Rising Diabetes Costs

Even Small Medical Advances Can Mean Big Jumps in Bills (Link)

In this segment of Pay Till It Hurts, the major issues surrounding ballooning costs regarding Type I and Type II Diabetes is discussed. I’ll preface this by saying that the diabetes market is severely broken and in disarray, and at best the most encouraging thing that remains is that Type I diabetics still have opportunities to receive insulin and live encouraging lives in contrast to the former status of Type I diagnosis as a terminal illness.

There are a number of concerns and strain points to illustrate about the state of the industry, and I will dive into a couple key takeaways also. The first main point outlined in the article is the consistent iteration of diabetes equipment and infusions that has led to soaring prices over the years with marginal increase in improved patient outcome. Since the development of insulin therapy in the 1920’s or synthetic insulin in the 1970’s, diabetics began having options to control their health issues with a minimum viable product of sorts. None of the technology was revolutionary by modern day standards, but the medical concepts were fully established and scalable to save and improve millions of lives. While there have certainly been large improvements, the past decade has led to more aesthetic and non-critical improvements that have pushed device and infusion maintenance costs soaring market-wide.

Patients worldwide also face is the increased rate of obsolescence in pumps and meters as well as monitoring and maintenance strategies. The more tech integrated into diabetes management, the more diabetes management companies behave like tech companies. There are ever increasing interoperability issues and software issues as the latest and greatest is rolled out, and legacy treatment methods and platforms begin to lose service support and become ever harder to purchase. The captive market of Type I diabetics specifically is becoming more and more susceptible to being treated as hostages at the will of prices the market will bear.

Given these two issues, I’ve identified key takeaways and opportunities for the dire tide to shift that is looming over the diabetes sector of healthcare.

1.     Bargaining Power Needs to be Unleashed

In the discussion of why costs are so high, I found this factoid to be especially shocking: “Medicare is not allowed to bargain for insulin prices.” I found it shocking that a federal program with such clout was unwilling to drive down costs for patients. It is important to note however that most Medicare patients pay insulin costs out of pocket, and it is not covered. Even so, given the fact that there are likely a quarter million Type I diabetics under Medicare (based on rough calculation), any ability to make industry behemoths uncomfortable about pricing could reap massive benefits to consumers. Especially when there are only three nationwide producers of synthetic insulin, and one manufacturer, Medtronic, gripping over 60% of insulin pump market share.

2.      Dire Need for Competitive Disruption

Off that pervious point, the competition for key components and drugs within diabetes care is quite scarce. There are often very few large players that run the table, and solid, strategic, and fast-moving market disruption centered on affordability and reliability may be the only true way for competition to drive prices down. Please see this supplementary blog post by a diabetes industry advocate of what would truly need to happen to disrupt the market and reverse market trends, it’s a great read.

All things said, the challenges facing improvements in this healthcare space run the gamut, from unchecked market factors to questionably beneficial product improvements increasing cost. Serious change will need to be made through the concentrated advocacy of diabetics nationwide, government and private industry players, and maybe a little well-timed luck.