How much did insulin prices increase and why is that suspicious?

Between 1996 and 2019, the average price of insulin in the United States increased by more than 1,200%. The list price of a vial of Humalog (Eli Lilly's rapid-acting insulin) rose from $21 when it was introduced in 1996 to over $275 by 2019. What made this pattern particularly suspicious was the near-lockstep pricing between the three manufacturers — when one company raised its price, the others would follow with nearly identical increases within days or weeks, a pattern maintained consistently for over two decades. In a truly competitive market, companies would be expected to undercut competitors' prices, not match their increases. The simultaneous nature of these increases, documented through pricing data analysis, formed the basis of multiple price-fixing lawsuits.

What role do pharmacy benefit managers (PBMs) play in insulin pricing?

Pharmacy benefit managers (PBMs) like Express Scripts, CVS Caremark, and OptumRx play a central and controversial role in insulin pricing. PBMs negotiate with drug manufacturers on behalf of health insurers and employers, ostensibly to secure lower drug prices. However, the system operates through a complex rebate structure in which manufacturers pay PBMs substantial rebates and fees in exchange for favorable formulary placement (being listed as a preferred drug). This creates a perverse incentive: higher list prices allow manufacturers to offer larger rebates to PBMs, making everyone in the supply chain except the patient financially better off. Multiple investigations and lawsuits have alleged that PBMs and manufacturers collaborated to inflate list prices while sharing the resulting rebate revenue, with uninsured and underinsured patients — who pay list prices — bearing the full cost.

Insulin Price Fixing — Pharma Cartel

Q: Has insulin pricing been fixed since the controversy became public?

Significant progress has been made on insulin pricing, though the underlying systemic issues remain partially unresolved. In 2023, Eli Lilly announced a 70% reduction in the list price of its most commonly prescribed insulin products and capped out-of-pocket costs at $35 per month. Novo Nordisk and Sanofi followed with their own price reductions. The Inflation Reduction Act of 2022 capped insulin costs at $35 per month for Medicare beneficiaries. Several states have enacted their own insulin price caps. However, these reforms primarily address the list price and out-of-pocket cost issue; the underlying rebate system between manufacturers and PBMs that incentivized the price inflation remains largely intact, and critics argue that the recent price cuts represent an acknowledgment of wrongdoing rather than a structural fix.

Overview

The insulin price-fixing conspiracy describes the coordinated behavior of the three dominant insulin manufacturers — Eli Lilly, Novo Nordisk, and Sanofi — who for more than two decades raised the prices of their insulin products in near-perfect lockstep, creating a pricing pattern that multiple courts, regulatory bodies, and investigators have found to be consistent with collusive behavior rather than independent market dynamics. Between 1996 and 2019, the average price of insulin in the United States increased by more than 1,200%, despite the product itself remaining largely unchanged and the cost of production declining.

This case is classified as confirmed because the pricing patterns have been exhaustively documented, multiple class-action lawsuits have resulted in findings against the manufacturers, and the companies themselves have effectively acknowledged the problem through dramatic price reductions announced in 2023-2024. While the manufacturers have generally denied explicit collusion — claiming that parallel pricing reflected market dynamics rather than coordinated behavior — the sustained pattern of simultaneous, near-identical price increases over more than twenty years, combined with the complex rebate system linking manufacturers to pharmacy benefit managers (PBMs), constitutes what legal and economic experts describe as tacit or conscious parallelism at minimum, and what plaintiffs’ attorneys have characterized as a conspiracy to fix prices.

The human cost of this pricing behavior has been devastating. An estimated 1.3 million Americans with diabetes have rationed insulin due to cost, and numerous deaths have been directly attributed to insulin rationing. The case has become one of the most prominent examples of pharmaceutical industry pricing practices that prioritize profit over patient welfare, contributing to broader public outrage that has driven legislative action at both state and federal levels.

Origins & History

Insulin was discovered in 1921 by Frederick Banting and Charles Best at the University of Toronto, with critical assistance from biochemist James Collip. Banting famously sold the patent for insulin to the University of Toronto for $1, declaring: “Insulin does not belong to me, it belongs to the world.” The discovery transformed Type 1 diabetes from a rapid death sentence into a manageable chronic condition.

For most of the 20th century, insulin was relatively affordable. Animal-derived insulin (from pig and cattle pancreases) was produced by several manufacturers at modest prices. The introduction of synthetic human insulin through recombinant DNA technology in the 1980s represented a genuine pharmaceutical advance, and the development of analog insulins — modified versions with improved absorption profiles — in the 1990s provided additional clinical benefits.

The pricing pattern that would become the basis of conspiracy allegations began in 1996 with the introduction of Eli Lilly’s Humalog (insulin lispro), the first rapid-acting analog insulin. Priced at approximately $21 per vial at launch, Humalog represented a significant improvement over regular human insulin for mealtime glucose management. Novo Nordisk followed with NovoLog (insulin aspart) in 2000, and Sanofi introduced Apidra (insulin glulisine) in 2004.

As the analog insulin market consolidated around these three manufacturers, a remarkable pricing pattern emerged. When one manufacturer raised its price, the other two would follow with nearly identical increases within days or weeks. This pattern was maintained with extraordinary consistency for over two decades. The prices of Humalog and NovoLog, for instance, tracked each other almost perfectly despite being produced by different companies in different countries — Eli Lilly in the United States and Novo Nordisk in Denmark.

By 2019, the list price of a vial of Humalog had risen to approximately $275 — a 1,200% increase from its 1996 introduction price. NovoLog showed a comparable trajectory. Long-acting insulins followed similar patterns: Sanofi’s Lantus (insulin glargine) and Novo Nordisk’s Levemir (insulin detemir) rose from initial prices of approximately $35 to over $300 per vial.

The pricing pattern attracted serious legal scrutiny beginning in the mid-2010s. In 2017, a class-action lawsuit was filed against Eli Lilly, Novo Nordisk, and Sanofi, alleging that the companies had conspired to raise insulin prices in violation of antitrust law. Additional lawsuits followed from individual patients, state attorneys general, and advocacy organizations.

The role of pharmacy benefit managers (PBMs) in the pricing mechanism became a central focus of investigations. The insulin pricing system operated through a complex chain: manufacturers set high list prices, then offered substantial rebates (often 50-70% of the list price) to PBMs in exchange for favorable formulary placement. PBMs shared a portion of these rebates with insurers and employers, but retained significant amounts as revenue. This system created a perverse dynamic in which all parties in the supply chain except the end patient benefited from higher list prices, because higher prices generated larger rebates.

Congressional investigations, particularly by the Senate Finance Committee, documented the mechanics of this system in detail. Internal documents revealed that manufacturer executives were aware that their pricing strategies placed insulin out of reach for many patients, but viewed the rebate system as necessary to maintain market share and formulary access.

Key Claims

Coordinated price increases: The three major insulin manufacturers raised prices in near-lockstep for over two decades, with price increases by one company followed within days by matching increases from the others
Tacit or explicit collusion: The consistency and timing of parallel price increases indicates either explicit agreement (price fixing) or tacit collusion (conscious parallelism) in violation of antitrust principles
PBM complicity: Pharmacy benefit managers participated in and benefited from the pricing scheme through a rebate system that rewarded higher list prices, making PBMs co-conspirators in the inflation of insulin costs
Patient harm: The pricing behavior directly caused harm to millions of Americans with diabetes, including insulin rationing, medical complications, and deaths attributable to inability to afford medication
Knowledge of harm: Internal documents show that manufacturer executives were aware that their pricing strategies caused patients to ration insulin, but continued the practices because of their profitability
Regulatory capture: The FDA and other regulatory bodies failed to intervene in the pricing crisis for decades, reflecting the pharmaceutical industry’s influence over the agencies that are supposed to regulate it
Patent evergreening: Manufacturers used incremental modifications to insulin formulations and delivery devices to extend patent protection and prevent the introduction of cheaper generic and biosimilar alternatives

Evidence

This theory is confirmed through extensive documentary evidence, legal proceedings, and congressional investigations.

Pricing data: The near-lockstep pricing pattern between insulin manufacturers is documented through publicly available pricing data. The National Drug Acquisition Cost database, wholesale acquisition cost records, and pharmacy pricing databases show that price increases by one manufacturer were consistently followed by matching increases from the other two within a narrow time window. Economic analyses have shown that the probability of this pattern occurring independently (without coordination) is extremely low.

Congressional investigations: The Senate Finance Committee conducted an extensive investigation in 2019, obtaining internal documents from Eli Lilly, Novo Nordisk, and Sanofi. The investigation revealed internal communications in which executives discussed competitor pricing in terms suggesting awareness of and response to each other’s pricing decisions. The committee found that the companies’ pricing strategies were “more consistent with a coordinated approach to pricing than with independent competitive decision-making.”

Class-action litigation: Multiple lawsuits against the three manufacturers and major PBMs have produced substantial evidence through discovery. In In re Insulin Pricing Litigation (D.N.J.), the court allowed claims of tacit collusion to proceed, finding that plaintiffs had presented sufficient evidence of conscious parallelism and “plus factors” (additional evidence beyond mere parallel pricing) to establish a plausible antitrust claim.

State attorney general actions: Attorneys general in multiple states, including Minnesota, Illinois, and New York, filed lawsuits or opened investigations into insulin pricing. Minnesota Attorney General Keith Ellison’s lawsuit against the three manufacturers and three major PBMs alleged that the defendants engaged in an “unlawful scheme to artificially raise the price of insulin” through the rebate system.

Patient harm documentation: The human cost of insulin pricing has been extensively documented. A 2019 Yale study published in JAMA Internal Medicine found that one in four insulin users reported rationing due to cost. Multiple patient deaths have been attributed to insulin rationing, including the widely publicized 2017 death of 26-year-old Alec Smith, who died of diabetic ketoacidosis after aging off his parents’ insurance and being unable to afford his insulin prescription.

Company admissions: The manufacturers’ own actions in 2023-2024 constitute implicit acknowledgment. Eli Lilly’s announcement of a 70% reduction in Humalog’s list price, followed by similar reductions from Novo Nordisk and Sanofi, represented a dramatic reversal of two decades of pricing strategy. While the companies framed these reductions as voluntary commitments to patient access, the timing — amid intense legal, legislative, and public pressure — suggested an effort to reduce liability and preempt more stringent regulatory action.

Debunking / Verification

This theory is confirmed. The pricing patterns, the rebate system, and the patient harm are extensively documented and not meaningfully disputed by any party.

The manufacturers’ primary defense has been that their pricing decisions were made independently — that parallel pricing reflected common market conditions rather than coordinated behavior. They argue that the rebate system is a market response to the demands of PBMs and insurers rather than a manufacturer-driven scheme, and that the high list prices do not reflect what most patients actually pay after insurance coverage and manufacturer assistance programs.

These defenses are undermined by several factors. The sustained duration and consistency of the parallel pricing pattern exceeds what economic models predict for independent decision-making. Internal documents reveal awareness of and responsiveness to competitor pricing that goes beyond normal market monitoring. The “most patients don’t pay list price” defense ignores the approximately 30 million Americans with diabetes who are uninsured or underinsured and do pay list prices or near-list prices, and the millions more who face high deductibles before insurance coverage begins.

The rebate system defense was further weakened by evidence that manufacturers actively increased list prices specifically to generate larger rebates, creating a pricing spiral in which the list price bore little relationship to the actual cost of production or the value of the product. When Eli Lilly introduced an authorized generic version of Humalog at half the list price in 2019, it demonstrated that the company had been capable of offering a significantly lower price all along.

Cultural Impact

The insulin pricing scandal has become one of the most powerful symbols of pharmaceutical industry pricing practices in American public discourse. The image of patients rationing life-saving medication that costs a few dollars to produce but sells for hundreds has galvanized public anger in a way that few healthcare issues have.

The case has driven significant legislative action. The Inflation Reduction Act of 2022 included a provision capping insulin costs at $35 per month for Medicare beneficiaries — one of the law’s most popular provisions. Multiple states have enacted their own insulin price caps, and federal legislation to extend the $35 cap to all insured Americans has been repeatedly proposed.

The death of Alec Smith and other patients who died rationing insulin has created a powerful narrative that has influenced healthcare policy debate far beyond insulin itself. Smith’s mother, Nicole Smith-Holt, has become a prominent healthcare advocate whose testimony before Congress and media appearances have personalized the consequences of pharmaceutical pricing practices.

The case has contributed to broader scrutiny of the PBM industry, which had previously operated largely out of public view. The revelation of PBMs’ role in insulin pricing has prompted legislative proposals to increase PBM transparency, regulate rebate practices, and potentially restructure the pharmaceutical supply chain.

Within the pharmaceutical industry, the insulin case has become a cautionary tale about the consequences of sustained price increases that outpace inflation, production costs, and patient capacity to pay. The dramatic price reductions announced by all three manufacturers in 2023 were widely interpreted as an industry attempt to self-correct before more draconian regulation was imposed.

The case has also influenced international comparisons of drug pricing. The enormous disparity between U.S. and international insulin prices — the same vial of Humalog that cost $275 in the U.S. was available for approximately $30 in Canada and under $10 in some other countries — has been central to arguments for drug importation policies and government price negotiation authority.

Timeline

1921 — Frederick Banting and Charles Best discover insulin; Banting sells patent for $1
1982 — First recombinant human insulin (Humulin) approved by FDA
1996 — Eli Lilly introduces Humalog at approximately $21 per vial
2000 — Novo Nordisk introduces NovoLog; parallel pricing pattern begins
2000-2019 — Near-lockstep price increases across all three manufacturers; insulin prices rise over 1,200%
2017 — Alec Smith, age 26, dies after rationing insulin due to cost
2017 — First class-action lawsuit filed against Eli Lilly, Novo Nordisk, and Sanofi alleging price collusion
2019 — Senate Finance Committee investigation into insulin pricing produces damning internal documents
2019 — Eli Lilly introduces authorized generic of Humalog at 50% discount, implicitly acknowledging price inflation
2019 — Multiple state attorneys general file lawsuits against insulin manufacturers and PBMs
2020 — Colorado becomes the first state to cap insulin copays at $100 per month
2022 — Inflation Reduction Act caps insulin costs at $35/month for Medicare beneficiaries
March 2023 — Eli Lilly announces 70% reduction in Humalog list price; caps out-of-pocket at $35
2023 — Novo Nordisk and Sanofi follow with their own price reductions
2024-2025 — Legislative efforts continue to extend insulin price caps to all patients

Sources & Further Reading

U.S. Senate Finance Committee. “Insulin: Examining the Factors Driving the Rising Cost of a Century Old Drug.” Staff Report, 2021.
Beran, David, et al. “Insulin Pricing in the United States: Past and Future.” JAMA Internal Medicine 179, no. 10 (2019): 1383-1387.
Rajkumar, S. Vincent. “The High Cost of Insulin in the United States: An Urgent Call to Action.” Mayo Clinic Proceedings 95, no. 1 (2020): 22-28.
Herkert, Darby, et al. “Cost-Related Insulin Underuse Among Patients with Diabetes.” JAMA Internal Medicine 179, no. 1 (2019): 112-114.
Greene, Jeremy A., and Kevin R. Riggs. “Why Is There No Generic Insulin? Historical Origins of a Modern Problem.” New England Journal of Medicine 372 (2015): 1171-1175.
T1International. “Costs and Rationing of Insulin and Diabetes Supplies.” Survey reports, various years.
Rowland, Christopher. “Insulin’s High Cost Leads to Deadly Rationing.” Washington Post, December 10, 2018.