9 - The Alleged Insulin Conspiracy

Summary

In the United States, more than 10 percent of the population suffers from diabetes. For many, insulin stands between them and decidedly ill health or death. This makes the demand for insulin extremely inelastic. For many low-income diabetics, the cost of insulin accounts for a large fraction of their disposable income, which makes it difficult to pay rent, maintain a healthy diet, and provide for the needs of children and aging parents. As a result, it is important to preserve and promote competition in the insulin market. But the price of insulin continues to rise, indicating that insulin markets may not be competitive. We review two possible explanations. First, there have been allegations that pharmacy benefit managers, whose primary role is to negotiate lower pharmaceutical prices, may be encouraging higher insulin prices to increase rebates and their profits. Second, there have been allegations that the three major producers of insulin – Eli Lilly, Novo Nordisk, and Sanofi – have been cooperating rather than competing. This chapter addresses these allegations and the antitrust response.