November 8, 2016

Insulin Drug Prices At the Forefront of US Election

In the last week, Bernie Sanders has called for a federal investigation of the continuously rising prices of insulin, the critical drug for people with diabetes. Senator Sanders and Representative Elijah Cummings crafted a letter to the Department of Justice and the Federal Trade Commission pointing to a pattern where the three insulin makers have increased their prices in tandem for the last 20 years. They point to a possibility that the drug companies are price fixing (coordinating the rise of their prices) to take advantage of millions of Americans who need the drugs.

With three companies producing insulin, the expectation would be that the price of the necessary drug to drop, as a competitive market should lead to lower prices. However, the prices have not dropped, in fact they have risen at a very similar rate. Prices of directly competing brands going up by the same amount in similar time periods is a malicious practice called “shadow pricing” [1]

Insulin Prices

The drug makers defend themselves by stating that they don’t collude with their competitors, but react to the prices that they set. Furthermore, the products are not entirely substitutable, as there are small differences in reaction to each brand of insulin. Doctors are worried that the uncontrollable price hikes and the fact that more people are getting diabetes now will produce an environment that is even more detrimental to patients. There are other options to attain safe and affordable insulin, which many US patients are now using.

Bernie Sanders is active on Twitter to denounce drug companies like pointing out that many people have to choose between medication and other essentials.

[1] The Insulin Market is heading for a shakeup. STAT. Retrieved from https://www.statnews.com/2016/10/14/insulin-prices-generics/

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