It's not just insulin: Comparing the cost of diabetes treatment in Canada versus the U.S.
A mother’s plea
Family is very important to 46brooklyn. Family was, of course, a big impetus for the launch of 46brooklyn, as evidenced by our name paying tribute to Eric’s mother. Across our volunteer team, we are blessed to have eight children, ranging in age from less than a year to middle school. Our kids are one of the driving forces behind why we do what we do. We know it is a cliché, but we hope to leave the world at least a little better for them than we found it. This is all any of us can do. It just so happens that we chose unravelling our complex prescription drug supply chain as our mission (or did it choose us?) in the hope that heavy doses of radical transparency would be part of the remedy for the drug affordability issues facing our nation. We have certainly made progress, but there is still much work to be done.
Recently, we were quite saddened as an all too familiar story repeated itself. In a viral video a fellow parent, a mom, made a desperate cry for help, because she could not afford insulin for her newly diagnosed, Type 1 diabetic, son. If you haven’t seen the video, please watch all 44 seconds of it below:
In case you missed it, her message bears repeating:
“I’ve worked for, like, 17 years.
I work all the time.
I’ve been paying medical bills on my son for nine years, since he was born.
And he was just diagnosed with Type 1 diabetes, and has to have insulin every two hours.
I just got his prescription – it was a $1,000!
I couldn’t pay for it.
I couldn’t pay for it.
I now have to go in and tell my nine year old son I couldn’t pay for it.”
It’s not that she is a single parent, as she goes on to say that both she and her husband work. It’s doesn’t appear that she isn’t motivated, as she explains that she works third shift so that she can attend school. It is simply that she cannot afford $1,000 per month for a drug discovered in 1923, and whose inventor sold the original patent for $1, as he reportedly recognized that that the discovery belonged to the world, not to him.
There is some good to this story, as help has been organized for her and her son on Twitter. However, there are two unfortunate realities about her story. First is that we as a country have become used to the idea that insulin is unaffordable for so many like this impacted mother. Who reading this (within the U.S.) is surprised by $1,000 insulin? Not many we would guess, because that is just the way things are here in the land of the free and the home of the brave. But that dovetails into the second reality, which is that this story is uniquely American. If she and her family were Australian, Canadian, British, or residents in any number of other Western democracies, she would not be facing such an affordability crisis.
Consider that over the last five years, we have heard story after story of our fellow citizens, suffering irreparable and mortal harm from not being able to afford insulin. And while diabetes may be the disease state that gets the attention, with at least one study suggesting one in four people in the U.S. cannot afford their life-sustaining insulin (a study we would be remiss not to note was conducted before a global pandemic), we know that this problem is not unique to diabetes. Others, like those needing chemotherapeutics for cancer or disease-modifying medications for multiple sclerosis are struggling just as much; with therapies for those disease states that are just as unattainable and out of reach as insulin – if not, more so. And while policymakers, like the soon-to-be-departed President Trump, understand the problem and have promised insulin so cheap, it’s like water, those policies have failed to alter the U.S. health care machine that, through its masterful application of price discrimination, has produced uniquely unaffordable medications for mothers like this one.
So as we at 46brooklyn heard this mother’s plea for help, we could not help but be reminded of the work we did in our Australia prescription drug pricing deep-dive. In that report, we already demonstrated how cheap many brand-name medications, like insulin, were abroad compared to at home. But hundreds of examples in one country is far from a preponderance of evidence. So in response to that report, we have already begun work on comparing other countries’ prices to the U.S., and it just so happens that the next one we are focusing on is Canada.
As we have been preparing the Canadian data, we could not help but notice that Canada included in their published prices non-drug items like medical food and equipment, such as diabetic testing supplies, that we did not see published in Australia. While the tool we are designing will not track these products, such price comparisons provide valuable insights into a more holistic, total cost of care for diabetic patients.
And while our Canada price comparison work is not yet ready for prime time, what is ready is a transparent view into the costs of a Type 1 or Type 2 diabetic patient in the United States compared to Canada.
Diabetes treatment
Before we begin, we need to provide a little background on diabetes. Diabetes is a disease that occurs when your body is no longer able to make insulin, or when the body cannot make use of the insulin it produces. Insulin is a hormone that helps take the carbohydrates (i.e. sugar) we eat and get it into cells so our body can produce energy. When this process breaks down, people can get high levels of sugar (i.e. glucose) in their blood, and that can cause immediate as well as long-term damage.
There are three main types of diabetes:
Type 1 diabetes occurs when your body produces little to no insulin and is more commonly diagnosed in children.
Type 2 diabetes occurs when your body can no longer make use of the insulin it produces and is more common in adults.
Gestational diabetes occurs in relation to pregnancy.
As you can see, there are similarities and differences within a diagnosis of diabetes, and this can impact the type of treatment a person with diabetes can be expected to receive.
For all patients diagnosed with diabetes, changes to their diet will be recommended. Similarly, all patients with diabetes will be encouraged to begin or maintain healthy exercise. And lastly, all patients with diabetes will be required to monitor their blood sugars on a regular basis. The most common way this is done currently is through diabetic test strips where a person pricks their finger and places a small drop of blood into a machine to get a reading. When it comes to controlling diabetes, persons with diabetes will generally test three to four times per day (before each meal and at bedtime).
Guidelines for treating Type 1 diabetes, like those of the American Diabetes Association’s (ADA’s), recommend treatment with insulin, which should include a basal insulin, like Lantus, and a rapid insulin for use at meal times, like Humalog.
Guidelines for treating Type 2 diabetes, like the same American Diabetes Association’s (ADA’s), generally recommend that patients receive metformin, and if necessary, the addition of other medication(s) like:
A dipeptidyl peptidase-4 (DPP-4) inhibitor like Januvia,
A Glucagon-like peptide-1 (GLP-1) receptor agonists receptor agonist like Ozempic,
A sodium glucose co-transporter 2 (SGLT-2) inhibitor like Invokana, and / or
A thiazolidinediones (TZD) like pioglitazone.
Insulin is also recommended for use in Type 2 diabetics as well.
With that background out of the way, let’s describe how we put this analysis together.
Where are we getting our prices?
As stated, our Canadian drug pricing tool isn’t ready for prime time just yet. But we found this story to be so compelling that we opted to publish this part of the story now. So we went to direct sources to pull prices in Canada and the U.S. to manually assemble the comparison. Specifically, we utilized the Formulary Search for the Ontario Drug Benefit Formulary in Canada and the Drug Look Up Tool for our home state of Ohio’s Medicaid program. Ontario is one of thirteen provinces in Canada, but was selected because of this handy, interactive tool where a brand or generic name can be entered and the drug ingredient cost price in Canadian dollars can be determined. For example, if you enter in Eliquis (which at $7.3 billion of gross spending was the #1 drug in Medicare Part D in 2019) into the search tool for Ontario and click brand you’ll get the following results (Figure 1):
Figure 1
Source: Ontario Drug Benefit Formulary/Comparative Drug Index
Regardless of strength, you’ll spend $1.63 CAD per pill for Eliquis in Canada. Or the equivalent of $1.28 USD (1 CAD = 0.79 USD as of 1/15/2021). And if this look-up tool is too hard to use, another province, Nova Scotia, has a formulary which can be downloaded in Excel here.
Enter the same thing into the Ohio Medicaid tool and you’ll get the following (Figure 2):
Figure 2
Source: Pharmacy.Medicaid.Ohio.gov
Notice that in the U.S., Eliquis carries a ~$7.50 USD per pill cost – or six times higher than that in Canada. And in case you wondering how real these Ohio prices are, 46brooklyn’s Ben Link was involved in creating the Ohio tool we are utilizing, so we can confirm that those prices represent the real reimbursement Ohio pharmacies can expect to receive for their ingredient cost for dispensed drugs in accordance with Ohio Administrative Code 5160-9-05 (or namely the NADAC price, or WAC if there is no NADAC).
Of course, the Ohio Department of Medicaid and other private employers may get rebates on Eliquis after the fact, but before dismissing these numbers because the above U.S. price is pre-rebate, go ahead and divide the above numbers… Eliquis in Ontario is 83% cheaper than its list price in the U.S.
So payers/employers that are reading this: here’s some homework. Go check your pharmacy benefit manager (PBM) rebate agreements… how many of you are getting north of 83% rebates on Eliquis?
That’s a trick question, because we’ve seen enough PBM contracts to bet that you don’t even know the rebate you are getting on this drug. Rather, your PBM gives you some overall per-claim rebate guarantee off of a formulary that they likely chose for you. So how are you to audit your true net pricing to understand how it compares to negotiated prices elsewhere? You can’t.
This of course is why it is so critical to demand that your PBM provides you with insight into your drug-level rebates (and all associated fees). If you are not getting this, your rebate “guarantee” isn’t worth a hill of beans. Rather, it’s a number created for you by your PBM to optimize its profit off of the management of your drug benefit.
We digress. Let’s get back to the topic at hand and do some price comparisons.
United States vs. Canada Prices
Type 1 Diabetic
As previously stated, a Type 1 diabetic generally needs three things – at least a vial each of two types of insulin (basal and rapid acting) and test strips (sufficient to test three to four times per day). Note there are plenty of people that use more than one vial of each, or test more than four times per day.
If we type in the names of the previously listed therapies above into our searchable databases, along with the lancets necessary to prick the finger and the syringes necessary to inject the insulin, and compare the total costs, we can get the following results (Figure 3):
Figure 3
Source: 46brooklyn Research, Ontario Drug Benefit Formulary/Comparative Drug Index, Pharmacy.Medicaid.Ohio.gov
And through the magic of Canadian health policy, ~$775 USD worth of U.S. prescription drugs can be acquired at a 71% discount in Canada (after accounting for the currency exchange rate). These are the same drugs, the same testing supplies, all from the same manufacturers. The only difference is whether you fly the Stars and Stripes or a big red maple leaf on your flag pole.
And before placing all the blame on rebates, we would remind you two very important facts.
The first was the mother’s story above – whatever amount of rebates and discounts that are sloshing around the drug supply chain didn’t end up making their way back to her.
The second is the net pricing information provided by one of the manufacturers of the products listed above. In March 2019, Eli Lilly stated that they receive $135 per month for each patient who takes the average prescribed amount of Humalog U-100 after rebates (which is 4.5x Canada’s transparent net price). We’re fairly certain that there are many people, employers and Federal programs that would gladly forgo their rebates for Humalog if it could be provided at the Canadian price going forward.
And the same story unfolds if we turn to Type 2 diabetes.
Type 2 Diabetic
Most Type 2 diabetics will be started on a regimen of metformin with similar requirements to test their blood sugar three to four times per day. However, many Type 2 diabetics will not achieve sufficient control of their blood sugar on metformin alone and will be placed on one or more additional therapies, as outlined in the previously mentioned treatment guidelines. Figure 4 below presents the cost for some of these previously mentioned therapies:
Figure 4
Source: 46brooklyn Research, Ontario Drug Benefit Formulary/Comparative Drug Index, Pharmacy.Medicaid.Ohio.gov
This time, we see a ~75% cumulative savings for all of these products when dispensed in Canada compared to the U.S. (note that although we present the total cost for all these therapies, a Type 2 diabetic patient would likely never be prescribed all of these medications concurrently, but realistically could be on three of them).
Interestingly, we see many of the same phenomena in Canada that we saw in our Australia report. For starters, generic drugs (i.e. metformin and pioglitazone above) appear more expensive in Canada than in the U.S., just like we observed in Australia (note, we are showing only ingredient costs and not dispensing fees that may be added on when these drugs are filled). And while generics may be modestly more expensive, those added costs pale in comparison to the savings recognized with brand name medications, just like we saw in Australia. The second is that Canada’s formulary, at least in Ontario and Nova Scotia, is restrictive, meaning that as a general principle, Canada is willing to trade options for savings.
To demonstrate, consider GLP-1 receptor agonists, like Ozempic in Figure 4 above. In the U.S., there are eight different GLP-1 products currently on the market, with the most common one being Victoza. In Medicare Part D, in 2019, Victoza was dispensed three-to-one relative to Ozempic, as can be seen in our recently updated Medicare Part D Drug Spending Dashboard. However, on Ontario’s formulary, you will not find Victoza, or any of the other GLP-1 products.
Why Ozempic and not another GLP-1? While we cannot be certain, Ozempic has impressive outcome data, reflected in its FDA-approved indication, that it can reduce the risk of stroke, heart attack, and other major adverse cardiovascular events (MACE) in adults with Type 2 diabetes and heart disease. It’s a big deal because the reductions observed were large, meaning that Canada is able to not only get drugs cheaper, but is able to buy just those drugs potentially associated with the best health outcomes and forgo the rest. Said differently, they’re designing healthcare coverage around outcomes and not just cost.
Telling the tale beyond diabetes
But before you go thinking we have all the answers (sadly, we don’t), we have one more piece of drug pricing information for you to consider. A lot has been made about restrictive formulary benefits – whether in the VA, testimony before Congress, or even in our report on Australia – but perhaps it is not as simple as that. To demonstrate, let us return to Eliquis.
Eliquis belongs to a class of medications called anticoagulants used to prevent blood clots, and at times treat, blood clots. The latest generation of anticoagulants are a competitive brand class, with no less than three available brand name drugs in Eliquis, Pradaxa, and Xarelto. Returning to our Part D dashboard, we see their collective dominance in Medicare Part D in 2019, as nearly 20 million prescriptions were dispensed at a pre-rebate cost of $12 billion in the program during that time, as shown in Figure 5 (note that the unit costs of Xarelto looks a little high in comparison, because it is dosed one unit per day as opposed to Eliquis and Pradaxa, which are both dosed at two units per day; after adjusting for this, the daily cost is nearly identical).
Figure 5
Source: 46brooklyn Research
It is important to note that these latest generation of anticoagulants are all brand name medications. There are no currently marketed generics for any of these three medications. And clinically, these products all work relatively similar (although at least one study suggests Eliquis may be associated with lower rates of adverse reactions compared to its competitors, Pradaxa and Xarelto, which may explain why it has the largest market share in the U.S.). With that in mind, let us compare prescription prices of these three products in Canada and the U.S. (Figure 6).
Figure 6
Source: 46brooklyn Research, Ontario Drug Benefit Formulary/Comparative Drug Index, Pharmacy.Medicaid.Ohio.gov
If you are looking at Figure 6 and scratching your head, welcome to the club. Here we see, unlike with Ozempic and GLP-1 agonist, that all three branded products have secured formulary access in Ontario. There do not appear to be, as far as we can tell, any real significant access restrictions in Canada; you (or your prescriber) are free to chose the drug that is best for you between Eliquis, Pradaxa, and Xarelto. And despite there being three branded products, all three are offered at significant discounted price (82-85% cheaper) in Canada to that available in the U.S.
But that isn’t how this is supposed to work, or so we have been led to believe. We have been told, in testimony before Congress no less, you need to give up choice to secure a lower formulary price, and choice has been something we in the U.S. (at least broadly through the federal government) have been unwilling to give up. So what gives?
Something has to give
Think about it this way, drug manufacturers are supposedly interested in offering their best price when they are the only option in a competitive therapeutic category (a “one-of-one” offer in rebate terms). This is because when they are the only product out of many options, they know that they have secured for themselves the largest market share for that category and thus are willing to give the lowest price point to the payer. In general, rebate offers get worse, or a higher net price for the payer is realized, when manufacturers are offering rebates as a one-of-two, or one-of-three preferred products in a category. And this supposedly makes sense because the manufacturer will not secure as much market share for their product when there are more therapeutic options being covered.
With that in mind, what justification would explain what we observe in Canada? Why wouldn’t Eliquis or Pradaxa (which do not appear to be the lowest cost option in Canada) forgo participating in the Ontario market? And why instead of forgoing participation are they lowering their net price to the same (or nearly the same) level as Xarelto? Said differently, why are they willing to offer a price 80% cheaper in Canada, despite being in a competitive therapeutic category with other brand, and not in an exclusive one-of-one position? And since the manufacturers are willing to lower their price to compete in Canada, shouldn’t these same market forces exist in the U.S.?
To be clear, we do not know, but the math doesn’t add up. And we know math.
Stop the ride, I want to get off
Of course, one of the pieces missing from our current equation may be the ever elusive and ephemeral PBM role in the U.S. drug transaction. We need look no further than the recently released insulin investigation from Senators Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) to see how PBMs can push the price of a drug higher and higher, year over year, despite what otherwise may be market competitive forces which would lower the price.
For those unaware, Sir Frederick Banting, MD, the man we previously mentioned who discovered and gave away insulin, just so happens to be a Canadian. And whether you call it coincidence, happenstance, or fate, we cannot help but pause and reflect that just as the previously mentioned mother’s story had reached us, we were already in a position to compare diabetes treatment costs in Canada and the U.S. And there is more coincidence with the release of that stomach-churning Grassley/Wyden report, as well as Joshua Cohen’s recent Forbes piece that highlights how patient out-of-pocket expenses for insulin are rising, despite net costs to PBMs decreasing.
Moms like the one in the viral video mentioned above are not random occurrences. And while state legislatures and PBMs work to pretend to clean up the insulin pricing mess with co-pay cap band-aids, it’s important to note that insulin is just a canary in a coalmine for a litany of other drugs and products that suffer from highly-inflated prices that are borne out of a system that is designed to juice them higher and higher from reality. Then we as consumers must trust untrustworthy PBMs to selectively dole out the savings as they see fit. And while they choose who the winners and losers will be amongst their client base, diabetics join patients suffering from multiple sclerosis, asthma, cancer, and more who shoulder a greater share of a tab that most can’t afford in order to stay alive and to continue to reward a drug supply chain that continues to fail them as patients.
Perhaps the worst part of this mess is the fact that the mess isn’t a secret. We knew this last year. We knew it in 2019. We’ve known all along. And while the Grassley/Wyden insulin report is some welcome sunlight on the mess, reports aren’t going to cover the cost of our increasingly inflated prescription drugs. 2021 has already bucked the recent trend of reduced drug price increases. Let’s see if 2021 will also buck the trend of policymakers doing little to solve the problems they’ve known about for years.
The release of our new Brand Drug List Price Change Box Score created a bit of a stir this month. Thanks to everyone who has used the tool and provided feedback on it. We already made a few tweaks to improve its functionality and usefulness, and much of it was done based on your feedback.
While the dashboard was referenced in a number of media reports over the last couple weeks, we’d like to especially thank Mike Erman at Reuters, Ed Silverman at STAT News, Khristopher Brooks at CBS News, Noah Manskar at New York Post, Kate Ashford at Investopedia, and Darrel Rowland at Columbus Dispatch for highlighting the tool, as well as correctly providing some of the nuances at play in the marketplace.
Additional thanks to Gabrielle Wanneh at Inside Health Policy for chatting with us about Ohio’s recent Medicaid PBM reforms, and another shout-out to Ed Silverman at STAT for our discussion of some of the ins and outs of Mark Cuban’s dive into the generic drug business.