The Insulin Price Story, in 5 Numbers

The insulin price in America is not a story about a hard drug to make. Insulin was first purified in 1921 and mass-produced by 1923. The chemistry is settled. Roughly 8 million Americans depend on it, per the American Diabetes Association, and for most of them there is no substitute, no generic aisle, and no option to wait for a sale.

Five numbers tell you how the price got where it is. None of them involve research costs.

Why did the inventors sell the patent for $1?

Because they did not think a discovery this basic should belong to anyone.

Frederick Banting, Charles Best, and James Collip assigned the insulin patent to the University of Toronto in 1923 for a dollar each. The university then licensed it widely, on purpose, so manufacturers could produce the drug at scale. They wanted a cheap medicine everyone could get.

That held for decades. The patent expiring is not what broke it. What came after did.

Who actually sets the insulin price?

Three companies. Eli Lilly, Novo Nordisk, and Sanofi supply the overwhelming majority of insulin sold in the United States.

Three sellers in a market where the buyer cannot leave is not a market in any useful sense. A person with type 1 diabetes does not comparison shop, delay purchase, or substitute a competing product on principle. Demand is fixed by biology. When demand cannot fall in response to price, price has no ceiling except what the seller thinks it can defend.

For most of the last two decades, the largest buyer in the country was legally barred from negotiating. The 2003 Medicare Modernization Act included a non-interference clause blocking the Department of Health and Human Services from bargaining directly on Part D drug prices. That held until 2022.

Why doesn't a generic fix this?

Insulin is a biologic, grown in living cells rather than synthesized from a chemical formula. Its competitors are biosimilars, not generics.

That distinction carries real weight. A chemical generic is cheap to develop, easy to prove equivalent, and a pharmacist can substitute it at the counter. A biosimilar costs far more to bring to market, faces a heavier regulatory path, and until recent rule changes could not be swapped in automatically. Manufacturers also spent those decades filing new patents on formulations, delivery devices, and dosing pens, layering protection over a molecule whose original patent had long since expired.

The result is a hundred-year-old drug that behaved like a new one for far longer than the bargain intended. The same pattern drives the rest of the pharmacy counter, which is the subject of why prescription drugs cost what they do.

How many people ration insulin?

About 1.3 million adults, roughly one in six insulin users.

That estimate comes from research published in Annals of Internal Medicine analyzing 2021 National Health Interview Survey data. Rationing means skipping a dose, taking less than prescribed, or delaying a refill to make a vial last.

Rationing is arithmetic. You weigh rent against a drug that keeps you out of a coma, then take the option whose consequences arrive slower. Those consequences are expensive and well documented: diabetic ketoacidosis, emergency admission, long-term organ damage. A skipped $300 vial becomes a five-figure hospital bill, and what an ER visit really costs is how a large share of medical debt in America gets created in the first place.

What did the $35 cap actually fix?

More than nothing, and less than the headlines suggested.

The Inflation Reduction Act of 2022 capped insulin cost-sharing at $35 per month for Medicare Part D beneficiaries. It ended the 19-year non-interference clause for a phased list of high-spend drugs. Then in 2023, under sustained public pressure, Eli Lilly, Novo Nordisk, and Sanofi each announced list price reductions and their own $35 out-of-pocket caps.

Read those two sentences again and notice the difference between them. The first is law. The second is corporate policy, announced voluntarily, and a company that announces a cap can revise the terms, narrow eligibility, or route patients through a savings-card program that requires enrollment, a valid prescription record, and commercial insurance.

If you are uninsured, on a plan that excludes manufacturer coupons, or unaware the program exists, the cap is a press release.

The caps also do nothing about the number underneath them. A list price stays where the manufacturer put it, and every calculation downstream still runs off that figure: what an uninsured patient is charged at the counter, what a coinsurance percentage gets applied to, what a plan counts toward your deductible. Capping the copay leaves the price intact and moves the difference somewhere less visible.

What is still broken?

The part nobody capped: the deductible.

If you carry a high-deductible health plan, your January insulin is charged at full negotiated rate until you spend down thousands. The KFF Employer Health Benefits Survey puts average family premiums near $25,000 a year in 2024, with the worker paying $6,000-plus of that before a single prescription is filled. You can be fully insured, fully employed, and still face a four-figure quarter for a drug that costs a few dollars to produce.

A full-time worker at the federal minimum wage of $7.25, unchanged since 2009, grosses about $15,000 a year. Do the subtraction yourself.

The price was chosen

Nothing in the chemistry of insulin explains its price. Not the manufacturing, not the research, not the patent, which its inventors gave away for a dollar precisely so this would not happen.

What explains it is a market with three sellers, a buyer who cannot walk away, and a two-decade rule forbidding the largest purchaser in the country from negotiating. Every one of those is a decision. The 2022 law proved it, because the moment Congress voted differently, the number moved.

The unfinished part is who the fix reaches. Medicare beneficiaries are covered. The uninsured, the underinsured, and the worker whose deductible resets every January are covered by a coupon and a hope. The gap is income, not medicine, and it sits at the center of what happened to the American dream and of why so many Americans cannot afford healthcare at all.