Team:Sydney Australia/Hexagons
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Developed Nation, High Expenditure with even Higher Prices
Even considering the low minimum wage - $25 a vial is an affordable shelf price for Regular Human Insulin, so the USA gets a pass on this one. The NBC article also describes ‘black market’ trading of insulin vials, however this is just further evidence of market inefficiencies creating artificial price rises. Certain insurance companies will only cover certain insulin analogues, and consumers must turn to the internet to find an affordable alternative if an allergy prevents them from using the single subsidised brand. This has little in common with the true black-market insulin available on websites such as AliBaba which comes from anonymous suppliers and may be a sole lifeline for individuals in developing nations.
It is difficult to estimate the spillover effect of the USA’s bloated pharmaceutical industry on the global price of insulin. Certainly, it is the same three companies supplying the majority of the world. They will naturally attempt to spread the incidence of their costs in America, despite the significantly lower purchasing power of these international customers. Coupled with a lack of institutional insurance or pharmaceutical benefits schemes, these secondary markets struggle to meet their national demand for insulin analogues.
Potentially as a consequence of this demand deficiency, Regular Human Insulin is routinely undersupplied in the global market. One would typically expect generic manufacturers to meet this lack, however sufficient supply has not manifested itself in most countries.[5]
Figure 3.Pharmaceutical companies find themselves in a prisoner’s dilemma, common in oligopoly markets. Opting to increase advertising expense prompts competitors to do the same, resulting in little change in market share. However failing to respond to competitors’ can lead to a significant loss in market share. Generally the only way to rectify this without industry collusion is through government intervention with legislation that caps advertising expenditure.[6]
Figure 4.It is fair to say that corporations should be able to recuperate R&D costs through an exclusionary patent that provides the holder with a temporary monopoly. Unfortunately, the convoluted American medical system can increase this cost by an order of magnitude or more. It is incorrect to blame the pharmaceutical companies for this situation - as they are merely individual agents attempting to maximise their profits in a limited market. The only solution is market reform.[7]
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Canada - Developed nation with poorly targeted Diabetes Budget
Canada is a developed nation, however like the USA it’s citizens struggle to get affordable access to insulin. However unlike the USA, Canada has a public health care system.
Despite this, 57% of Canadians do not follow their doctor prescribed therapy because they cannot afford medications, devices and supplies. There is a high variability in out-of-pocket expenses across the nation, with different jurisdictions offering different subsidies based upon income level. The highest burden of Diabetes rests on the lowest income Canadians, which the study recommends reforming; “People with type 2 diabetes with incomes of $30,000 pay more as a percentage of both their annual and family income than those who earn $43,000 and $75,000.” [18]
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Figure 10.The Canadian government’s report recommends rapid reform of the Diabetes rebates - and unlike it’s developing counterparts, has the public finance to carry this out. However, throwing more money at the problem without tackling upstream inefficiencies in manufacturing/distribution will not solve the problem. [18]
An alternative, fiscally-efficient methodology would be to invest public finances in local insulin manufacturing facilities. The lack of intellectual property protection on Regular Human Insulin would allow for the Canadian government to limit the effect of the supply constraint, while boosting local industry and reducing out-of-pocket costs for Diabetics.
An alternative, fiscally-efficient methodology would be to invest public finances in local insulin manufacturing facilities. The lack of intellectual property protection on Regular Human Insulin would allow for the Canadian government to limit the effect of the supply constraint, while boosting local industry and reducing out-of-pocket costs for Diabetics.
Figure 11.The burden of Diabetes disease management rests most heavily on the poorest Canadians, costing an average of 17.7% of individual income for those who earn less than CA$15,000 (with an insulin pump). On Prince Edward Island (PEI), poor citizens can expect to fork over nearly 40% of their individual income to pay for diabetes management with a pump. Comparing this with 10% of income on PEI for management without a pump elucidates a major challenge faced by low-income Diabetics in developed nations. Extensive advertising expense is paid to educate health professionals and advertise to the decision makers in government to ensure the status-quo is advanced insulin pumps that only function with an expensive insulin analogue. Better control of blood-glucose and a low-input regime should not be locked behind a paywall that excludes the majority of Diabetics on the planet. There exists here an excellent opportunity for open-source science to provide an insulin pump that provides CGMitC (continuous glucose monitoring in the cloud) and is capable of dispensing a variety of Regular and Analogue Human Insulins. The BioFoundry plans on development of this pump in 2018, using the insulin produced from USYD iGEM’s bacteria!
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European Union
The European Union enjoys relative prosperity and easy access to insulin. Socialisation of the health care expense reduces the cost burden to the individual, and also creates a clear image of the “societal cost of Diabetes.” Rather than extensively examine the shelf prices of insulin in various EU countries, it is more important to observe the public expense that Diabetes treatment incurs. Pharmaceutical benefit schemes will often offer only one insulin brand, greatly increasing the taxation burden due to the non-competitive market. Furthermore, a lack of competitive pressure can keep prices artificially high, beyond the reach of poorer nations.[16]
- Survey Quotes:[1]
- France:“There is no insulin shortage in France despite many patients so I guess it's not hard to obtain it”
- Netherlands:“I have no problems getting insulin, getting enough test strips to measure blood sugar levels is way more expensive”
- Spain: “The doctor gives us prescriptions for a year and we simply have to go to the pharmacy to pick them up. $17 euros a month”
- Denmark: “It is very easy, Danish hospital system.
- Denmark: “It is easy because we live in Denmark = Novo Nordisk and good health care”
- Germany: “For free with a prescription in a pharmacy (paid by health insurance)”
Figure 8.There is a high variability in the treatment cost of diabetes even within the European economic zone. Kanavos, Aardweg and Schurer (2012) summarise the cost of just Medicines, In- and Out-Patient Care to an individual, per year;
- Germany - €5,899
- UK - €5, 470
- France - €54,32
- Italy - €2, 756
- Spain - €1, 708
Unlike most of the rest of the world, these price distinctions roughly translate to the purchasing power of each country's citizens. Gallup’s gross median household income elucidates the highly targeted nature of pricing in this market; [22]
- Germany - €28, 343
- UK - €26, 884
- France - €25, 818
- Italy - €17, 078
- €18, 671
Figure 9.Europe’s familiarity with Diabetes management has allowed more comprehensive studies of the disease’s effect on society.. When an illness such as Diabetes affects all aspects of life, it creates significant externalities on society’s ability to function. Kanavos, Aardweg and Schurer (2012) give quantitative examples of these costs, adjusted to 2010;
Diabetic Retinopathy/Blindness (10-28.7% patients, with 0.5-3.7% blinded);
- Average cost of Blindness = €1,589 per eye,
- Foot Disease (1.5-9.9% patients);
- Average cost of Treatment without inpatient care = €840/monthly and €2,772/monthly with inpatient care.
- Highest cost for amputation/rehabilitation
- Cardiovascular Disease - including angina (16%), myocardial infarctions (1-8%), stroke (1.7-7%), ischemic heart disease and heart failure (6.3-11%);
- Diabetes results in 6-23% greater costs. Treatment costs range from €2,100 - €9,767.
- Up to €11,786 for stroke
- Renal Disease - microabuminuria (20-25%), progressing onto renal disease, end stage renal disease (ESRD) (0.4-3.0%) requiring haemo- or peritoneal dialysis, and finally kidney transplant (Type 1 incidence 7.7-9.2%; Type 2 0.3-2.6%)
- Haemodialysis carried an annual cost of €81,449 and peritoneal dialysis €49,953
- Erectile Dysfunction - Approximately 32% of Type 1 male patients and 46% of Type 2 male patients suffer from erectile dysfunction.
- Cost of penile implants is between €225.9 (rigid or semi-rigid) and €261.3 (hydraulic penile implants)
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China - Communist Government/Market Economy with high public investment in industry
The major insulin manufacturers hold the majority of the market share in China; "Due to technical barriers, China’s insulin market is mainly occupied by Novo Nordisk, Sanofi and Eli Lilly, of which, Novo Nordisk accounted for 60.3% in 2012."[8] In 2013, China had 114 million people with diabetes - the most in the world. This number is ever increasing, due to improved awareness and diagnosis as well as changing lifestyle habits. The chinese government and industry are working quickly to nationalise their insulin production. Current projects include:[9]
- Tonghua Dongbao Pharmaceutical - 367.2 million yuan ($59.21 million) to build a new 44,000-square-meter facility.
- China's Zhuhai United Laboratories said in 2011 that it planned to invest ¥1 billion ($151.4 million) in a new insulin plant that would provide for 10% of the country's insulin market.
- In addition, foreign investment in China’s API market continues to grow;[9]
- Eli Lilly spent $350 million to expand its insulin cartridge manufacturing in China.
- Merck KGaA (Germany) said it would invest €80 million ($107.67 million) to produce Glucophage, Concor and Euthyrox and will be its second largest in the world.
Figure 5.According to the World Bank; “China has shifted from a centrally-planned to a market-based economy and has experienced rapid economic and social development. GDP growth has averaged nearly 10 percent a year—the fastest sustained expansion by a major economy in history—and has lifted more than 800 million people out of poverty.” [10] A great deal of this growth can be attributed to intelligent government investment in burgeoning industries, compatible with the strategic opinions of Keynesian Economics. The rapid growth in the insulin market can be attributed to improved healthcare, diabetes awareness and the changing lifestyle conditions associated with prosperity. Further directed national investment could set the Chinese market on the path towards insulin independence, and eventually China may become a net exporter of the drug.[8]
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India - Developing Nation, Very High Public Healthcare Expenditure
Insulin in India is heavily subsidised by the government, however this comes with a significant drawback. The public burden for insulin subsidies in 2016 was 4.7x the allocated budget and growing at a rate of 20-30% per year.
Brand name insulin is virtually unaffordable for the majority of the 60+ million diabetics in India. [11]
Of the government response, a study by the Lancet says; "Substantial attention has been given to the issue of access to medicines for communicable diseases; however, access to essential medicines for diabetes, especially insulin, has had insufficient focus." [11]
Advertising to doctors by major pharmaceutical companies encourages the use of a multiple-insulin regime, despite the additional expense this engenders.
BioCon and Wockhardt offer a relatively affordable Regular Human Insulin [12] - we were unable to determine whether this is also subsidised;
- Biocon - Insugen R: US$2.47/vial
- Wockhardt - Wosulin R: US$2.79/vial
Figure 6.Alongside China, India is the world’s best hope for an Insulin Manufacturing Powerhouse - a net exporter that can rectify the market inefficiencies with an internationally recognised generic/biosimilar. Biocon and Wockhardt are home-grown companies struggling to overcome existing market barriers to their success. One possible strategy for protecting and encouraging local industry would be to set a maximum price on insulin within the Indian market.
As described by Wockhardt Chairman Habil Khorakiwala;
“Domestic companies make investments in the country and build facilities and the government is favouring multinationals by giving a higher price to imported products. They are enjoying huge premiums."[13]
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The Philippines Department of Health has started an Insulin Access Program in 2009, however cheap insulin is only available from a short list of government sponsored hospitals. When available, the subsidised price is 500 Philippine Pesos (~$US10). For many in the market, this simply hasn’t been an option until now. It is likely the government can’t afford the expense to expand access. Otherwise more work needs to be done to raise awareness of the program and the possibility of switching insulins. [14]
The Philippines is expected to have one of the highest rates of newly diagnosed diabetics by 2025, prompting the government to investigate further options. The national insurance system does not allow comprehensive coverage of diabetes management, is only limited to certain household members, and provides limited medication coverage. “Out-of-pocket” health care continues to be the main mechanism of patient–doctor relationship and compensation.[14]
Metformin and sulfonylureas are the most commonly prescribed medications due to their availability and cheaper cost. SciLin R is an available generic from Singapore, but at $262 yearly expense - it is far from the price of generics in other countries.[12]
“Even if I have work, it's really a burden for me to buy Insulin because it is indeed very costly. Imagine Lantus Solostar 3mL Pen costs around 850+ pesos and I consume it for only 6 days, Humalog 3mL cartridge I consume for about 10 days that costs 800+ pesos. If I'm going to sum all my expenses on medicines and syringes alone it will cost me around 6,000 pesos a month, that's roughly half of what I am getting from my job, and I still need to pay for the house rent, water, electric and telephone bills and of course my son's therapy and food. I haven't included the cost of blood glucose strips yet, that's gonna be around 5,000 pesos if you test pre and post meals in a month. For an average earner like me, it's gonna be a challenge on how to budget my monthly salary with everything that's coming my way. No wonder some people give up and die from diabetes complications, especially the poor that can't afford to pay for Insulin to live.”[15]
“Humulin N is 1,345 pesos in Drugstores and I got it for 413.40 pesos only because of the Insulin Access Program of DOH. That's only a fraction of the price! Very affordable! I'm glad my doctor agreed that I switch to this Insulin.”[15]
Figure 7.Insulin Price after government subsidy under the Insulin Access Program from the Philippines Department of Health. Citizens outside of major urban areas report difficulty gaining access to this program.[14]
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Tanzania - Developing Nation with Developing Health Care System
According to the World Health Organisation, considerable progress has been made in Tanzania in recent years to better provide healthcare to its citizens, especially in remote areas. Crucial medications such as insulin are transported to the Central Medical Store, where they are distributed to those who can afford treatment or are lucky enough to come under the umbrella of a charitable organisation. [20]
Diet and lifestyle changes are major contributing factors to the rise in diabetes prevalence inside the nation, but so is greater awareness and improved diagnosis. Dr Mavura Nurdin, head of the Diabetes clinic, says;
“We have 7 000 patients at Mwananyamala Hospital alone. We don’t always have enough medicines for all of them, so when we run out, we tell the patients they need to go and buy their insulin in a pharmacy, and pay the full price.” [20]
The Tanzanian government is currently working to implement a national healthcare system that takes contributions from citizens relative to their personal income. Ideally this would reduce dependence on other nations, but it will not affect the local price of insulin. [20]
Another problem stems from ‘counterfeit’ insulin (and other medications), as it can make the patient even more sick and directs them away from actual medication. The lack of government resources to invest in large-scale manufacturing makes Tanzania an ideal location to attempt the ‘bathtub insulin’ business model - however, as discussed elsewhere, this would be a regulatory nightmare.
Once again, the burden of action lies upon the Developed world to introduce efficiency into the manufacturing chain of this essential medication.
Figure 13.Tanzania is an excellent location for Insulin Redistribution charities like “Insulin for Life” to send excess vials. Contact them today if you are oversupplied! [21]
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Brazil
A nationwide, multicentre study of diabetes in Brazil by Cobas et al (2013) found that; “The average annual direct medical cost per capita was US$1319.15. Treatment-related expenditure (US$1216.33 per patient, per year) represented 92.20% of total direct medical costs. Insulin administration supplies and Self-Monitoring Blood Glucose (US$696.78 per patient, per year) accounted for 52.82% of these total costs.” [21] Furthermore, the one Brazilian respondent to our survey stated; [1]
“No estado onde moro no Brasil o acesso público ao medicamento é relativamente fácil. No entanto, ocorre falta do medicamento repetidas vezes ao longo do ano”
Translation: “In the state where I live in Brazil the public access to medicine is relatively easy. However, there is lack of the drug again and again throughout the year.”
Figure 14.Insulin and self-monitoring of blood glucose (test strips) account for the majority of a Diabetic’s medical expenses. The paper states that “Approximately 68% of the participants in our study were of low or very low economic status. To save money, these individuals may use their supplies inappropriately (e.g. they may reuse disposable supplies, use lower doses of medication or perform SMBG less often than recommended by clinical diabetes monitoring and treatment guidelines).” [21] In addition, the authors suggest another very real danger implicit in patient’s spending so much on supplies; “more money is being spent on SMBG supplies than on physician and dietitian consultations and nurse counselling. These findings point to the need to pay greater, more logistical and financial attention to the integral health assistance model, which involves investing in a multidisciplinary team and focusing on health education and on the rational and effective use of the procedures and technologies available.” [21] High insulin costs don’t just undermine the ability of diabetics to treat their condition, they also undermine the very medical industry that attempts to protect those with Diabetes.
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Australia - Developed Nation, High Public Healthcare Expenditure
Australia has one of the world’s most well funded ‘Pharmaceutical Benefit Schemes’ - which ensures cheap medication at the cost of an exacerbated tax burden due to the non-competitive market. As such, the overall insulin expense is steadily increasing for the Australian government. Even with this rapid growth, it is likely that cost inflation is mitigated by contractual agreements between major pharmaceutical companies and the PBS.
Figure 1. The PBS publishes a recommended ‘order of prescription’ for doctors treating new diabetic patients. The layout of this treatment is determined by PBAC (Pharmaceutical Benefits Advisory Committee) and is likely influenced heavily by cost/contractual pressures.[1]
Figure 2. Increased coverage by the PBS for Diabetes-related medications accounts for some of the price increases that can be observed. In addition, more than 100,000 Australians developed diabetes in the last year alone (2016).[2] This would only contribute to a portion of the 200% increase in insulin expenditure described by the PBS[3] - a direct impact of rising insulin prices on Australia’s taxation burden. As such, improving access to insulin and limiting the rise in price would provide a very clear benefit for developed nations as well.
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