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Eli Lilly CEO David Ricks comments on why it's cutting insulin prices now

AILSA CHANG, HOST:

Insulin is a lifeline for people with diabetes, and it can be prohibitively expensive for people with tight budgets. Over the last 20 years, leading manufacturers have boosted their prices by more than 600%. There have been some state and federal efforts to offset costs for patients, but advocates have been calling for years for the drug companies who produce insulin to make it more affordable. And now one of the biggest names in the game, Eli Lilly, is taking steps in that direction. They're reducing prices on some older insulins and capping how much people have to pay out of their own pockets. Eli Lilly CEO David Ricks joins us now. Welcome.

DAVID RICKS: Thank you. Good to be with you today.

CHANG: Good to have you. Let me start by asking you about the timing of this announcement because Congress just recently capped insulin copayments for Medicare patients, and I know that the Biden administration has been pushing to do it for people with commercial insurance as well. So is the timing of your announcement just Eli Lilly trying to get out ahead of all that?

RICKS: Yeah, it's a logical question. But just to step back, we've been working on improving affordability of insulin for some time, really since 2016, when we first launched a copy of the bestselling insulin from a competitor. Later, we noticed there wasn't anyone working on a competitor to our products that were off patent, so we launched our own generic against ourself. That's an unusual move. But the idea was to try to bring down the cost. And then later, we introduced caps on out-of-pocket costs, like we're re-announcing today...

CHANG: Right.

RICKS: ...Ninety-five dollars now down to 35 as of today's news.

CHANG: But let me ask you...

RICKS: But just to - go ahead.

CHANG: ...Because you say that full-fledged efforts began around 2016, but this is something people have been calling for for years - reducing the price of insulin - well before 2016. What took so long to address this chronic problem of high insulin prices?

RICKS: Well, something changed in the U.S. health care market, which was that high-deductible plans really start to grow in popularity around 2011 and '12. And what that does is it - rather than have a co-pay that's fixed in your insurance, your out-of-pocket cost is linked to the list price of medications or services you use. Unlike services, though - where when your insurance company negotiates a discount, you benefit - that does not happen in the pharmacy side of the business. So that problem grew and grew as high-deductible plans grew and more people were exposed to the full pricing of insulin without the benefits and the discounts that the system, the health care system was benefiting from, but not individual patients.

CHANG: Insulin is one flashpoint, but there are other medicines out there, such as cancer medicines, which can also be a huge financial drain. Will Lilly lower prices on other medicines given your concerns about affordability?

RICKS: So the unique thing about insulin is some of these products are old and have not had copies even though they've been off patent for almost a decade. So that's unusual. Our belief about how the system should work is our job is to innovate, to make new medicines that didn't exist before for conditions that were previously untreatable. And when we do that, we expect to get a good reward because it's risky and expensive. But that reward should not last forever. It should last for a period of time that - you know, maybe 10 or 15 years, depending on the patent - and then, after that, drugs should become very, very cheap because they go generic.

And I think that's sort of our contract with society is that while they're expensive, insurance should cover them and shield people from that cost. And when they become cheap, everybody wins for reasons that are difficult to explain. That does not happen with insulin. So we're taking these actions independent of those external effects.

CHANG: I want to end now by asking you a question about some personal stories that we have heard for quite some time. NPR and other news organizations have reported on people like Alec Raeshawn Smith, who was a young man who died of diabetic ketoacidosis after aging off of his mother's insurance. His family believes that he was rationing his insulin because it was just too expensive. What do you say to families like his right now?

RICKS: Yeah. I'm sorry that something like that would have happened. It shouldn't have happened. And there were ways to prevent it that weren't enacted, and we could talk about those. Now those cases should be fewer. Our goal is to eliminate that situation. It has always been, but sometimes health care's complicated and inconvenient. You know, with today's announcement, automatic discounts should occur even without insurance. You know, what I would say is we're taking steps, we're learning, we're improving, and no one should have to ration their insulin.

CHANG: Eli Lilly CEO David Ricks, thank you very much for joining us today.

RICKS: Thanks, Ailsa. Transcript provided by NPR, Copyright NPR.

Ailsa Chang is an award-winning journalist who hosts All Things Considered along with Ari Shapiro, Audie Cornish, and Mary Louise Kelly. She landed in public radio after practicing law for a few years.