There is no issue of greater concern for people with Type 1 Diabetes than
the rising cost of insulin. From Washington to your local pharmacy, people are
furious, frustrated and scared. While some turn to social media to vent their
anger and advocate for change, others look to Congress for a solution. The
former might make folks feel like they are doing something (and feel better in
the process). Traditional media (newspapers and TV news) have also covered the
issue of the exorbitant cost of insulin. In addition, the President and some in
Congress have said that out of control drug pricing is a problem that needs to
be solved, but beside posturing, there has not been any substantive legislation
introduced that could realistically be enacted.
In other words, there is a lot of 'buzz' about the issue. Other than a
lawsuit alleging price fixing and collusion between the three major insulin
manufacturers, there aren't any prospects of a solution anywhere on the
horizon.
So what is the solution?
Each of the three major insulin manufacturers (
Eli
Lilly,
Sanofi and
Novo Nordisk) are publicly traded
corporations. They view their primary obligation to provide value to their
shareholders. Love it or hate it, that is why they exist.
Since they are focused on pleasing their shareholders, we could look at
reaching equity owners as to get these corporations to manage insulin
pricing differently. Sanofi currently has 2.584 billion shares trading at
$49.21 each. Novo has 1.96 billion shares trading at $40.60 each. Lilly is
priced at $80.19 per share, and with 1.103 billion shares outstanding has the
lowest market cap of the three at $88,500,000,000. Unless you are Warren Buffet
or Bill Gates and you put all your money into just one of these, you don't have
the financial horsepower to bend them to your will. Scratch that idea.
Who sets insulin prices in the first place? Most likely it is a team of
financial and managerial accountants who consider cost data, sales forecasts
and guidance from senior management among other considerations. After crunching
the numbers they arrive at a figure, it is approved by the executive(s)
empowered with that authority, and then put into place. As conditions
change, that price will be evaluated and the process repeats. But if they
arbitrarily drop the price, revenue will fall and the bean counters will have
to make it up somewhere else in order to (as always) keep investors
satisfied.
Maybe appealing to the Chairman or CEO would work, right? If we leaned on
him hard enough, couldn’t he just say 'the hell with it - we need to make
insulin more affordable, so we are dropping the price to $X.XX per vial.' Well,
no - for a couple of reasons. Like the bean counters, they are responsible for
keeping the shareholders happy by maintaining optimal profitability. Secondly, making
one group of customers happy would probably infuriate other customers. Dropping
the cost for patients with diabetes would mean raising prices on products used
by other patients. Placate the second group and the process is repeated ad
nauseum. One thing Chairmen/CEOs avoid like the plague is unnecessary turmoil. Annoying
customers and investors isn’t part of their job description. Which of us goes
out of our way to jeopardize our livelihood - especially for a constituency
that will likely be unsatisfied and won't do anything for us? Finally, they get
paid to take heat when it comes, and part of that is weathering a storm – like insulin
prices.
So who can get things done? The Board of Directors. They set the strategic
direction of the corporation. As long as shareholders are generally happy,
directors are empowered to do almost anything they want. By and large they
have pretty wide latitude. Normally a Board wouldn't get so far into the weeds
as setting prices for a product, but if there is enough pressure on them to get
involved, they just might. Also, they aren’t the public face of the
corporation. Nobody raises hell with them, so what a Chairman/CEO might brush
off as part of their job might be enough to get a Director to ask hard
questions. The kind of questions that a Chairman/CEO and his subordinates would
have to answer.
Here would be my plan of attack:
I’d go after the Directors of Lilly. Sanofi and Novo Nordisk are
multinational corporations that are headquartered overseas. They’d be less
vulnerable to public heat in America than Lilly would be.
I’d look at their
Board of
Directors and their biographies. Which would be most likely influenced by
the stories of patients who could not afford insulin? Maybe those with a
healthcare background – particularly in patient care?
I’d look at the
members
of the Public Policy and Compliance Committee. Part of their charter is to “…
review,
identify and when appropriate bring to the attention of the board political,
social and legal trends and issues, and compliance and quality matters that may
have an impact on the business operations, financial performance or public
image of the company.”
I’d get the contact information for each of the directors I was going to
contact. Google is your friend.
I’d send each of them a one page letter. They are more personal. They are
not as easily dismissed as an email. They are not missed like a tweet (assuming
some of them are on Twitter).
Here is what I would say:
- I’d tell my story.
- I’d identify myself as a customer.
- I’d tell them my very life depends on their product.
- I’d tell them how much I pay for their product, on top of my insurance premiums and co-pay.
- I’d tell them what I cannot do for my family or myself because of how expensive their medicine is. I’d ask them how they would deal with these challenges if they were in my shoes.
- I’d tell them what I think is a reasonable profit for insulin.
- I’d ask them to contact me and tell me how they will make insulin affordable, when they will do it, and what they’ll do to keep it that way.
Most of all, I’d share that with other people with diabetes. I’d tell them
what I did, who I contacted, what I said and I’d encourage them to do the same.
