Letter to the Editor: The growing crisis of insulin price manipulation on university healthcare

Editor’s note: This letter remains in the condition in which it was sent.

The Growing Crisis of Insulin Price Manipulation and Its Strain on University Healthcare Systems Across New York and Beyond

Although insulin manufacturing is at most $4, the shelf price of this life-saving drug is marketed in some states for a staggering $800. This retail price is 200 times higher than the cost of manufacturing, leaving most insulin-dependent diabetics in America with two options: either ration insulin and risk severe long-term health effects from uncontrolled diabetes or go into debt to afford insulin.

Before 2022, when the Inflation Reduction Act was enacted, caping insulin co-pay at $35 for those on a government health insurance plan, 14% of insulin-dependent diabetics had to spend almost half their income on insulin. Those who could not afford this went into debt averaging $9,000 even with full coverage. Moreover, 1 in 4 patients engaged in rationing to save costs.

In the U.S., insulin costs nine times that of other developed nations. However, while the price of insulin is now regulated through an act dealing with inflation, these cost increases have nothing to do with inflation but with corporate greed. Insulin is a literal life-saving drug that people are forced to buy. This allowed companies to raise prices significantly within the past decade, as they could rely on a constant demand.

Insulin Price Impact on Universities’ Health Insurance Plans

When enrolled in university, students are generally automatically set on a private insurance plan the university manages. These insurance products are no different from others, based on free market principles. In this sense, when the cost of a healthcare product or service increases, so do the costs associated with healthcare insurance.

As insulin prices have increased significantly in the past few years, so have health insurance plans provided by universities. As these plans included coverage for such high-cost medication, the rising prices of insulin now required higher premiums to cover these costs. Consequently, students, especially those requiring daily insulin, faced higher out-of-pocket expenses for the medication itself and their health insurance premiums.

The financial strain imposed by these increased costs can lead to several adverse student outcomes. For instance, the higher costs might deter some students from enrolling in or continuing their education at institutions where health insurance is mandatory but increasingly expensive. This situation particularly impacts students from lower-income backgrounds, who might find it increasingly difficult to afford the combined costs of education and healthcare.

Furthermore, the stress and financial burden associated with managing a chronic condition like diabetes, compounded by higher healthcare costs, can adversely affect academic performance and overall student well-being. At the same time, the long-term effects of rationing are also staggering, as unmanaged diabetes can result in severe health complications. Nevertheless, while capping insulin co-pay may alleviate pressure on patients with diabetes, this inadvertently can impact private and public organizations offering health care insurance. This also includes universities, who must supplement the costs following the capping.  

The New York Approach to Regulating Insulin Prices  

In 2023, New York set a cap on insulin prices at $35 for those without medical insurance. By January 1, 2025, the state further advanced its efforts by abolishing insulin co-pays for individuals covered by state-regulated health insurance. These insurance plans, including those offered by universities, comply with federal and local government regulations and cover various private insurances.

These measures significantly impacted universities that now have to pay the full price for those insured and needing insulin. More recently, public institutions and individuals have taken to court seeking justice for these exorbitant prices, which reflect corporate greed and allegedly enterprise criminal activity.

Exposing PBMs’ Role in Insulin Price Manipulation

The ever-increasing insulin prices in America eventually led to a Multidistrict Litigation (MDL No. 3080) against main producers and major Pharmacy Benefit Managers (PBMs).

Plaintiffs here, including universities and other private and public organizations, argue that these companies used typical price-fixing schemes, forcing patients, universities, and public institutions to pay excessive amounts for a life-saving drug. Therefore, the rise in insulin prices was a deliberately orchestrated scheme executed in perpetuity, where manufacturers and PBMs continuously inflated insulin prices through rebates, exclusionary contracts, and coordinated price hikes. This systemic exploitation ensured sustained corporate profits at the direct expense of patients.

While results from this MDL may take years, U.S. states can support patients with diabetes and control corporate greed and lack of social responsibility through legislation. Additionally, continued state-level action, such as New York’s insulin co-pay elimination, can serve as a model for broader reforms, ensuring that life-saving medication remains accessible regardless of corporate profit motives.

About Author

Yahn Olson is an experienced attorney at Environmental Litigation Group, P.C., specializing in environmental law and providing legal assistance to victims suffering from corporate negligence.