<p>You are missing patents. </p>

<p>I recommend reading the paper "<a href="https://static1.squarespace.com/static/58011633197aea95712e5e2f/t/596cf3f4e45a7cff8a3d3656/1500312565180/Why+is+there+no+generic+insulin.pdf" rel="noreferrer">Why Is There No Generic Insulin? Historical Origins
of a Modern Problem</a>" by doctors Greene and Riggs.</p>

<blockquote>
  <p>...high costs of
  pharmaceutical research and development are
  often invoked to justify the high price tags of new
  medications. Although the price point of effective new drugs — from hepatitis cures to new
  agents for heart failure — may initially be out of
  reach for many patients, market laws predict
  that drugs with strong demand should become
  more accessible after market exclusivity ends
  and generic competition begins. Since 1984,
  when the Drug Price Competition and Patent
  Term Restoration Act was passed, pharmaceutical innovation and access have been balanced on
  that premise: innovative drugs are rewarded
  with high prices during their window of patent
  protection, and generic competition reduces
  prices thereafter.</p>
  
  <p>[...] incremental innovation has repeatedly precluded the formation of a generic insulin industry in North America when earlier
  patents expired. The history of insulin hasn’t followed the standard chronology of pharmaceutical innovation, in which patent monopolies predictably give way to generic competition.
  <br>
  Viewed in historical perspective, insulin is not
  a single entity but a family of related products
  that has evolved through incremental improvements. Subsequent iterations of insulin represented actual innovations, each one being safer,
  more effective, or more convenient than its predecessor. And yet after generations of incremental
  innovation, insulin may be no more affordable
  than it was when the original patent holders
  sold their stake for $1 to ensure access to this
  essential medicine. <br>
  Pharmaceutical-industry analysts have described a repatenting tactic called evergreening,
  in which a series of related patents — often on
  metabolites or optical isomers — extend the life
  of a product after initial patent expiration.</p>
</blockquote>

CC BY-SA 4.0
2019-01-31T16:19:53.723Z
2019-01-31T16:19:53.723Z
Giskard
<p>A lot of my family is concerned about a future insulin shortage and it's reported that this shortage is growing.  When I read articles from Harvard about it, <a href="http://harvardpolitics.com/united-states/how-insulin-became-unaffordable/" rel="nofollow noreferrer">they imply it's pure greed</a>:</p>

<blockquote>
  <p>There are no generic insulins. Over the past twenty years, prices for the most commonly prescribed “analog” insulins have risen from about $20 per vial to well over \$250 per 10 mL vial, an over 700% increase after accounting for inflation. In contrast, insulin today costs roughly five dollars per vial to produce. With deductibles far outpacing wages, insulin has become unaffordable even for well-off Americans.</p>
</blockquote>

<p>If it costs us 5 dollars to produce, why don't we all start insulin companies and sell it for $15, attracting all the business (as well as popularity since we have better prices).  Is greed really the issue, or is there another economic explanation, like the resources involved in insulin-making are in a shortage?  Or the regulation of producers?  Or the possible lawsuits producers face if they make a mistake? </p>

<p>It sounds like anyone could compete against these greedy companies and put them out of business.  What am I missing?</p>

<supply-and-demand>
Economics Behind the Insulin Shortage?
KriyanshAurik
# Economics Behind the Insulin Shortage?

(Asked by: username_0 on 2019-01-31)

A lot of my family is concerned about a future insulin shortage and it's reported that this shortage is growing. When I read articles from Harvard about it, [they imply it's pure greed](http://harvardpolitics.com/united-states/how-insulin-became-unaffordable/):

> There are no generic insulins. Over the past twenty years, prices for the most commonly prescribed “analog” insulins have risen from about $20 per vial to well over \$250 per 10 mL vial, an over 700% increase after accounting for inflation. In contrast, insulin today costs roughly five dollars per vial to produce. With deductibles far outpacing wages, insulin has become unaffordable even for well-off Americans.

If it costs us 5 dollars to produce, why don't we all start insulin companies and sell it for $15, attracting all the business (as well as popularity since we have better prices). Is greed really the issue, or is there another economic explanation, like the resources involved in insulin-making are in a shortage? Or the regulation of producers? Or the possible lawsuits producers face if they make a mistake?

It sounds like anyone could compete against these greedy companies and put them out of business. What am I missing?

**Tags:** supply-and-demand

---

## 1 answers

### Answer by username_1 on 2019-01-31. Score: 6 | Accepted answer

You are missing patents.

I recommend reading the paper "[Why Is There No Generic Insulin? Historical Origins
of a Modern Problem](https://static1.squarespace.com/static/58011633197aea95712e5e2f/t/596cf3f4e45a7cff8a3d3656/1500312565180/Why+is+there+no+generic+insulin.pdf)" by doctors Greene and Riggs.

> ...high costs of
> pharmaceutical research and development are
> often invoked to justify the high price tags of new
> medications. Although the price point of effective new drugs — from hepatitis cures to new
> agents for heart failure — may initially be out of
> reach for many patients, market laws predict
> that drugs with strong demand should become
> more accessible after market exclusivity ends
> and generic competition begins. Since 1984,
> when the Drug Price Competition and Patent
> Term Restoration Act was passed, pharmaceutical innovation and access have been balanced on
> that premise: innovative drugs are rewarded
> with high prices during their window of patent
> protection, and generic competition reduces
> prices thereafter.
>
> [...] incremental innovation has repeatedly precluded the formation of a generic insulin industry in North America when earlier
> patents expired. The history of insulin hasn’t followed the standard chronology of pharmaceutical innovation, in which patent monopolies predictably give way to generic competition.
>   
> Viewed in historical perspective, insulin is not
> a single entity but a family of related products
> that has evolved through incremental improvements. Subsequent iterations of insulin represented actual innovations, each one being safer,
> more effective, or more convenient than its predecessor. And yet after generations of incremental
> innovation, insulin may be no more affordable
> than it was when the original patent holders
> sold their stake for $1 to ensure access to this
> essential medicine.   
> Pharmaceutical-industry analysts have described a repatenting tactic called evergreening,
> in which a series of related patents — often on
> metabolites or optical isomers — extend the life
> of a product after initial patent expiration.


---

