The pharmaceutical giant Eli Lilly announced March 1 that it is capping out-of-pocket patient costs for its two most popular insulin drugs at $35 a month. By some strange coincidence, that is the same $35 insulin price cap included last year for Medicare in the Inflation Reduction Act, and the one President Biden demanded in his State of the Union address to be expanded beyond Medicare to include every diabetes patient.
Funny how a progressive president using both the bully pulpit and the legislative agenda can alter indefensible corporate behavior.
Lilly also announced that it was cutting list prices by 70% for two of its most popular branded insulin drugs, Humalog and Humulin. But watch out for the fine print.
First of all, those price cuts are not scheduled to be implemented until October, giving Lilly seven more months of high prices even as they are lauded for their corporate responsibility.
Second, patients who have commercial insurance can get the $35-per-month cap on out-of-pocket costs. And patients with no insurance can get a Lilly “savings card” to get insulin for the same $35.
But the Lilly press release adds in a footnote, “Government restrictions exclude people enrolled in federal government insurance programs from Lilly’s $35 solutions.”
Say what? The federally mandated $35 cap already covers Medicare Part D. Is Lilly saying that people on Medicaid, who include the lowest-income Americans, will have to pay sticker prices for their insulin?
And since Lilly caps out-of-pocket costs to patients but not necessarily prices charged insurance companies, the result could be cost-shifting and higher insurance premiums.
Lilly is out to limit reputational damage and head off more direct government regulation. For a decade, the strategy of the three major insulin makers, Lilly, Sanofi and Novo Nordisk, has been to jack up the price of insulin as much as the market will bear. The current list price of Humalog is $530 for five injection pens.
Lilly’s strategy is also to compensate for the hit to profits by increasing market share. It is planning to introduce yet another insulin variant, called Rezvoglar, a copycat knockoff of a Sanofi product.
We are all for greater price and product competition, but basic insulin, synthesized in 1921, has been in the public domain for more than a century and should cost no more than aspirin.
If embarrassed drugmakers are cutting prices thanks to government action, that’s the time for government to redouble regulatory requirements and not to trust corporate public relations and voluntary gestures. Better yet, produce and sell generic insulin socially, at cost.
My granddaughter, who is in the eighth grade, competes in a relatively new sport known as Cheer, a kind of cross between traditional cheerleading and competitive gymnastics. You are probably aware of Cheer, but you may not be aware that every aspect of the sport is controlled by a corporate monopoly called Varsity, which in turn is owned by the private equity firm Bain Capital.
As our friend Matt Stoller has reported. “Varsity controls virtually every single tournament, including the fees, who gets invited, and through its manipulation of the governing body for cheer, how they are organized. How did Varsity acquire such control? Mergers. Using an array of tactics, but mostly buying rivals starting in the early 2000s, and then accelerating into the 2010s. It bought Jam Brands in 2015, Spirit Celebrations in 2016/2017, and Epic Brands in 2018. Varsity came to control or eliminate virtually all cheerleading competitions, or roughly 90% of the market.”
Varsity uses that monopoly to do what monopolists always do—price-gouge consumers. One abuse among many: If your kid competes at an out-of-town tournament, you can only stay at an approved hotel, a practice known as play-to-stay. Did somebody say kickbacks?
Varsity has been sued for illegal anti-competitive tactics and is now in the process of trying to settle those suits while keeping as much control as it can. If middle school and high school sports competitions have been taken over by monopoly corporations, is anything safe?
My longtime hero and intellectual lodestar, Karl Polanyi, warned that in a capitalist economy, virtually everything is capable of being turned into a commodity. The internet age has only supercharged this tendency. As Shoshana Zuboff wrote in her prescient 2019 book, “The Age of Surveillance Capitalism,” on abuses by monopolistic platform monopolies, the product is you.
For the past five years or so, an important movement has gained momentum to connect the revival of democracy with the revival of antitrust and the recovery of a competitive economy.
Conventionally, the threats to democracy are mainly perils such as voter suppression and efforts to overturn election results by fraud or force. Those are genuine—but just as genuine is the increased corporate concentration that destroys communities, wipes out small business, disempowers workers, and leads to concentrations of income, wealth and power. The two forms of anti-democracy reinforce each other
Elizabeth Warren summed up “the ruinous effects of consolidation on our economy as well as on our democracy” in a recent speech that you should read in its entirety, that ticked off all the ways we need to restrain monopoly and restore competition. She gave that speech at one of the most important conferences I’ve attended in many a year, titled Renewing the Democratic Republic.
The conference, convened by Barry Lynn and the Open Markets Institute and co-sponsored by The American Prospect, connects all the dots between the destruction of democracy and the destruction of ant-trust and competition. The video is available here and well worth watching.
But antitrust has arisen from the dead. President Biden has appointed two of the leaders of that resurrection, Lina Khan and Jonathan Kanter, to head the two antitrust agencies, the Federal Trade Commission and the Antitrust Division of the Justice Department. Monopolies are starting to be broken up, and other anti-competitive abuses banned. As David Dayen has reported, Biden tasked every major federal agency with using its powers to increase competition.
Even more importantly, there has been a shift in public consciousness and a new, broader conceptual framing of what it means to take back democracy, economically as well as politically. “Just about every ill we face today is made worse by monopolization,” Barry Lynn told the conference, “soaring prices for our homes, our food, our health care or...ever-lower wages and ever worse jobs, surveillance, the destruction of the free press....”
Taking back democracy also requires once again housebreaking capitalism. Open Markets deserves great credit for bringing these two aspects of the progressive movement closer together.
Robert Kuttner is co-editor of The American Prospect (prospect.org) and professor at Brandeis University’s Heller School. Like him on facebook.com/RobertKuttner and/or follow him at twitter.com/rkuttner.
From The Progressive Populist, April 1, 2023
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