Insulin costs more in the United States than in any other country, and it’s not because the drug itself is expensive to produce. In 2018, the average manufacturer price for a standard unit of insulin was $98.70 in the U.S. compared to $8.81 across 32 other high-income nations. Even after accounting for discounts and rebates, American prices remain more than four times higher than those elsewhere. The reasons come down to a combination of patent strategies, middlemen incentives, limited competition, and a pricing system unlike anything found in the rest of the world.
How Patents Keep Prices High for Decades
Insulin was discovered over a hundred years ago, so you might assume it would be cheap by now. The original molecule is long off patent. But the insulin products most people use today are modern analogs, engineered versions that act faster or last longer than older formulations. These products are protected not by a single patent but by dense layers of overlapping patents that manufacturers continuously add to.
This strategy is called “evergreening.” As one patent nears expiration, the manufacturer files new ones covering slightly different aspects of the same product: a new formulation, a different delivery device, a tweak to the manufacturing process, or a minor chemical modification. These secondary patents don’t make the drug work better, but they extend the company’s legal monopoly. On average, a secondary patent on a new formulation adds 6.5 years of protection, and one covering a new method of use adds 7.4 years. Stacked together, these overlapping patents form what’s known as a “patent thicket,” making it legally risky and expensive for competitors to enter the market.
When generic or biosimilar competitors do get close, manufacturers have additional tools. In some cases, they release a slightly modified version of their product, pull the original from the market, and mark it as “obsolete” in the national pharmacy database. This prevents pharmacists from substituting a cheaper generic, because the system no longer recognizes the original as a valid match. In other cases, manufacturers have settled patent lawsuits by paying the would-be competitor to delay their product’s launch, a tactic known as a pay-for-delay agreement.
The Rebate System That Rewards Higher Prices
Between you and the insulin manufacturer sits a powerful intermediary: the pharmacy benefit manager, or PBM. These companies negotiate drug prices on behalf of insurers and decide which medications your insurance plan will cover. In theory, PBMs should push prices down. In practice, the way they make money creates the opposite incentive.
PBMs earn revenue through rebates and fees calculated as a percentage of a drug’s list price. A higher list price means a bigger rebate, which means more money for the PBM. This creates a perverse dynamic: manufacturers raise list prices specifically so they can offer the larger rebates PBMs demand in exchange for favorable placement on insurance formularies. The three largest PBMs control roughly 80% of the market, giving them enormous leverage over which insulin products patients can access.
In September 2024, the Federal Trade Commission sued the three dominant PBMs, alleging they had artificially inflated insulin prices through this rebate-driven system. The FTC’s complaint laid out how manufacturers felt compelled to keep raising list prices to compete for formulary access, with PBMs pocketing larger rebates at each step. The result is a list price that bears little resemblance to what the drug costs to make, and patients without insurance, or those with high-deductible plans, often pay that inflated list price out of pocket.
Only Three Companies Control the Market
For years, the global insulin market has been dominated by three manufacturers: Eli Lilly, Novo Nordisk, and Sanofi. With so few competitors, there’s little pressure to undercut on price. Instead, all three companies have historically raised their prices in near-lockstep. When one company increased its list price, the others followed within months, a pattern economists call shadow pricing.
This isn’t how competitive markets normally work. In most industries, a rival’s price increase is an opportunity to attract customers by staying cheaper. But in insulin, the rebate system rewards higher prices, patent thickets block new entrants, and the three incumbents face no real threat of losing market share. The result is that U.S. insulin prices climbed steadily for over a decade, tripling between 2002 and 2013 and continuing to rise after that.
Why Other Countries Pay a Fraction of the Price
The price gap between the U.S. and the rest of the world is staggering. American insulin prices in 2018 were 6.3 times those in Canada and Germany, and nearly 28 times those in Turkey. Across all comparable high-income nations, U.S. prices were roughly 8 times higher. Updated data from 2022 found U.S. manufacturer prices were still nearly 10 times the average across other OECD countries.
The core difference is that most other countries negotiate drug prices at a national level. Government agencies set a maximum price or negotiate directly with manufacturers, using the threat of excluding a drug from the national formulary as leverage. The U.S. has historically had no such mechanism. Medicare, the largest single purchaser of insulin in the country, was prohibited by law from negotiating drug prices until the Inflation Reduction Act began changing that in 2022. Without a single large buyer pushing back, manufacturers could set whatever price the market would bear.
Recent Price Cuts and the $35 Cap
The landscape has shifted meaningfully since 2023, though the changes don’t reach everyone. Eli Lilly cut the list price of Humalog and Humulin, its most widely used insulins, by 70%. The company also launched an interchangeable biosimilar to Sanofi’s Lantus at a 78% discount. Novo Nordisk and Sanofi announced their own price reductions around the same time.
On the legislative side, the Inflation Reduction Act capped insulin copays at $35 per month for people on Medicare, effective January 2023. This applies to Medicare Part D prescription drug plans and Medicare Advantage plans with drug coverage. Starting in July 2023, the cap extended to Medicare Part B beneficiaries who use insulin pumps. Given that nearly 30% of Medicare enrollees have diabetes compared to about 11% of the general population, the cap affects a large number of people who rely heavily on insulin.
The gap in coverage is significant, though. The $35 cap only applies to Medicare. If you have private insurance, you may benefit from the manufacturers’ voluntary list price cuts, but your actual cost still depends on your plan’s formulary, your deductible, and your copay structure. If you’re uninsured, the list price reductions help, but you’re still navigating a system where prices remain far higher than in other countries. Several states have passed their own insulin copay caps for people with private insurance, but there’s no federal protection for this group.
Why Biosimilars Haven’t Solved the Problem
Biosimilars are the biological equivalent of generic drugs. They’re designed to work the same way as a brand-name biologic at a lower price. The FDA has approved several insulin biosimilars, and in theory, these should drive competition and bring costs down the way generics do for other medications.
In practice, biosimilars face steeper barriers than traditional generics. Because insulin is classified as a biologic rather than a simple chemical compound, competitors can’t just replicate the molecule and file an abbreviated application. They must conduct their own clinical trials to prove their product is comparable, which costs hundreds of millions of dollars. On top of that, the patent thickets around branded insulins make it difficult to launch without facing infringement lawsuits. And even when a biosimilar reaches the market, PBMs may not place it on preferred formulary tiers if the branded product offers larger rebates.
The biosimilars that have launched have generally been priced at meaningful discounts, but they haven’t yet created the kind of robust competition that drives prices toward production cost. The market remains concentrated, and the structural incentives that inflated prices in the first place are still largely intact.