Off with their heads

Off with their heads

Well it looks as if all the crusaders who claim that the “high” out of pocket cost of insulin is hurting patients will get their day in court. The Minnesota Attorney General is suing the three major insulin companies – Lilly – Novo Nordisk and Sanofi. Per several published reports;

“The lawsuit claims drugmakers fraudulently set “artificially high” list prices for their drugs and negotiated steep rebates with pharmacy benefit managers. This practice allegedly made the drugmakers’ insulin more profitable for PBMs and in turn made the middlemen more inclined to place the drug on their formularies, or list of approved drugs under a health plan.”

Now before we go any further lets say that paragraph is almost 100% accurate – while we would disagree with the term artificially high it is true that all the insulin companies raised the wholesale or list price almost in lock step. They did this as we have noted in the past so when the payors and middlemen demanded discounts and/or rebates they could keep their net effective selling price at a reasonable level so they could make a profit. Which we believe is still legal.

In one story published by Beckers Hospital Review it states;

“As a result of the practice, Ms. Swanson claims, the list prices the drug companies set were so far removed from the net prices that they failed to reflect the true cost of insulin and were deceptive and misleading.

While insured patients often pay a much lower rate than the list price, uninsured patients or those with high-deductible insurance plans ended up paying the artificial list price, the lawsuit contends.

“Insulin is a life-or-death drug for people with diabetes. Many people can’t afford the price hikes but can’t afford to stop taking the medication either,” said Ms. Swanson.”

First Ms. Swanson is Lori Swanson Minnesota’s Attorney General. Next some of what Ms. Swanson says is accurate – net prices did not reflect the cost to make, distribute and support the insulin – as we noted the difference between the net effective selling price and these costs is called the profit which as we noted is not illegal.

Next she is correct patients without insurance or those with high deductible plans do pay a heavy price for their insulin. However what she does not say is who determines this price. We can tell you it isn’t Lilly, Novo or Sanofi. Without getting overly complex let’s look at how this really works – none of the insulin companies sell their insulin directly to a pharmacy like a Walgreens or CVS, they sell it to a middleman who in turn sells it to Walgreens or CVS, who then marks up it up so that .. wait for it … they too can make a profit – which we keep noting is not illegal.

So the patient with no insurance or in a high deductible plan could pay almost $300 for a vial of insulin which is a very hefty price, this as we have said before has never been in dispute. Heck even the insulin companies themselves have said this cost is exorbitant. However that $300 cost is NOT set by the insulin company, it is set by the seller who like the insulin companies is entitled to make a profit. Is this cost crazy for sure but like any for profit entity the pharmacy sets prices based on multiple factors including one big one they can get away with it.

And what about the patients employer who in an attempt to save money forces their employees into these high deductible plans. Employers who likely also want to make a profit so they can continue to employ these people and as we keep noting is not illegal.

What about the patient who CHOOSES to be in a high deductible plan? They know they are on insulin, they know insulin isn’t cheap but they choose this plan because its way cheaper, less is taken from their paycheck every two weeks. Does not the patient bear any responsibility whatsoever are they excused from responsibility just because they use insulin.

Let’s get another thing clear here it does not matter one iota that insulin hasn’t substantially changed or that it is a commodity, Lilly, Sanofi and Novo are NOT philanthropic entities. They are FOR PROFIT businesses that have a fiduciary responsibility to make money for their stakeholders. Using this same logic any company that makes razor blades, toothbrushes, laundry detergent – all commodities aren’t entitled to make a profit either.

For grins and giggles lets say Minnesota wins this lawsuit – how will patients benefit? Let’s say that besides stringing the bastards up, stoning them, then bringing out the tar and feathers what will the patient get out of all of this? (And since Sanofi is based in Paris we’re re sure the land of 10,000 lakes will bring out the guillotine. Hey what’s fair is fair after all.) Let’s say that Ms. Swanson can extort a hefty settlement from the insulin companies, will patients get any of this money or will it go into the Minnesota state coffers?

Think what happens if Minnesota does win. Yep the floodgates will open and state after state will want their pound of flesh too and demand they too get paid. Will the patient get any of this money? Will the ones in a high deductible plan get a lower deductible? Will Walgreens or CVS charge less? Will the payor or middlemen lessen their demands for discounts and/or rebates?

What these crusaders never seem to consider is what happens if they win their crusade. Yes it’s noble to believe patients will win but it also naïve. Look at the huge settlement paid by the cigarette companies. Did people stop smoking to certain extent maybe but many believe this would have happened anyway given how people are becoming more health conscious. Did one lung cancer victim, get paid? A victim who by the way chose to smoke knowing full well the risks associated with smoking.

Did the states receive a handsome payday, yep. Did the states use this money to help smokers quit or offset the healthcare cost for lung cancer patients? Or did they use it offset a budget deficit or anything besides why the suit was brought in the first place. Are the cigarette companies out of business or are they still racking in the big bucks?

Have any of these people bothered to consider how what they believe would be a huge victory could instead turn into a disaster. Remember these are the same people who want newer, better insulins – products that cost money to develop. Well why would Lilly Novo or Sanofi throw money into an area where they can’t make a profit? (We almost shouldn’t say that as Lilly is doing that by getting into the insulin pump market and Sanofi with just about everything they touch in diabetes.)

Listen we know its easy and enjoyable to lay the blame at the doorstep of the insulin companies. Like the witches in Salem everyone wants them burned at the stake. They are evil, despicable organizations who care nothing about the patient wanting only to make as much money as possible. (Which just so happens is what their stakeholders want and is their reason for being. But hey lets not let the facts get in the way of a good crusade.)

Our question to the crusaders is what does the patient get out of all this? How will the patient benefit? And please don’t tell us that out of pocket cost of insulin will go down as this just ain’t going to happen by blaming the insulin companies. Not to be redundant but what the insulin companies “charge” for insulin is just one of many factors that determine what the patient pays out fo pocket. Something the crusaders either cannot grasp (and since most never took a business class in their life its possible they can’t) or ignore (equally possible for as we have been saying all along never let those pesky facts get in the way of a good crusade).

Now we should have stated this upfront as this is another post that can be shared. All we ask is all the folks who believe we are an unashamed, proud card carrying capitalist- we are – use more creative adjectives. We are not going to apologize for believing in America or capitalism. Unlike the crusaders who believe the patient bears no responsibility whatsoever we believe they do.

Just to digress here if only for a moment patients with diabetes are not VICTIMS. They have a chronic yet manageable disease. They do no matter what all these crusaders say have a responsibility too.

So we will ask again what is the patient going to get out of all this? Will they really get something or will it be the same old bend over and take it? We know were our money is going and it ain’t on anything good either. We have seen this over and over.