A New Risk

With the 2020 Presidential campaign already underway it might be time for all the insulin companies to be paying very careful attention. The drumbeat about the high cost of insulin continues while earlier this month per a press release;

“U.S. Representative Bobby L. Rush (D-Ill.) introduced H.R.366, the Insulin Access for All Act of 2019. This bill, cosponsored by 33 members of the House Democratic Caucus, eliminates the cost sharing requirement under Medicare and Medicaid for insulin.”

A day does not go by without one story or another, usually on social media, about patients rationing their insulin because they cannot afford it. Several groups are applying all sorts of pressure everything from protesting outside of Lilly’s headquarters to their own social media campaigns. Heck even the FDA commissioner himself has weighed in on the issue and not to the liking of the insulin companies.

Now we won’t mention that this issue isn’t caused by the insulin companies alone, yes, they are part of the problem, but they alone did not create it. Nor we will mention then role played by insurers, PBM’s or high deductible insurance plans. The simple fact is insulin companies have been cast as the villain in this saga a villain every voter can relate to.

The fact is the dominoes are aligned against the insulin companies and once that first domino falls it will set off a chain reaction which will have a very real and very material impact on their future. Which is ironic as these companies are already under pressure as insulin has become a commodity. If Sanofi would ever get their act together with Amdelog the short-acting insulin market would suffer the same carnage as the long-acting market. Even if Sanofi doesn’t it’s only a matter of time before someone else will have their own biosimilar short-acting.

Yet it would be foolish to ignore the political risk these companies face especial since this issue transcends party politics. Our elected officials may not be able to keep the government open but being politicians they know a juicy issue when they see one and the high cost of insulin is very juicy. Even better as we noted already, they have an easy target a villain they can cast as the bad guy a villain voters can relate to.

Patients may not understand what a PBM does or the discount/rebate game played by insurers, but they sure do understand what an insulin company does. They see all these stories about how a vial of insulin cost $40 10 years ago and now cost $300. They also know over that same time frame that insulin hasn’t changed one bit. They ask themselves how the hell can this happen how can a product which has not changed at all go from $40 to $300.

Worse for the insulin companies this isn’t just a money issue, that issue alone is bad enough. This is also a life or death issue as these patients cannot do without insulin. Insulin is literally a life sustaining drug.

Talk about giving politicians a layup issue. And let’s not forget not only are there millions of voters impacted directly by this issue so too are their families and friends. Given the populist sentiment that seems to be growing to us it’s not a question of if the politicians will act but when and how far will they go.

Will they institute price controls? Will they force insulin companies to lower their prices? Only time will tell what they will do and depending on who wins this next election we will take nothing off the table. Again, as we noted earlier it would foolish to ignore this risk as to us it’s not when the damage will be done but how much damage will be done. Keep in mind these are multi-billion-dollar franchises which generate huge profits for the insulin companies.

The worst part here is even with all their corporate money and political connections they are basically dead ducks. They have been cast in the role of the big bad wolf who has eaten sweet old granny and is about to eat her cute little granddaughter for desert. We can’t see any politician Democrat or Republican wanting to be seen as a friend to the big bad wolf. This would be like publicly coming out against Santa Claus, Mom’s, Apple Pie and the Flag.

As Momma Kliff herself used to say; “There are times when you can’t fix a problem you can only prepare for fixing the damage after the storm hits.” For the insulin companies the storm clouds are forming and it’s not a question of when the storm will hit but how much damage it will leave once its over.