Biosimilars Fail to Deliver on Insulin Pricing

Price cuts that the three dominant insulin producers Lilly, Novo Nordisk and Sanofi announced may not fully benefit all who need insulin, particularly those who are uninsured or who have large deductibles.

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Biosimilars were supposed to be the catalyst for lower biologics prices, but in the case of insulin products, the leadership now seems to be coming from Medicare and the three dominant insulin producers: Eli Lilly, Novo Nordisk and Sanofi.

Following a provision in the Inflation Reduction Act of 2022 that limited the monthly out-of-pocket cost for insulin to $35 for older adults covered by Medicare Part D, the big three announced they would basically follow suit, slashing list prices and putting caps on out-of-pocket costs. Lilly; Novo Nordisk, a Danish company; and Sanofi, a French one, manufacture most of the insulin used in the United States and 95% of the insulin sold worldwide. Estimates vary, but one puts the number of people who use insulin in the United States at 8.5 million. The Centers for Disease Control and Prevention says 1.6 million people have type 1 diabetes and use insulin.

People with type 1 diabetes, a genetic disorder, always need insulin — one to three vials per month, on average. People with type 2 diabetes, which tends to occur later in life and is often associated with weight gain, do not always need insulin but, if they do, may need it in greater quantities than those with type 1.

Years of steady price increases have made access to this essential medicine increasingly more difficult for millions of Americans with diabetes who need insulin. About 5% of people with diabetes who had employer-based insurance spent more than $200 per month on insulin in 2019 and 2020, according to the Health Care Cost Institute. Some patients reportedly have paid upward of $1,000 per month.

The price cuts that Lilly, Novo Nordisk and Sanofi announced may not fully benefit all who need insulin, particularly those who are uninsured or who have large deductibles. The list price cuts would seemingly make insulin more affordable, but much depends on whether those savings are passed on to consumers or solely benefit payers and pharmacy benefit managers (PBMs). The changes will not go into effect until the end of 2023 or early 2024. This suggests that biosimilars may have a role to play, in the interim and for patients whose health insurance exposes them to high drug expenditures.

The effect of biosimilars

There are several insulin biosimilar products available. Basaglar, a long-acting insulin marketed by Lilly and Boehringer Ingelheim, came on the market in 2016. It was not approved through the official biosimilar pathway, although it is, for all practical purposes, a biosimilar of Sanofi’s Lantus.

But according to a November 2022 study in The American Journal of Managed Care®, Basaglar hasn’t been much of a bargain for patients. Between 2016 and 2018, Basaglar users had higher out-of-pocket costs than users of Lantus and two other long-acting insulin products, Novo Nordisk’s Levemir and Sanofi’s Toujeo. More than half (56.3%) of Basaglar users incurred, on average, almost $6 extra per claim in out-of-pocket costs than Lantus users, according to lead author Morgane C. Mouslim, D.V.M., Sc.M., of the Hilltop Institute of the University of Maryland, Baltimore County, and her colleagues. One reason for the difference in out-of-pocket costs was that Lantus users received comparatively more coupons, vouchers and patient assistance program discounts.

Semglee was officially approved as a biosimilar to Lantus in 2021 and an interchangeable one at that. Still, it’s not clear yet whether it will deliver on the biosimilar promise of lower prices and savings for users. Semglee in 2021 was priced at a wholesale acquisition cost (WAC) that was 5% below Lantus, the reference product. The company marketing Semglee, Biocon Biologics, also launched an identical, unbranded version of Semglee at a 65% WAC discount to Lantus, according to Adam Fein’s Drug Channels Institute.

Still, among commercial plans, Semglee in 2022 outsold its ostensibly cheaper unbranded version, and Lantus kept a 52% share of market.“It will be important to empirically evaluate whether Semglee will be less expensive for patients than Lantus before promoting efforts to automatically substitute it for Lantus,” noted Mouslim and her colleagues.

California lawsuit

Claiming systematic collusion in setting prices, the state of California recently filed a lawsuit against Lilly, Novo Nordisk and Sanofi and the three PBMs, Express Scripts, Optum Rx, CVS Caremark. The specter of liability and consequent penalties may have prompted the manufacturers to give ground on insulin prices.

For their part, the manufacturers have contended they are victims of a vicious cycle: The PBMs force them to pay ever-larger rebates on every insulin prescription sold in order to get their products on formulary, and those large rebates force them to ratchet up their list prices to maintain a reasonable profit margin.

Showing little faith in the power of free market dynamics to bring down prices of reference biologics or commercially produced biosimilars, California has moved forward with an experiment to distribute its own low-cost insulin. The state has signed a contract with Civica Rx to produce insulin. A vial that in the past would have sold for $300 will be priced at $30. California seems ready to push ahead with its low-cost insulin plans despite the recent pricing concessions and discounts promised by Lilly, Novo Nordisk and Sanofi.

Humalog, NovoLog, Lantus and Levemir are the dominant brands of rapid- and long-acting analog insulin. The FDA approved them in the decade-long span from 1996 to 2005. During the following period of almost 20 years, the free market system and competition on price have failed to establish competitive pricing for these products when it comes to their list prices

A memorandum from the House Committee on Energy and Commerce stated that the list prices for a vial of insulin have climbed steadily over the past two decades, reaching $250 in 2022, up from $20, while the true cost to manufacture a vial of insulin was $10 in 2018.

“Inexplicably, list prices for insulin have risen several hundred percent over the last two decades,” the California lawsuit states. The same is true in other states, according to advocates for people with diabetes.

Tony Hagen is a medical, business and environmental editor and writer in Florence, New Jersey.