Not the way to go

Not the way to go

As the country votes and soon waits come Wednesday morning there will be a new President waiting to take office. No matter who is elected it’s certain this person will face a mountain of issues to overcome. One issue that does NOT and should NOT be on the to do list is the rising out of pocket cost of insulin. We mention this because of statements made by Senator Bernie Sanders, who along with Rep. Elijah Cummings sent a letter last week to federal regulators urging them to look into this issue. The consensus has become that the three major insulin companies have “conspired” to artificially inflate the cost of insulin.

There are several reasons regulators should not waste taxpayer’s money on this witch hunt let’s outline just a few. The rising “list” price of insulin is not the one and only reason “out of pocket” costs have been rising. Anyone who listened to the recent earnings calls from Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO) and Sanofi (NYSE: SNY) or read their earnings statements knows that the “net” cost of insulin has been DECLINING. That to secure and/or maintain formulary position which determines volumes and therefore margins all three insulin companies, the ones who supposedly colluded to raise prices, are engaged in an all-out price war. All three have used a combination of deeper discounts and higher rebates to secure this valuable territory.

Another reason is even if they did conspire, something we believe is farfetched and absurd, the problem isn’t what the insulin companies charged payors for insulin, the problem is what patients are paying out of pocket for insulin. Connected to this is no one honestly knows the extent of this “problem”, just how many patients are impacted. Along these lines we’d also like to know how much is too much, obviously for a patient without insurance coverage the cost is crazy high. But what about those with high deductible plans, how much is too much?

Listen we know it’s easy to blame big bad pharma for this problem, they are villains people can relate to. Now some of this big pharma has brought upon themselves. When companies make news for raising the price of a drug 5000% overnight, or executives receiving million dollar bonuses that most people can only dream of. It’s easy to portray these companies and the executives that run them as the Evil Empire lead by Darth Vader.

However, it’s not easy to explain to the public what a PBM does, or how the Affordable Care Act has led to these high deductible plans. It’s not so easy to explain that the “list” price of insulin is vastly different than the “net effective selling price” of insulin. That this net price is just one of many factors that determine what the patient pays “out of pocket” for their insulin. The reality is our elected in spite of evidence to the contrary aren’t blithering idiots, they understand public perception and better to have villain like Darth Vader that people can relate to, then explain the true complexities of insulin pricing.

Let’s be clear here we are not saying that Lilly, Novo and Sanofi have been angles here and that they play no role in this issue. What we are saying is they play a role but are not the only reason a patient pays more out of pocket today than they did 5 or 10 years ago.

Yet to Diabetic Investor this witch hunt is classic Washington thinking, let’s find a villain voters can relate with, let’s crucify them every way possible and then ….. nothing. It’s so much easier to do this than deal with the actual problem and fix it. It’s so much easier to grab voters’ attention with conspiracy theories and innuendo then to explain those pesky facts. Let’s be honest here everyone wants to crucify Lilly, Novo and Sanofi. They want them held accountable for their actions. But what they really want most of all is someone to blame every time they walk into a Walgreens or CVS and pick up their insulin. Every time the pharmacist says that their out of pocket cost has gone up. The fact is these patients could care less who’s at fault, what they want is to spend less on the drug that keeps them alive. We so get that.

However, the last thing we need now with all the problems that are facing this great country of ours is another witch hunt. Yes, they will grab lots of headlines, probably produce some hearings but in the end, not much will be done to solve the real problem. A problem that is deeper and much more complex than most patients, heck most people, understand.

It’s time to stop blaming Lilly, Novo and Sanofi as quite frankly even without this undeserved blame they have a boatload of issues facing them and this is just piling on. The insulin market along with the rest of the diabetes drug market has commoditized. Payors are in firm control over what they will pay for these commodities. Having Congress crawl up their backsides with a back hoe is just unnecessary and won’t solve a damn thing.

The central fact, yes those pesky facts again, is that blaming Novo, Lilly and Sanofi for this problem is like blaming Steve Bartman for the Cubs not getting to the World Series back in 2003. While Cub fans like to blame Bartman, thankfully management didn’t. They knew that Mr. Bartman was nice scapegoat but in order to get to the World Series and win it they would have to overhaul their entire organization. That they needed not just better players but also a new attitude. Most importantly of all they knew for the problem to be fixed it would take time.

Well Cub fans have been rewarded for their loyalty and patience with a World Series championship thanks in large part to the moves made by management. Today the Cubs are not just champs but appear to be built for a period of sustained excellence. Something that didn’t happen by placing blame, pointing fingers or believing in silly curses. It happened because they understood the problem and went about fixing it. Kudos to the Cubs and their devoted fans.

Let’s hope our elected officials whoever is elected as President follow the example set by the Cubs. They won’t but it sure would be nice if they did.