Estimating sustainable cost-based prices for diabetes medicines

Background: The burden of diabetes is growing globally. The cost of managing the disease and its complications places significant pressure on health budgets and patients, especially in low- and middle-income countries. For insulin, which is a daily requirement for survival in people with type 1 diabetes, gaps in access are especially consequential. Yet, only half of people who need insulin globally can access it. The prices of diabetes medicines are a key determinant of access: where medicines are unaffordable, patients may not be able to receive medically necessary treatment.

Methods: Building upon earlier analyses of medicine cost of production, we developed a model for estimating the cost of manufacturing insulins, sodium-glucose cotransporter 2 (SGLT2) inhibitors, and glucagon-like peptide 1 receptor (GLP1) agonists. Data on the cost of active pharmaceutical ingredient (API) were extracted from Panjiva, a commercial database of global trade shipments; average cost in US$ per kilogram was modelled using a weighted least squares regression model. Data on production costs for devices and some APIs were collected through interviews and review of trade literature. API cost per unit was combined with costs of formulation and other operating expenses. We added a markup of 10%-50% and an allowance for tax of 25% to calculate estimated cost-based prices. Estimated cost-based prices were compared to current market prices in 13 countries.

Results: In this economic evaluation of manufacturing costs, estimated cost-based prices for treatment with insulin in a reusable pen device could be as low as US$96 (human insulin) or US$111 (insulin analogues) per year for a basal-bolus regimen, US$61 per year using twice-daily injections of mixed human insulin, and US$50 (human insulin) or $72 (insulin analogues) per year for a once-daily basal insulin injection (for type 2 diabetes), including the cost of injection devices and needles. Cost-based prices ranged from $1.30 to $3.45 per month for SGLT2 inhibitors (except canagliflozin: US$25.00-$46.79) and from $0.75 to $72.49 per month for GLP1 agonists. These cost based prices were substantially lower than current prices in the 13 countries surveyed.

Conclusion: There was a large difference between estimated cost-based prices and current market prices for insulins, SGLT2 inhibitors, and GLP1 agonists, in nearly all comparisons. The findings of this study suggest that robust generic competition among suppliers and negotiation by purchasers could reduce prices and enable expansion of diabetes treatment globally.