Sticker Shock: An Inconvenient Truth About Healthcare Prices


Diabetes patients already feel the daily health burden of their disease. However, the rising costs of their medical care are also taking a toll. While endocrinologists understand the problems and have solutions, getting those solutions implemented is the ultimate challenge.

Irl B. Hirsch, MD, professor of medicine at the University of Washington in Seattle runs four half-day clinics a week, treating a large number of patients with diabetes. Eighty percent of his patients have type 1 diabetes, the rest have type 2 diabetes, and 98% of all these patients are on insulin. One of his patients now pays more for her insulin per month than she pays on her mortgage per month. Another patient maxed out his credit cards to pay for his insulin, and he was denied a car loan because of his low credit score.

These examples come at a time of great turmoil in the healthcare system, with providers and insurance companies and Congress all trying to determine who pays for what and who gets what treatment. They come at a time when ill-informed Congressional representatives make asinine statements like “patients are going to have to decide whether they want an iPhone or healthcare.” (Just for reality’s sake, an iPhone costs $700 retail; the newest insulin agonists, like the GLP-1 receptors, cost around $700 a month, retail. An $8,400 phone does not exist…yet.)

But insulin isn’t the only drug patients with diabetes have to take. These patients, and their prescribing physicians, face hurdles when it comes to every kind of diabetes medication. Hirsch points to drug manufacturers’ co-pay cards as an example of one of these hurdles. “They take away the tiering system,” he says. Where Hirsch practices in Seattle, if a drug is Tier 2, that drug will often generate a prior authorization, “which is the two-word cuss word for endocrinologists,” he says.

“If I’m going to practice evidence-based medicine, I’m going to prescribe Jardiance [empagliflozin] and Victoza [liraglutide] because of their cardiovascular benefits,” Hirsch says. But because those drugs might not be listed on the formulary, or even if there are drugs in this class that are on the list, he has to write a prior authorization. “Writing the prescription is the easy part,” he says. “It’s then convincing the pharmacy benefit manager (PBM) that this is the appropriate drug for that patient. We’re now practicing PBM-based medicine and not evidence-based medicine.”

Haves & Have Nots

The global cost of diabetes is now more than $800 billion a year. In the U.S. alone, the cost is more than $240 billion a year. And that’s not just direct costs. According to the American Diabetes Association, indirect costs of diabetes include $5 billion for increased work absenteeism, $21 billion for reduced productivity at work, and $18.5 billion for lost productive capacity due to early mortality.

Diabetes rates here in the U.S. and around the world, continue to skyrocket. In 2012, 29 million Americans had diabetes, with 1.4 million new cases being diagnosed each year. Millions more have prediabetes. Diabetes is the seventh leading cause of death in the U.S. And many patients with diabetes either reduce the quality of their care or stop compliance altogether because of one reason: cost.

Robert Vigersky, MD, medical director of Medtronic Diabetes and past-president of the Endocrine Society, says that a good doctor-patient relationship is essential to endocrine care, but once some physicians started not appearing on preferred-provider lists, their patients began to relinquish the doctor-patient relationships they had established, in favor of physicians who were on these lists and didn’t cost as much. “That creates a two-tier system,” he says. “Patients who can afford it can get the physician of their choice, and those who can’t are left to find someone on their plan or spend more out of pocket than they did before. It’s very difficult for the patient to navigate the system,” Vigersky continues, “so they often default to what the cost is.”

The cost to treat diabetes effectively has created a system of haves and have nots: patients who have the least to spend for out-of-pocket charges visit clinics where physicians have the least amount of time to spend with them. These patients also stop taking their medications or take them every other day. Or if certain medications aren’t available to them because of cost or these drugs aren’t on the formulary list, that affects outcomes as well. “These are all barriers to improved results in care of patients with diabetes,” Vigersky says.

Here’s how backwards things are: JAMA Internal Medicine in January published an article by J. Frank Wharam et al., titled “Diabetes Outpatient Care and Acute Complications Before and After High-Deductible Insurance Enrollment: A Natural Experiment for Translation in Diabetes (NEXT-D) Study.” The authors analyzed data from 12,084 high-deductible health plan members (HDHP) with diabetes who had been enrolled in a low-deductible plan (<$500) for one year, followed by two years in a HDHP (>$1,000) after their employers changed plans.

The researchers found that these patients “experienced minimal changes in outpatient visits and disease monitoring after an HDHP switch, but low-income and HSA-eligible HDHP members experienced major increases in emergency department visits for preventable acute diabetes complications.” The authors go on to write that these patients had greater concern about out-of-pocket spending than their less vulnerable counterparts, and that they might forgo “expensive scheduled and acute visits [or shift care] to less expensive but potentially less appropriate settings. Such effects might lead to more severe disease by the time of presentation for acute complications.”

“There’s a burden that diabetologists and endocrinologists have that as specialists we will naturally get the patients who are the most challenging, and all that needs to be taken into consideration when outcomes are judged.” – Robert Vigersky, MD, medical director, Medtronic Diabetes; past-president, Endocrine Society

And the cost of diabetes care is increasing every year. Patients are often on several drugs to treat their diabetes and associated co-morbidities, and drug prices continue to rise. “I think everyone knows the huge increases in the cost of insulin that have occurred over the last few years,” Vigersky says. “And that has caused some patients to resort to getting insulins that are not as effective.”

Insulin: A Right or a Privilege?

Insulin, of course, is the prime drug used in diabetes care. But it’s also a prime example of just how convoluted diabetes care has become. In the U.S., human insulin can be bought over the counter, but analogs still require a prescription. Other countries allow both types of insulin to be sold without a prescription. In other countries, governments negotiate drug prices, rather than leaving that to individual insurance plans. “It really puts us at a disadvantage,” Hirsch says.

According to Hirsch, as of 2013, the U.S. and Canada used 12% of the world’s insulin, yet those countries generated 52% of the revenue. In contrast, China uses 25% of the insulin in the world, yet that country generates only 4% of the revenue. “That was from 2013,” he says, “and the U.S. insulin prices have increased since then.”

“This is not a concierge drug,” Hirsch says. “This is not a drug that, in my opinion, should only be for the wealthy. It gets back to the premise of the Affordable Care Act. Is healthcare a right or a privilege? Is insulin a right or a privilege? It’s my humble opinion that insulin is a right of every American. Nobody should be without insulin therapy. Nobody.”

“I would invite any government official, whether it’s a senator or congressman, spend a half day in the clinic with me. I would like them to see for themselves how my patients struggle.” – Irl Hirsch, MD, professor of medicine, University of Washington, Seattle

A Daily Struggle

The cost to treat diabetes has a very real, and often negative, impact on people who need these expensive drugs and treatments just to live. Doctors are coming around to including financial burdens in treatment decisions, but a lot of times their hands can be tied. There are fewer and fewer endocrinologists in private practice; more and more physicians are employed by health plans or other types of care delivery systems in which they have to adhere to a formulary. “You’re constrained by the formulary,” Vigersky says. “You can appeal to the health plan, but the time and cost is really daunting and not feasible for many physicians in practice.”

This is a mess, but what can be done? Diabetes prevention is usually at the top of the list for reducing diabetes care costs, but just days before this issue went to print, the Journal of the American Medical Association published a research letter that concluded that many obese Americans have given up trying to lose weight. What’s troubling is that this phenomenon was most common among African American women, who already have a higher risk of developing diabetes. The Diabetes Prevention Program has produced some encouraging preliminary results, but Vigersky says these results still need to be expanded and validated.

As for insulin, Hirsch would like to see the U.S. adopt a system similar to the World Health Organization’s. WHO has a list of what they call “essential medicines,” and insulin is on the list. “It’s my belief we need to do the same with insulin,” he says. “Maybe not the best and newest and most expensive, but there needs to be a list of medicines that patients can get for a reasonable cost.”

Hirsch’s “dream system” sounds like a simple one, but certainly not an easy one to implement: Along with eliminating the PBM, he says he “would like to see insulin go straight from the manufacturer to the patient at a reasonable cost.”

Healthcare recently has shifted to quality metrics and outcomes, which is a good thing, but Endocrine Society members need to remain active and engaged in this battle for solutions, says Vigersky. “There’s a burden that diabetologists and endocrinologists have that as specialists we will naturally get the patients who are the most challenging,” he says, “and all that needs to be taken into consideration when outcomes are judged.”

Again, the reality is that patients are not having to choose between buying an iPhone or investing in their own healthcare. For many patients with diabetes, they’re having to decide whether to buy food or insulin. Make their rent or buy insulin. Miss work because they landed in the hospital with a preventable acute complication, because they couldn’t afford their diabetes medications. “I would invite any government official, whether it’s a senator or congressman, spend a half day in the clinic with me,” Hirsch says. “I would like them to see for themselves how my patients struggle.”

  • Bagley is the senior editor of Endocrine News. He wrote the two-part article on patient-centered care that ran in the February and March issues.