A Century-Old Drug, a Modern Ransom: How Big Pharma Turned Insulin Into a Luxury Americans Ration to Survive

In 1923, Frederick Banting and Charles Best sold the patent for insulin to the University of Toronto for one dollar. Their reasoning was explicit: a medicine this essential should not be owned by anyone who would profit from withholding it. One hundred years later, three pharmaceutical companies — Eli Lilly, Novo Nordisk, and Sanofi — collectively control roughly 90 percent of the global insulin market and have spent decades engineering a pricing structure that turns that founding principle into a bitter historical irony.

In the United States, the list price of insulin increased by approximately 1,200 percent between 1996 and 2019, according to research published in the BMJ. Americans pay, on average, ten times more for insulin than patients in comparable wealthy nations. And the consequences of that gap are not theoretical — they show up in emergency rooms, in GoFundMe campaigns, and in death certificates.

The Mechanics of a Manufactured Monopoly

Understanding how three companies came to control a century-old molecule requires understanding two interconnected strategies: patent evergreening and biosimilar suppression.

Patent evergreening is the practice of making incremental, often minor modifications to an existing drug formulation — a new delivery device, a slightly altered concentration, a different inactive ingredient — and filing new patents on those modifications to extend market exclusivity well beyond the original compound's patent life. Insulin, which should by any reasonable measure be a generic commodity, has instead been kept under continuous patent protection through a cascade of reformulations. Eli Lilly's Humalog, for instance, was introduced in 1996. By filing new patents on delivery devices and formulations, the company has maintained pricing power over what is functionally the same drug for decades.

Biosimilar suppression is the complementary strategy. Unlike small-molecule drugs, insulin is a biologic — a complex protein produced through living cells — which means generic versions are called "biosimilars" rather than generics and face a more complex regulatory pathway. The three dominant manufacturers have used this complexity to their advantage, filing thickets of overlapping patents that deter competitors, entering into exclusive contracts with pharmacy benefit managers that effectively block biosimilar uptake, and pricing their own authorized generics just below list price — low enough to capture cost-conscious consumers, high enough to preserve the revenue structure.

The result is a market that looks competitive on its surface — there are multiple insulins available — but functions as an oligopoly in practice. Prices among the three major manufacturers have historically moved in near-lockstep, a pattern that has drawn scrutiny from antitrust researchers and, more recently, from Congress.

What the Price Cap Actually Did — and Didn't Do

The Inflation Reduction Act of 2022 included a provision capping insulin costs for Medicare beneficiaries at $35 per month. This was a genuine, meaningful step — an estimated 3.3 million Medicare enrollees with diabetes benefit from the cap, according to the Department of Health and Human Services. Eli Lilly, Novo Nordisk, and Sanofi subsequently announced voluntary price reductions and caps for commercially insured patients as well, moves that were widely covered as corporate generosity but more accurately described as strategic positioning ahead of regulatory pressure.

But the $35 cap does not apply to the uninsured. It does not apply to the approximately 25 million Americans with diabetes who are covered through employer-sponsored insurance plans not subject to the IRA's provisions. And it does not address the underlying pricing structure — the list prices, the rebate arrangements with pharmacy benefit managers, the patent thickets — that produced the crisis in the first place. Capping the consumer's out-of-pocket cost while leaving the systemic architecture intact is not a solution. It is cost-shifting with better optics.

Rationing Is Not a Choice, It's a Sentence

The practice of insulin rationing — stretching doses, skipping injections, or going without entirely because of cost — is not a fringe phenomenon. A 2021 study published in JAMA Internal Medicine found that approximately one in five insulin-using Americans reported rationing their insulin due to cost. Among adults under 65 without insurance, that figure was substantially higher.

The clinical consequences of insulin rationing are severe and well-documented. Diabetic ketoacidosis, a potentially fatal complication that occurs when the body lacks sufficient insulin, is directly associated with cost-related underuse. A 2018 study in Diabetologia estimated that the mortality risk from cost-related rationing was significant and concentrated among younger, lower-income patients — precisely the demographic least likely to be covered by Medicare's $35 cap.

Alec Smith was 26 years old when he died of diabetic ketoacidosis in Minnesota in 2017. He had aged off his parents' insurance and was rationing his insulin while trying to save enough to afford a new plan. His death became a symbol of the human cost of insulin pricing and helped fuel advocacy campaigns that eventually contributed to the IRA provision. But advocacy that produces a partial fix a half-decade after a preventable death is not a health care system functioning as intended.

The Strongest Case for the Other Side

The pharmaceutical industry's defense of insulin pricing rests on two arguments that deserve serious engagement rather than dismissal.

The first is that high list prices are not what most patients actually pay — rebates negotiated by pharmacy benefit managers significantly reduce net prices, and manufacturer patient assistance programs cover many low-income users. This is partially true. The rebate system does mean that the gap between list price and net price is substantial. But it also means that the list price functions as a tax on the uninsured and underinsured, who lack the intermediary power of a PBM to negotiate rebates. The rebate system redistributes insulin costs rather than reducing them — it is not a defense of the pricing structure, it is a description of its complexity.

The second argument is that pharmaceutical innovation requires the revenue generated by high prices, and that price controls will reduce investment in next-generation diabetes treatments. This is the industry's most durable claim, and it cannot be entirely dismissed. But insulin is not a next-generation therapy — it is a hundred-year-old drug. The argument that we must pay monopoly prices for a 1923 discovery to fund 2035 innovation is not an economic argument. It is a rhetorical sleight of hand.

The Political Architecture of Inaction

The pharmaceutical industry spent approximately $373 million on federal lobbying in 2022, according to data from OpenSecrets — more than any other sector. Eli Lilly, Novo Nordisk, and Sanofi are consistent and substantial contributors to both parties, though with a notable tilt toward members of the Senate Finance Committee and House Energy and Commerce Committee — the bodies with jurisdiction over drug pricing legislation.

The IRA's drug pricing provisions passed without a single Republican vote and faced sustained opposition from industry-aligned Democrats as well. The Medicare negotiation authority included in the law — which allows the federal government to negotiate prices on a limited number of drugs annually — was the product of years of legislative effort and still represents only a fraction of what a genuine federal pricing regime would require.

Meanwhile, the European Union, Canada, Australia, and Japan all use some form of government reference pricing or direct negotiation to keep insulin costs a fraction of American levels. The argument that such systems are incompatible with American values is not a policy argument — it is a lobbying position dressed in the language of ideology.

What Justice Looks Like

A health care system that treats insulin as a public good — which is what it is, both historically and morally — would look substantially different from the one that exists. It would include robust Medicare negotiation authority extending to all high-cost drugs. It would close the patent evergreening loophole through legislative reform of the Hatch-Waxman Act's biologic provisions. It would require manufacturers to disclose actual production costs as a condition of federal market access. And it would extend the $35 insulin cap to every American, regardless of insurance status.

None of these proposals are radical. Most have majority public support. The obstacle is not public opinion — it is the $373 million annually that buys the legislative inertia that keeps the status quo in place.

When a drug discovered in 1921 and sold for a dollar is killing Americans in 2025 because they cannot afford it, the problem is not science, not economics, and not complexity — it is a political choice, and it can be unmade.