Insulin Prices Begin Tripling 2002-2013 as Three Manufacturers Control 99% of Market - From $231 to $762 Annually

The average price of insulin in the United States began a decade-long tripling from $231 per patient annually in 2002 to $762 in 2013, according to congressional hearing data—with some patients paying up to $900 per month for insulin products that cost $4.34 per milliliter in 2002 but reached $12.92 per milliliter by 2013. Three companies—Eli Lilly, Novo Nordisk, and Sanofi—controlled 99% of the global insulin market and 100% of the US market, eliminating price competition while implementing synchronized price increases that raised costs 300% over the decade. The price increases occurred despite insulin being a century-old drug with no significant breakthroughs in the underlying science, and despite the United States comprising only 15% of global insulin volume but generating nearly 50% of insulin-related revenue—exposing how the US pharmaceutical market had become optimized for price extraction rather than patient access.

The Three-Company Oligopoly and Synchronized Price Increases

Eli Lilly, Novo Nordisk, and Sanofi collectively controlled 99% of the world’s insulin market, with the three companies holding 100% of the US market where no generic competition existed for branded insulin products. This oligopoly structure enabled synchronized price increases where each company raised prices in tandem, eliminating competitive pressure that would typically constrain pricing. When one manufacturer raised prices, the others followed within months, establishing a pattern of coordinated increases that congressional investigators characterized as anticompetitive behavior. The lack of generic competition stemmed from multiple barriers: biological drugs like insulin face higher regulatory hurdles for generic versions (biosimilars), patent thickets on delivery devices and formulations created legal obstacles, and the substantial investment required to develop biosimilar insulin deterred market entry when existing manufacturers could simply raise prices on legacy products.

Payment Incentives and Patent Evergreening

Representatives Tom Reed (R-N.Y.) and Diana DeGette (D-Colo.), co-chairs of the Congressional Diabetes Caucus, concluded after a year-long bipartisan investigation that payment incentives in the pharmacy benefits manager system, outdated patent regulations, and other factors allowed drugmakers to increase insulin prices by nearly 300% from 2002 to 2013. The payment incentive structure created perverse results: pharmacy benefits managers (PBMs) negotiated rebates from manufacturers based on list prices, incentivizing high list prices with large rebates rather than low net prices. Manufacturers raised list prices to increase rebate dollars available to PBMs, while PBMs had no incentive to pressure for lower list prices since their revenue derived from rebate percentages. Patients without insurance or with high-deductible plans paid the inflated list prices, while those with comprehensive insurance paid premiums reflecting the higher net costs after rebates.

The American Price Extraction Market vs. Global Pricing

The United States comprised only 15% of the global insulin market by volume but accounted for almost 50% of worldwide insulin-related revenue—a disparity revealing that American patients paid 6-7 times more per unit of insulin than the global average. Countries with national health systems or price negotiation mechanisms paid a fraction of US prices for identical insulin products from the same manufacturers. The three-company oligopoly could charge vastly different prices across markets because US law prohibited Medicare from negotiating drug prices (under the 2003 Medicare Part D law) and no other regulatory mechanism existed to control pharmaceutical pricing. The manufacturers priced insulin in each market at the maximum level that market would bear, with the US market bearing the highest prices due to regulatory gaps, insurance structures that obscured costs from most patients, and lack of any government price negotiation.

Patient Harm and Insulin Rationing

The 300% price increase forced insulin-dependent diabetics to make impossible choices between medication and other necessities, leading to widespread insulin rationing with deadly consequences. Congressional hearings featured testimony about Alec Smith, who died in 2017 from diabetic ketoacidosis after aging out of coverage under his mother’s insurance at age 26, leaving him unable to afford $1,300 monthly insulin costs. Smith attempted to ration his insulin to make supplies last longer—a common but dangerous practice among uninsured and underinsured diabetics. Studies documented that one in four insulin-dependent diabetics reported rationing insulin due to costs, skipping doses or using less than prescribed amounts. Insulin rationing led to preventable hospitalizations for diabetic ketoacidosis, long-term complications from poorly controlled blood glucose, and deaths that would not occur in countries where insulin remained affordable.

Congressional Hearings and Limited Legislative Response

Since 2018, House and Senate subcommittees held multiple hearings where representatives from Novo Nordisk, Sanofi, and Eli Lilly testified alongside pharmacy benefits managers from Express Scripts, CVS Caremark, and OptumRx. The hearings exposed how each segment of the pharmaceutical supply chain blamed others for price increases while all segments profited from the high-price system. Manufacturers blamed PBM rebate demands, PBMs blamed manufacturer list prices, insurers blamed both, and patients paid the compounding costs. Despite bipartisan congressional outrage and detailed documentation of the price manipulation system, federal legislation to control insulin prices stalled for years. The breakthrough came only with the 2022 Inflation Reduction Act, which capped Medicare insulin copays at $35 monthly—a limited victory covering only Medicare beneficiaries nearly two decades after price increases began.

State-Level Responses and Manufacturer Settlements

Minnesota’s Alec Smith Insulin Affordability Act, signed in 2020 and named for the young man who died rationing insulin, capped out-of-pocket costs at $35 monthly for Minnesota diabetics. Other states followed with similar caps. State attorneys general including Minnesota’s Keith Ellison and New York’s Letitia James filed lawsuits alleging deceptive pricing practices, securing settlements where manufacturers agreed to cap prices at $35 monthly for uninsured residents for five-year periods. These state-level actions revealed that political pressure could force pricing concessions, but the patchwork of state laws created a two-tier system where insulin affordability depended on state residency. Eli Lilly and Novo Nordisk eventually announced voluntary price cuts of 70-75% on some insulin products in 2023—nearly two decades after the price tripling began—reframing the reductions as corporate generosity rather than acknowledging the original price increases as exploitative.

Significance

The insulin price tripling exposed the consequences of pharmaceutical oligopoly combined with regulatory gaps in US drug pricing authority. Three companies controlling 99% of the market for a century-old lifesaving drug implemented synchronized 300% price increases over a decade, knowing that insulin-dependent diabetics had no alternative treatment options and would pay any price or die. The disparity between US prices and global prices—with Americans paying 6-7 times the global average—demonstrated that high prices reflected market power rather than production costs or innovation incentives. The fact that manufacturers could voluntarily cut prices by 70-75% in 2023 proved the previous prices bore no relationship to costs but represented pure extraction of monopoly rents. Congressional hearings spanning multiple years with bipartisan support failed to produce federal price controls, illustrating pharmaceutical industry lobbying power to prevent meaningful reform. The state-level interventions and eventual manufacturer price cuts came only after two decades of price gouging and after patient deaths from insulin rationing had generated sustained media attention—demonstrating that pharmaceutical industry pricing strategies changed only when public pressure threatened more comprehensive regulation. The insulin crisis exemplified how the US healthcare system prioritized pharmaceutical industry profits over patient survival, with market access to a century-old lifesaving drug determined by ability to pay monopoly prices rather than medical need.