As an exhibit of everything wrong with our corporatized health-care system, Donald Trump’s first Health and Human Services secretary is a tough act to follow. Less a pharma bro than a pharma granddad, Tom Price invested in drug makers while serving as their loyal guard dog in Congress, where he ferociously protected their public funding and bloated profit margins against regulation threats.
By nominating the pharmaceutical executive Alex Azar to succeed Price, the administration has accomplished a difficult feat, offering up an even purer embodiment of market-based health care than Price. Azar’s confirmation hearings will showcase why 53 percent of Americans now support government action to lower drug prices.
Roughly 45 million people don’t fill their prescriptions because they can’t pay for them. A subset of those people can barely afford the life-saving drugs sold by Azar’s former company, Eli Lilly. During his tenure as CEO, the company jacked up the price of a fast-acting insulin product, called Humalog, from $74 to $269 per vial.
But this episode is the lesser half of a much larger scandal: Humalog’s $74 sticker price when Azar became CEO was already outrageous compared with other developed countries. In Sweden, a vial of the same medicine is reimbursed at the (still profitable) price of $18.38. The reason Eli Lilly charges so much in the United States—whether $74 or $269—is because they can. And they can because profit, not access, is the driving force in the American health-care system.
Azar’s upcoming confirmation hearings will give Democratic senators the opportunity to drive home the urgency of overhauling a system whose ultimate symbol is a $269 vial of a century-old drug.
In the United States, Type 1 and Type 2 diabetes affect one in ten Americans. The production of insulin, the life-saving medicine that people with diabetes need, is essentially controlled by a cartel consisting of the firms Eli Lilly, Novo Nordisk, and Sanofi. Together they produce more than 90 percent of the world’s insulin products. The profit margins they enjoy in various markets track neatly to the ability of people with diabetes to secure a prescription for insulin products in those markets.
Where the state negotiates drug prices on behalf of a national health-care system, prices are typically much lower and access to diabetes medicines is higher. In the United States, which has abdicated its responsibility to negotiate on behalf of all Americans and ensure that everyone has access to the drugs they need, prices are the highest, and access the lowest among advanced economies.
As James Elliot noted in a recent Nation article about Azar’s Eli Lilly tenure, Americans with Type 1 diabetes spend an average of $571 every month on insulin. But many people can’t afford the amount of insulin they actually need. Instead, they risk serious harm by “stretching” their supply. Others rely on GoFundMe campaigns, or make hard choices between insulin, food, and rent. Then there are the people, some of whom Elliot names, who slip into ketoacidosis-induced comas and die because they do not have the money to pay for insulin.
In recent years, the potential of government to play a key role in bringing down prices has received fresh attention. In Louisiana, the state secretary of health has discussed petitioning HHS to forcibly break a privately held patent on a new class of Hepatitis C drugs, which would allow cheaper generic drugs to enter the market.
As a candidate, Trump routinely invoked the broad executive powers that would give him the ability to address drug prices once he was elected. However, after Trump’s first meeting with Big Pharma brass last January, the president not only forgot about those powers, but actually accused Medicare of “price-fixing.”
If only. Medicare is an important profit generator for the manufacturers of insulin. In 2015, the program expended more than $4 billion on a single insulin analogue, the second-largest expense for prescription drug reimbursement program known as Part D. (The program’s biggest outlay involved a wildly overpriced Hepatitis C drug, but that’s a separate, if very similar, drug-pricing scandal.) The federal government has not shown any willingness to intervene to reduce this cost—even though the number of diabetes patients has increased right along with insulin prices. According to the American Diabetes Association, diagnosed diabetes cost the U.S. economy $245 billion in medical expenses and reduced productivity in 2012, up from $174 billion in 2007.
But even without action at the federal level, there are ways to increase drug access, including one suggested by insulin’s origin story at a publically funded lab at the University of Toronto in 1921. Universities develop at least one-third of new drugs and, in recent years, the drug-access movement has successfully battled drug companies on campus.
At the forefront of this effort is a 15-year-old international student-driven non-profit called Universities Allied for Essential Medicines (UAEM). “We need a leader that favors people over profit to reverse the corporatization of HHS,” says Merith Basey, UAEM’s executive director for North America. “But in the meantime, we can roll back the pharmatization of universities.”
Basey is uniquely qualified to steer UAEM’s efforts, using insulin as a cautionary tale. Her career in health advocacy followed years of running diabetes programs in Latin America and the Caribbean, where parents of children with Type 1 diabetes often told her they couldn’t afford the monthly insulin supply.
When she turned to the biggest diabetes groups for help in expanding access, she found them unresponsive. The majority of diabetes groups, including the International Diabetes Federation, receive funding from the insulin cartel.
“People think of insulin as this big medical success story in terms of global access, but it’s not true,” says Basey. “This generic drug has been around for almost 100 years, yet the leading cause of death for a child with Type 1 diabetes in 2017 remains a lack of insulin.
“Globally,” she continues, “one in two people with diabetes lack access. Eli Lilly was a mom-and-pop company when it entered into an agreement with the University of Toronto in 1922. Now it’s part of a global monopoly.”
In 2012, Basey co-founded the 100 Campaign to re-frame insulin access as a human-rights issue and achieve full access to insulin for any American who needs it by the drug’s 100th anniversary. In 2014, Basey joined UAEM, which was founded in 2001 by veterans of the landmark victory for drug access at Yale. A coalition of students convinced the university to beat back attempts by Bristol-Myers Squibb to retain an exclusive license on a breakthrough HIV/AIDS drug created using public funds. The victory set an historic precedent and by ensuring generic competition forced steep cuts in the price of the drug.
In January 2017, UAEM celebrated a similar victory when Johns Hopkins University announced that the school would give licensing rights for a promising tuberculosis drug to the Medicines Patent Pool, and not to Sequella, the pharmaceutical company that would have acquired the license. Two years of organizing and lobbying by UAEM, Johns Hopkins students and alumni, and allies in the drug-access movement, including Treatment Action Group, Public Citizen, and Doctors Without Borders, produced the agreement.
“This is what public health–driven licensing looks like,” says Basey. “If universities are pressured from within to license new drugs to bodies like the Medicines Patent Pool, which is mandated to prioritize access, affordability, and innovation, we could build a new approach to drug development, one NIH-funded university lab at a time.”
There are plenty of new drugs to protect from greedy companies. Every year, the NIH provides $34 billion in grant funding to university research centers. Researchers produce breakthrough medicines that are then snapped up by corporate drug makers, who tweak them, patent them, and claim them as their own.
Economist Mariana Mazzucato estimates that since the 1930s, the NIH has invested close to $1 trillion into the basic and applied research underlying the modern pharmaceutical and biotechnology industries. Though these firms like to boast about their “innovations” and whine about their research and development outlays, most companies take advantage of universities’ public financing for the early hard lifting, and then spend half or more of their “drug budgets” on sales and marketing.
Basey believes that UAEM’s model, had it existed and enjoyed public support in 1922, would have produced in a very different insulin story. “A global access licensing movement could have pressured the University of Toronto to reach an agreement with a company that prioritized access and availability as metrics for success,” she says. “Students and researchers could have said, ‘Look, if they take this product that we researched and developed with public funding, it needs to be affordable.’”
The UAEM currently proposes that the NIH adopt a “rule of seven” for all future drug funding grants. The regulation would stipulate that licenses issued by publically funded labs could not charge more for a drug than the average price of that drug in the seven largest economies.
Basey doesn’t expect NIH to adopt this rule without public pressure. But she believes more victories are possible by organizing university labs.
“We need to get universities to recognize the power they draw from their position at the very start of the drug R&D pipeline,” she says. “Regardless of what’s happening in Washington, we can get them moving in a very different direction—collaborating with universities in low- and middle-income countries, following open-access principles, being transparent with funding and who they’re responsible to. We can ensure that every piece, from research choices to licensing agreements, is needs-driven, not pharma-driven.”
There is one person who epitomizes this need to revolutionize access for new drugs and time-tested ones like insulin. His name is Alex Azar, and his Senate confirmation hearings begin Wednesday morning.