Baldwin pins blame for high insulin prices on big drug corporations, but there are other factors

When it comes to diabetes, the numbers are stark.

One in 10 Americans have the disease, and more than one in three have pre-diabetes, according to the U.S. Centers for Disease Control and Prevention. What’s more, people are developing diabetes at younger ages and a faster rate.

A recent tweet from U.S. Sen. Tammy Baldwin, who has cosponsored legislation to cap the out-of-pocket cost of insulin for Americans at $35 per month, made a stark claim of its own:

"The price of insulin has been jacked up by Big Drug Corporations," Baldwin, D-Wisconsin, said in the March 16, 2022, tweet. "35 million Americans who have diabetes need lower costs. We can cap the price of insulin at $35 with our Affordable Insulin Now Act. Let's have a Senate vote and pass it!"

The House of Representatives voted a few weeks later, on March 31, 2022, to approve the Affordable Insulin Now Act, which would cap insulin prices at either $35 a month or 25% of an insurance plan's negotiated price — whichever is lower.  

But the fate of the measure in the Senate remains unclear. 

So what can one make of Baldwin’s tweet? 

Are costs of insulin in the United States excessive? And what can be said about whether high prices are due to being "jacked up by Big Drug Corporations"? 

Diabetes is a chronic health condition that affects how your body turns food into energy. Most people’s bodies naturally produce insulin, a hormone that helps convert sugars from food into energy the body can use or store for later. 

"When you have diabetes, your body either doesn’t make insulin or doesn’t use its insulin well, causing your blood sugar to rise," according to the CDC. "High blood sugar levels can cause serious health problems over time."

When a person has Type 1 diabetes, the body can’t make insulin, and he or she will need to take insulin every day. With Type 2 diabetes, your body doesn’t use insulin well. 

"Losing weight, eating well and exercising can help you manage the disease," according to the Mayo Clinic. "If diet and exercise aren't enough to manage your blood sugar, you may also need diabetes medications or insulin therapy."

About 30 million Americans have diabetes, and about 31% take insulin to manage the condition, according to the Commonwealth Fund, a private U.S. foundation whose stated purpose is to "promote a high-performing health care system that achieves better access, improved quality, and greater efficiency…"

According to the American Diabetes Association, those with diabetes account for $1 of every $4 spent on healthcare in the United States.

Let’s start with some statistics that underline how high costs are in the U.S. 

According to an April 2020 report from the American Action Forum, a conservative think tank based in Washington, D.C., the average list price of insulin increased 11% annually from 2001 to 2018, with average annual per capita insulin costs now nearing $6,000. 

According to an October 2021 report from the Health Care Cost Institute, an independent nonprofit that studies health care prices, in its data sample the average monthly out-of-pocket spending on insulin in 2019 was $82. And "among the 8.7% of individuals in the highest spending category, the median monthly out-of-pocket spending on insulin was $315."

The U.S. Department of Health and Human Services says Americans pay 10 times what people in other developed countries pay.

Meanwhile, a January 2021 Forbes article reported that net costs of insulin to pharmacy benefit managers and payers have decreased in recent years because of steep rebates, but the savings very often have not been passed through to patients. 

The bottom line: Americans pay a high cost for insulin – far higher than in other countries.

But in her claim, Baldwin pinned the blame on the drug companies, when there are many factors involved in pricing and many points where prices – and profits – can be increased. 

When we asked Baldwin’s office for backup for the claim, it pointed us to several reports and articles on insulin costs and affordability and a 2021 Senate committee report on what is behind it.

The bipartisan staff report from the Senate Finance Committee noted that "(insulin) manufacturers are retaining more revenue from insulin than in the 2000s," and that "the amount of revenue pharmaceutical manufacturers are retaining from insulin has risen."

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"Insulin manufacturers compete fiercely, using rebates as bargaining chips to receive preferred formulary placement for their products and to block competition," the Senate report reads.  "The companies undertake these bidding wars to maximize revenue and capture — or maintain — market share. Furthermore, in some cases the investigation found that while insulin manufacturers closely monitor their competitors’ pricing actions when determining their own list prices over time, there were multiple instances of companies increasing prices in lockstep with competitors."

So, that supports Baldwin’s claim. But others note that’s not the full picture.

Dr. Jing Luo, assistant professor of Medicine at the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, said in an email to PolitiFact Wisconsin, "There was a time when list prices for insulin rose at a rapid clip…on the order of 30% per year. Those price increases came from the manufacturers themselves."

Luo, whose research focuses on prescription drug use, pricing and policy, especially for medicines treating chronic diseases such as diabetes, also noted: "In recent years we have noticed that the list price changes are not as dramatic as they had been previously. This is probably due to much higher public scrutiny."

Luo, in a Dec. 10, 2021 WBUR radio article said the limited number of TextEditor

manufacturers in the U.S. are part of the equation.

"When you have a setting where there (are) only a few suppliers, but the demand for the medication is quite great," he told WBUR, "it results in a situation where manufacturers can raise their prices without much blowback."

As to Baldwin’s claim, he said it is "a simplification of the complex system we have that allows drug manufacturers to set whatever price they desire."

Karen Van Nuys, executive director of Value of Life Sciences Innovation at the University of Southern California, said in an email to PolitiFact Wisconsin that big drug corporations often get the blame for rising insulin prices, but their research shows "they are actually not the culprits in this case."

"The amount manufacturers have been receiving per 100mL of insulin has actually been declining steadily over the last several years," Van Nuys said. "What has been increasing is the amount of money drug distribution intermediaries — pharmacies, pharmacy benefit managers, health plans and wholesalers — have been pocketing."

Insulin is measured in International Units (units); most insulin is U-100, which means that 100 units of insulin are equal to 1 mL.

Baldwin said "the price of insulin has been jacked up by Big Drug Corporations."

There is no question that U.S. consumers pay more than those in other countries. And there is strong evidence that drug company profits are a key factor in the higher costs. But experts note that there are other factors involved – and other steps along the way where profits are taken. And those entities also play a role in the higher costs.

For a statement that is partially accurate but leaves out important details or takes things out of context, our rating is Half True.