulator and then went back to industry, like I've done this is the DC thing. And so I think there's just this coordinated effort by the wealthy to keep staying wealthy and to not really care about the working class.

Back to this report. And by the way, there's a link to it in the show notes if you want to read it yourself. So the Committee looked at a number of drug companies, including the three big insulin makers, Eli Lilly, Novo Nordisk, and Sanofi, and they went through the different strategies that these companies use to suppress competition in order to keep drug prices high. And there are a lot.

These three insulin makers were specifically called out for abusing the patent system, shifting patients to new drugs before generic competition for old products were released, adding conditions to PBM rebates that exclude competitor products on formularies, and using shadow pricing to follow their competitors price increases.

Laura: My first thought, when you said that they're suppressing competition, is what competition? I mean, there's never been competition, genuine competition in the insulin space.

Craig: There's three different companies that are all producing insulin. Is that not how a free market should work?

Laura: But you will never have a free market because we can't walk away from the purchase. We have to buy it. If Lilly decided tomorrow to sell Humalog insulin, which is what I take, for $2 million a vial, I got to figure it out. So It will never be a true free market.

Hannah: Especially with insulin too, where insulins aren't interchangeable necessarily, even biosimilars are slightly different than the product that they're similar of. And there's instances where a diabetic needs one specific insulin. Like Laura, you're allergic to Novo Nordisk products and you're stuck with Humalog. That also adds, I think another layer of complexity that non-diabetics just don't really understand. So you're really, in certain cases, locked into one product. Switching to another product, even if it's possible is terrifying because you don't know how that insulin's going to react in your body. We don't have any say whether we need it or not, it's pay or die.

Laura: And then you have the whole Semglee situation. It was an originally released at I think, $99 a vial. And then once they got interchangeable status from the FDA, they raised the price to, I think it's something ridiculous, like 4% cheaper than Lantus' price today.

Craig: So in that sense, adding competition through this interchangeable biosimilar, kind of caused the price to go up of that drug. Had the opposite effect of what it normally would in a real free market.

Laura: Yes. And I would add that it always has. When I was diagnosed back in the nineties, like Lilly was really the big player in the insulin sphere. And then in early 2000s, Novo really gained more traction, I think, with its Novolog. And then when Sanofi introduced Lantus, they gained even more traction, but the curve of the pricing increases got even steeper as each one of those competitors joined.

Hannah: They're all just fighting for the same chunk of the pie. They can't compete on volume because it's hard to like grab an entire, giant share of diabetics and move them onto your insulin. So if you add more competition, you're all still just fighting over the same pool of like diabetics. And if you can't compete on volume, you're going to compete on price and keep raising the price, because that's the only way you can increase your revenue.

Craig: And one of the things the report pointed out is that executive compensation, like bonuses, are tied to hitting those revenue targets. So individuals in the pharmaceutical companies have a personal financial stake in increasing that revenue.

Hannah: Yeah. And there were like multiple instances where exactly that happened. Like 70% of their comp is based off of performance targets. And so that they weren't going to get their performance target comp, unless they increase the price. And then, of course the price increased and the executives got their payouts.

Craig: If I'm a Senator or in the House of Representatives, why do I care? And I know why I should care morally, right? Like I represent these people who need insulin and they can't afford it. But we're looking at a very small piece of the pie, people who need insulin.

Laura: Small piece of the pie how? Because my understanding from the report was that Lantus was one of Medicare's biggest expenditures. Even if you don't care about it from a patient or morality perspective, if you claim to be fiscally conservative in any way, shape or form, you really should care that instead of Medicare saving $16 billion, that was just thrown to these three companies, two of which aren't even American.

Hannah: You care about the free market or have libertarian values, shouldn't we like knock out this provision that doesn't allow Medicare to negotiate so that they can negotiate as you would be able to do in a free market? There are regulations that are making these price increases happen and like allowing them to happen. It's okay, can we get rid of those regulations at least? No, it's, all political people pick and choose what they're going to support in order to, whatever, makes them personally wealthy.

Laura: And then when you see proposed solutions like copay caps for insulin. Where are insurance companies gonna make up that money? They're not just going to be like, okay, you got us, we'll take the hit. They're going to further increase premiums for everyone. Everybody's paying more either through increased premiums, through increased taxes. Everyone loses except for essentially Eli Lilly and partners.

Craig: One of the arguments that drug makers make is that they need to increase prices in order to pay for research and development.

Hannah: Companies are spending more making their shareholders more wealthy through buybacks and dividends, then they're spending actually investing in R&D. And what the report also found that I thought was like really striking, is that the R&D that these companies are investing in is really just there so that they can keep getting further, patent life on the drugs they currently have.

There was also a really good point about product hopping. So companies are spending in R&D to produce products like Toujeo, which is literally just concentrated Lantus. Or Fiasp, which is Novolog plus a little bit of vitamin B. Or Lyumjev, which is essentially just Humalog and some additional additives. So they're investing in this R&D for not anything that's innovative. And then encouraging us to product hop to these new insulins so that when the biosimilars come out, we're not really interested in switching to a biosimilar because we're on like the latest and greatest insulin that isn't really all that great.

Craig: So it feel like from a patient perspective, going backwards to move to one of these biosimilar insulins.

Hannah: Right. And I think there was another point in the report where, with Sanofi, like Toujeo and Lantus are so intertwined with one another that they don't feel like they could even decrease the price of Lantus without patients and physicians and payers expecting that decrease in price on Toujeo. So they're putting out these newer insulins that are essentially the same old insulins, having us all switch on it. And then they're going to keep the prices of the old insulins high, because we know that it's all the same.

Craig: There was a big section of the report that talked about patient assistance programs. These are programs voluntarily run by pharmaceutical companies to make their expensive products affordable. Usually for people who are in that gap between good health insurance, and people on government insurance.

Laura: No one, regardless of your insurance status, regardless of who you are and how much you make, no one should have to jump through hoops to get insulin period. Some of the stuff in the report lays out the different programs, but not necessarily how challenging it is to actually apply for and get that assistance or how many people are really assisted by these programs. Back when I was struggling, I was just flat out denied for whatever small program they had, by all the insulin manufacturers.

Hannah: And they said that they spend less than one tenth of 1% on patient assistance programs. So there's not even like a real investment in them. I think the report made this really clear for me, that copay cap cards are not patient assistance programs, they've never been meant to be patient assistance programs. They're there as like a marketing tool to get people onto your drugs. And when they put out a new insulin, like Toujeo, they put out a copay cap card for like the first two years where, the whole point of that was to entice people to get onto Toujeo. And so once you've already got the people you can convert using that marketing scheme, like why would you keep it up? And so that sort of relief is so short term. And I think a lot of people are out here like saying, oh, there's a copay cap card. Copay cards are the answer, they'll save us. And they just won't.

Laura: The report what we all know as patients, makes it clear that a voluntary program that can be taken away at any moment, that's largely for PR, is not sufficient to address 20 plus years of price increases on insulin.

Hannah: Yeah. And there was an anecdote in the report where like Sanofi was trying to increase the price of Lantus in 2018. And so that was when they launched like the value for you savings program. It was like the same week.

Laura: And they call that out in the report that it was specifically said, oh no, go ahead and increase the price of Lantus cause we're starting up the value savings program. Come on. That's frustrating. They're using it not only as cover for good PR, but also as cover for just needless price increases.

Craig: Have you seen any of the diabetes nonprofits, that say they advocate for people with diabetes, talking about these pharma abuses?

Laura: I looked specifically for JDRF and ADA. I'm blocked by Beyond Type 1, so who knows? And interestingly, one of the groups had not only not commented on this report, but was announcing some event that was sponsored by Novo Nordisk.

There's a quote in this report where a Novo Nordisk employee remarked, "maybe Sanofi will wait until tomorrow morning to announce their price increase. That's all I want for Christmas," on Christmas Eve. That's the level of what we're up against and I think it makes it even that much more questionable to see partnerships like that.

Craig: You mentioned before the incestuous relationship between government and industry. But is there also a interesting relationship between non-profits and pharmaceutical companies that is advantageous to both parties?

Hannah: Yes, definitely. Patient advocacy organizations claim to represent patients, right? And they have this power to go to Congress, to be a lobbying presence there, and claim that they represent patients, when they're largely being funded by pharmaceutical companies. That are in turn this big bad force that we're fighting up against all the time.

It just took so long for any of the patient advocacy organizations to even recognize that insulin pricing was the number one issue impacting diabetics. It was in like 2005. It was in like 2010. It was in 2015. And so on. This has been like the big problem for like decades now. And it really took Laura doing an article at the Washington Post for like any of them to even like acknowledge that this was a problem. And then all of a sudden these organizations had to go on the defensive, had to start like building these taskforce, had to start having these big meetings about the insulin pricing crisis.

Their hands are forced and they had to like address this and like the ways that they've been addressing this issue over the past few years have been largely in ways to continue to please their pharma donors. It's like they advocate for copay caps, which really puts the onus of the solution on insurance companies. They've never really come out and advocated for a price cap or Medicare For All, or any of these sorts of like solutions that are real solutions that would take away pharma power. So there's definitely an incestuous relationship there and it's one that is actively harmful for all of us.

Laura: When I think about a conflict of interest, like when I was practicing law, we'll pretend I was a criminal attorney, I was not. But I couldn't represent both the defendant and the prosecution. No one would ever be comfortable in that situation. I will say as an advocate, it is the absolute worst feeling. Something really just evil about when someone screams that they represent you while doing the exact opposite of what you need to survive. Conflict of interest here isn't even hypothetical or potential. It's very real.

Craig: I can see why someone hearing about this merry-go-round of government and industry would feel jaded about the whole system and maybe not even feel like they have a voice at all to make change. The system is designed to enrich the powerful and keep us silent. So why even bother?

Hannah: We have to remember, there are people who care in government, probably in these pharma orgs. Maybe they're there for the paycheck and don't agree with what their leaders are doing. I know a lot of us diabetics too who get into jobs that we don't want to be working or don't believe in, are like that too. So there are people who care who are out there, who are in positions of power, who can help us make change. And we've seen a lot of, I would say quantifiable wins over the past five years on this issue. We've had virtually no price increases on these insulins since we started this fight. This was a 2020 like campaign issue that people were talking about that impact 2% of people in their day-to-day lives. If we win on insulin, we can win on a lot of other drugs for like a lot of other conditions and really help improve healthcare for all. Though we also need Medicare For All. And we should use our organized spaces of people to like fight on that issue too.

Craig: But I see a lot of vilification of individuals and even vilification of communities that aren't necessarily 100% focused on lowering the list price of insulin. People find those communities because they're looking to not feel isolated. But if you go to a JDRF walk, for example, or a Beyond Type 1 mixer or an ADA bike ride, does that make you part of the problem?

Hannah: We should be going to those more often and educating people and recruiting people and building relationships.

Laura: My issues have never been with individuals is it's with who individuals choose to represent. My issue is always with pharma. My issues with any non-profits are really issues with pharma. So if you are an individual within one of these big groups, and you have power and you choose to represent pharma, and especially if you do that with the intention of misleading people about who you're actually representing, I have a real issue with that. And it's not a personal issue it's with who you're choosing to represent.

Craig: What can people do if after listening to this, they say, I want to advocate for cheaper insulin. What do I do?

Laura: Everybody has a talent. Everybody has a story. Everybody has an experience. Everybody who lives with insulin dependent diabetes is like such a powerful force in making change. You know, I'd reach out to my local newspaper perhaps, and tell my story. Or, if you're just on social media and you want to join in on the conversation, do it. In order to get affordable insulin, we need everybody and there's nobody that's affected by this who doesn't have something really powerful to add.

Hannah: Anyone can be a leader in this space. If you keep doing work, you keep showing up, you keep building relationships with people, you become a presence, you become a leader. At the end of the day, it's we need people with all like viewpoints.

Craig: The real takeaway for people, with this report and listening to this, is that pharmaceutical companies don't have the interest of patients in mind, but we as patients have the power to make change. No one's going to fight for us if we don't fight for us.

Laura: I would encourage everyone to reach out to your representatives and tell them, you heard about this report, you think the Novo Christmas joke is disgusting. Let's do something about this now.

Beta Cell is produced, recorded and edited by me, Craig Stubing. And our theme music is by Purple Glitter.

Check out Hannah's data work at insulin.substack.com or follow her on Twitter @lollydaggle. You can find Laura on Twitter as well @kidfears99. You can also follow Beta Cell on Facebook, Instagram, and Twitter @betaacellpodcast.

And if you enjoy type one diabetes storytelling that isn't sponsored by pharma, you can support us on Patreon. There's a link in the show notes. And check out all of our podcasts at betacellpodcast.com. I'm Craig Stubing and this is Beta Cell.