The Insulin Machine

Frederick Banting and Charles Best discovered insulin at the University of Toronto in 1921. They sold the patent to the University of Toronto for one dollar, explicitly so that no one would be able to profit from it. Insulin was not a business opportunity. It was a lifesaving molecule that people with Type 1 diabetes would need every day for the rest of their lives. Without it, they die -- typically from diabetic ketoacidosis within days or weeks.

Insulin is not expensive to manufacture. A vial of insulin costs approximately $2 to $6 to produce. In the United Kingdom it sells for $7.52 per standard unit. In Canada, $12.00. In Germany, $59.00 per month. In the United States, the list price reached $300 to $700 per vial -- and for monthly GLP-1 drugs like Ozempic and Wegovy, $969 per month in the US vs. $122 in Denmark, the country where Novo Nordisk is headquartered. HHS/ASPE.

The gap between cost-to-produce and US list price is not a market outcome. It was designed. A bipartisan Senate investigation, a Federal Trade Commission enforcement action, and class action litigation by state attorneys general have all concluded the same thing: three pharmaceutical manufacturers and three pharmacy benefit managers operated a price-fixing system that inflated insulin prices in coordinated lockstep for more than two decades.

Between the pharmaceutical manufacturer and your pharmacy counter stand three companies called pharmacy benefit managers, or PBMs: CVS Caremark (subsidiary of CVS Health), Express Scripts (subsidiary of Cigna), and OptumRx (subsidiary of UnitedHealth Group). Together they control approximately 80% of the US pharmaceutical benefits market. They decide which drugs appear on insurance formularies. A drug not on the formulary is a drug patients can't access through insurance.

The rebate system works like this: manufacturers pay PBMs a rebate -- a kickback -- in exchange for formulary inclusion. The larger the rebate, the better the placement. Rebates are calculated as a percentage of list price. This means a manufacturer can guarantee better formulary placement by raising its list price and paying a proportionally larger rebate. The PBM earns more. The manufacturer protects its market access. The patient, who pays based on list price, pays more.

In January 2021, after a two-year investigation reviewing more than 100,000 pages of internal documents, the Senate Finance Committee released a bipartisan report by Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR). The report found that insulin manufacturers raised list prices in tandem with competitors, step for step, not to compete but to maintain formulary placements. PBM contracts included 'price protection' clauses allowing manufacturers to raise prices up to 12% per year -- a contractual floor on annual price increases, not a ceiling. Senate Finance Committee.

The FTC filed suit against all three PBMs in September 2024, describing a 'perverse drug rebate system' that excluded lower-cost insulin products from formularies because lower list prices generated lower rebates. The cheaper option was structurally shut out. The most expensive option was entrenched. FTC.

Eli Lilly launched Humalog -- a recombinant insulin -- in 1996 at $21 per vial. Over the next two decades, the company raised the price more than 30 times:

2009: $92.70/vial. 2011: $115.70. 2017: $274.70 -- a 1,157% increase over 21 years, against roughly 25% consumer price inflation for the same period. Every major competitor raised prices in parallel. Novo Nordisk's Novolog and Sanofi's Lantus traced the same trajectory.

The Senate Finance investigation documented the mechanism: each manufacturer watched the others' pricing moves and matched them, not to undercut -- which would have reduced their rebate-generating capacity -- but to maintain parity. Competing on price would have destroyed formulary access. The rebate architecture made price competition structurally impossible.

In March 2023, Eli Lilly announced a 70% cut to Humalog's list price. This was presented as a voluntary humanitarian act. It was not. It came after passage of the Inflation Reduction Act's Medicare drug negotiation provisions, after Senate Finance Committee hearings in which executives were questioned under oath, and after state attorneys general in Massachusetts, Minnesota, and other states had filed or were preparing to file suit. CNBC No executive faced any criminal or civil penalty for the 27 years of price increases that preceded it.

Rationing insulin -- extending a vial by skipping doses or injecting less than prescribed -- causes blood sugar to spike uncontrolled. The medical consequence is diabetic ketoacidosis (DKA): a cascading metabolic crisis that can kill in hours. For people with Type 1 diabetes, who produce no insulin at all, there is no margin. The math is simple: too little insulin for too many days, and the body begins to shut down.

T1International documented publicly confirmed deaths from insulin rationing: 4 in 2017, 4 in 2018, 5 in 2019 -- minimum counts, because many deaths from DKA are not publicly reported as rationing-related. Among those documented:

Alec Raeshawn Smith, 26, Minneapolis, MN. Died June 27, 2017. Aged off his parents' insurance. Needed $1,300/month in insulin. Could not afford it. Began rationing. Found dead in his apartment from DKA, 27 days after losing coverage. CBS News.

Shane Patrick Boyle, approximately 33, died March 18, 2017. Had started a GoFundMe for a month of insulin. He was $50 short of his goal when he died from DKA -- days after his mother's death. Snopes has verified the account. Snopes.

Jesimya David Scherer, 21, Minnesota. Found dead June 28, 2019, from DKA after rationing insulin due to cost.

Jada Renee Louis, 24, Virginia. Died June 2019, one week after hospitalization from rationing-related complications. She had faced a choice between rent and $300 insulin.

Jeremy Crawford, 39, Dallas, TX. Died August 25, 2019, from DKA after losing his job and insurance. Vice.

These are the cases the press covered. The Lown Institute estimated in 2021 that 1.3 million Americans were currently rationing insulin -- not historically, not occasionally, but as their current practice because they cannot afford the prescribed dose. Lown Institute A T1International survey found 1 in 4 Americans with Type 1 diabetes had rationed insulin, versus 6% of Type 1 diabetics in other high-income countries. T1International.

In September 2024, the Federal Trade Commission filed suit against CVS Caremark, Express Scripts, and OptumRx and their affiliated group purchasing organizations. The FTC's complaint described a 'perverse drug rebate system' that rewarded manufacturers who raised prices and structurally excluded lower-cost alternatives from formularies, shifting the burden to the patients least able to pay: the uninsured and those with high-deductible plans.

In February 2026, Express Scripts (Cigna's subsidiary) reached a settlement with the FTC requiring fundamental changes to its rebate practices. The FTC projected the settlement would drive down out-of-pocket costs by up to $7 billion over 10 years and increase revenue to independent pharmacies. No fine. No admission of wrongdoing. No executive charged. Healthcare Dive Suits against CVS Caremark and OptumRx continue.

The Inflation Reduction Act of 2022 capped insulin cost-sharing at $35 per month -- for Medicare patients. There are approximately 37 million Medicare enrollees in the US. There are approximately 155 million Americans on employer health plans. The $35 cap does not apply to them. For the uninsured, nothing changed.

Lars Fruergaard Jorgensen, CEO of Novo Nordisk, testified before the Senate HELP Committee on September 24, 2024. Senator Bernie Sanders asked him why Ozempic costs $969 per month in the United States and $122 in Denmark -- Novo Nordisk's home country. Jorgensen said the US pricing system was complex and that the company was 'working to improve access.' He is paid approximately 275 million Danish kroner per year, or roughly $40 million. Senate HELP Committee.

Class action lawsuits from state governments, self-funded health plans, and individual plaintiffs have been consolidated into Multidistrict Litigation No. 3080 in the District of New Jersey, before Judge Brian Martinotti. As of early 2026, more than 400 cases are pending -- up from 85 cases in December 2024. Massachusetts, Delaware, Arizona, Minnesota, and multiple other state attorneys general have filed complaints. The Massachusetts AG complaint alleges manufacturers 'deliberately and willingly' raised prices and paid significant portions back to PBMs as a quid pro quo for formulary inclusion: a rebate kickback scheme. Massachusetts AG.

There is no trial date. No criminal referral has been made by any state or federal agency. No insulin manufacturer executive has been charged with a crime. No PBM executive has been charged with a crime. No one has gone to prison.

Alec Smith's mother, Nicole Smith-Holt, testified before Congress. She started a nonprofit, Alec's Got This Foundation, to help diabetics afford insulin. She has been doing this for eight years.

Dave Ricks, CEO of Eli Lilly -- the company that raised Humalog from $21 to $274 over two decades -- earned approximately $21.3 million in annual compensation in recent years. The 70% price cut he announced in March 2023 was a reduction in the list price that Eli Lilly had itself inflated by 1,157%. It was described in press releases as 'historic.' No one was held legally accountable for the years it took to get there, or for the people who did not survive them.