Each year, more than 200,000 Californians walk out of their doctor’s office with a diagnosis of diabetes. Up and down the Central Valley, in many of the poorest communities in the state, more than half the residents are considered obese and two-thirds suffer from either diabetes or pre-diabetes.
But it’s not just the number of cases that is rising. The cost of the medicine to combat the disease is exploding at the same time.
Over the past two decades, the price of insulin – the difference between life or death for millions of Californians – has risen an incredible 450 percent. A 10-milliliter vial, less than a month’s supply for most adults, is listed around $250 compared with $21 in 1996.
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What accounts for such a rise? The drugmakers won’t tell us, and aren’t required to by California law.
Time and again, state legislatures have tried to force Big Pharma to reveal the true costs of drugs, only to be blocked by its powerful lobby. That’s why I have authored Senate Bill 17, which has passed the Senate and is now in the Assembly. It mandates, quite simply, that drug companies start playing by the same rules as everyone else in health care.
Drugmakers will have to provide written notification to the state and insurers when they decide to raise prices by double digits, or introduce a new and very expensive drug. For the first time, companies will have to explain to the public why their drugs cost so much.
Big Pharma would like us to believe that rising costs reflect expensive research and development. It argues that society benefits when they can recoup their investments and make enough profit to bring the next miracle drug to market.
But consumers have no way of proving such claims. What the pharmaceutical industry spends on research and clinical trials is kept hush-hush. But one study found that for every $1 spent on R&D, $19 goes to advertising.
And what about insulin, hardly a new medication? After the first harvested insulin was injected into a diabetic in 1922, Eli Lilly started large-scale production. In 1982, Eli Lilly sold the first commercially available biosynthetic insulin.
It has been 35 years since that breakthrough, plenty of time to have recouped initial investments and then some. But the price keeps going up. A recent federal lawsuit filed against Eli Lilly, Novo Nordisk and Sanofi alleges that the three insulin makers have engaged in collusion. On multiple occasions, Novo Nordisk and Sanofi have raised their price for insulin at the same time and rate.
The arguments trotted out by drug companies against transparency are tired ones. They say a patient often ends up paying far less than the listed price because of discounts and rebates, but fail to mention that these savings eventually get added back in higher insurance costs. This is why consumer spending on prescription drugs increased by a staggering $65 billion from 2012 to 2015, according to the Kaiser Family Foundation.
Pharmaceutical companies have a right to make a profit when they develop breakthrough medicine. But they have no right to abuse their market power. It is their choice to bombard us with costly TV commercials that turn every ailment into a disease with a drug to match.
We need to shine a light into the deep shadows of drug pricing and hold Big Pharma accountable. SB 17 is a commonsense approach to accomplish that goal.
Ed Hernandez, a West Covina Democrat, is chairman of the Senate Health Committee and represents the 22nd state Senate District. He can be contacted at Senator.Hernandez@senate.ca.gov.