U.S. medical insurance to control costs, but also learn to collect?

The thinking and attempts of the United States to control medical insurance fees have pulled the biopharmaceutical industry to a new stage.

This week, after Lilly announced a 70% price reduction in insulin products, Novo Nordisk also announced that it would reduce the price of its four traditional insulins, with a maximum price reduction of 75%; Sanofi followed suit, cutting the list price of its most popular insulin product by 78%.

Currently, these price adjustments are limited to the US market.

In terms of specific implementation time, Eli Lilly chose the fourth quarter of this year, while Novo Nordisk and Sanofi chose the beginning of 2024. In other words, 2023 is basically the last year of "free pricing" of insulin products.

Insulin has become the Biden administration's first focused price reduction target, which is inseparable from the incidence of diabetes and treatment concepts in the United States.

After the 50s of the 19th century, the rapid development of the US economy, under the preference of cola burger fried chicken, the number of diabetic patients continued to rise, and the group of patients continued to get younger. According to statistics, between 2001 and 2017, the number of people under the age of 20 in the United States with type 1 diabetes increased by 45%, and the number of people with type II diabetes increased by 95%.

In 2014, a report from the American Association of Pharmaceutical Research and Manufacturers said that American pharmaceutical research companies were developing 180 new drugs to curb the growing number of diabetics.

Insulin is actually one of the earliest biological drugs developed by humans. As early as the 50s of the last century, the mainland successfully synthesized bovine insulin. In 1982, Genentech successfully launched recombinant human insulin, and since then Americans no longer have to worry about diabetes and can live according to their own lifestyle.

But the widespread use of insulin also creates another social problem: increasingly expensive drugs.

In the United States, the insulin industry is very easy to monetize, so it is more and more expensive to incentivize companies to iterate technology and continue to introduce more effective products. In the past few years, the price of insulin drugs in the United States has risen from $25 to $450 per prescription, and some patients spend $900 a month on insulin, totaling about 6,300 yuan.

The large pharmaceutical companies that have a layout in diabetes products have also received a lot of returns, and Eli Lilly, Novo Nordisk and Sanofi are considered to be the leaders in the industry. In 2022, Lilly's sales of insulin lispro Humalog (Eucura) were $2.061 billion, human insulin Humulin sales were $1.019 billion, Insulin Nordisk had full-year revenue of approximately $7.502 billion, and Sanofi's reduced price of insulin glargine Lantus (Lytus) had sales of 2.259 billion euros in 2022.

The medical insurance system in the United States is mainly commercial insurance, and insurance companies and most large pharmaceutical companies "take care of each other" and strive for higher "pricing freedom" for pharmaceutical companies, which is the reason why the United States has become an important market for innovative drugs. However, this approach makes it difficult for many people who do not have commercial insurance but are dependent on drugs to bear high drug prices. Manifested in insulin, the contradiction is very prominent.

The reason why insulin companies can control product prices is related to the continuous improvement of product technology on the one hand, and the characteristics of biopharmaceuticals on the other hand.

In the United States, after the patent protection period, a large number of generic drugs will compete with drugs, and the market price will decline rapidly. But biopharmaceuticals are different, there is no complete concept of "generic drugs", only biosimilars. Moreover, the biosimilar cannot be completely consistent with the original drug, similar to imitating the pimple on a rope, and it is impossible to guarantee that the three-dimensional structure of each fiber and pimple on the rope is exactly the same.

And, objectively speaking, so far there has not been a successful biosimilar on the US market. Pfizer's infliximab biosimilar was approved for marketing in the United States in 2016, but sales in 2022 are still only about a quarter of the original drug. Biosimilars have not had an impact on the original drug in terms of price or efficacy.

In insulin, the problem is more prominent: there are differences between different brands of insulin of the same generation; Individual patients also receive different levels of insulin. In recent years, many popular science has called for: each diabetic patient uses different drugs, and you must choose the right blood sugar control drugs. In this way, the insulin market seems to have many competitors, but in fact, each brand has its own independent market.

Around 2015, the Obama administration began to establish a national health care system to cater for the poor and vulnerable without commercial insurance. However, until today, the United States has not been able to fully guarantee the establishment of a health care network that covers the widest number of people like China.

The Biden administration's cost control decision this time is actually somewhat similar to "grouping by efficacy": as long as it is insulin, the out-of-pocket cost of patients partially covered by Medicare is capped at $35. This policy no longer considers the cost of pharmaceutical companies, but only considers the ability of the government and patients to pay, which is a precedent for the US pharmaceutical market.

Chemical drugs rely on the introduction of generic drugs and regulate prices through market mechanisms; Commonly used biological drugs that are difficult to achieve complete equivalence rely on administrative force regulation. In contrast, this is actually similar to the mainland's collective procurement system.

According to the U.S. Centers for Medicare and Medicaid Services, total U.S. drug spending in 2021 was $734 billion, or 17 percent of total health costs. In terms of total volume, drug sales are nearly twice as high as China's, but the proportion is lower than China's, which is not unrelated to the high cost of medical labor in the United States.

Developed countries are obsessed with controlling the cost of medicines, let alone developing countries.

Written by|Niacinamide

Editor|Jiang Yun Jia Ting

Operations | He Anying

Illustration | Visual China

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