The US Insulin Market
A century-old drug, lockstep price increases and the PBM rebate system on trial
Insulin was discovered more than a century ago, and its inventors sold the patent for a token sum so it would be widely available. Yet by the late 2010s many Americans with diabetes were rationing it because of cost. Three manufacturers and three pharmacy benefit managers now face lawsuits from states, cities, employers and the FTC alleging they profited from inflated list prices.
Questions
Who controls the US insulin market?
Three manufacturers produce ~90% of world insulin; three PBMs process ~80% of US prescriptions — concentration on both sides that critics say enabled manufacturers to compete on rebate size rather than price, with PBMs incentivised to favour higher list prices.
Three manufacturers, Eli Lilly, Novo Nordisk and Sanofi, produce about 90% of the world's insulin. On the other side of the transaction are the three largest pharmacy benefit managers, CVS Caremark, Express Scripts and OptumRx, which together process roughly 80% of US prescriptions. PBMs decide which insulins appear on the formularies of health plans they serve and negotiate rebates from manufacturers in return. The FTC reported in 2024 that the largest PBMs are vertically integrated with major insurers and pharmacy chains. This concentration on both the supply and purchasing sides is central to the controversy: critics argue that rather than competing on price, manufacturers competed on the size of rebates, and PBMs had an incentive to favour higher list prices.
Q2How much did insulin prices rise?
Humalog went from $21 a vial in 1999 to $274 in 2017 — a 1,000%+ increase over 20 years with no significant efficacy advances — while by early 2023 even insured patients spent on average more than $750 a year.
Dramatically, for a drug without major innovation. Lilly's Humalog cost $21 a vial in 1999 and $274 in 2017. One lawsuit notes that insulin prices have gone up more than 1,000% over 20 years. The Senate Finance Committee's 2021 bipartisan investigation found list prices had doubled or in some cases tripled in the past decade, absent significant advances in efficacy. By early 2023, Humalog listed at $274 a vial and $530 for a five-pack of pens, and even insured patients spent on average more than $750 a year on insulin, while uninsured patients spent at least twice as much. About 8.4 million Americans use insulin, according to the American Diabetes Association.
Q3What did the Senate investigation find about how the market works?
Manufacturers 'shadow-priced' within hours of each other; PBMs demanded rebates rising from single digits to 60%+; Novo's board voted down a price decrease because it would reduce PBM revenue — a system that rewarded rising list prices while patients on deductibles paid them in full.
The Grassley-Wyden report found that manufacturers engaged in "shadow pricing": Novo Nordisk and Sanofi raised insulin prices sometimes within hours or days of each other. PBMs, rather than resisting, demanded bigger rebates, which rose from single digits in 2013 to 60% or more for large accounts, while administrative fees climbed to around 5% of list price. Because PBM revenue was tied to list prices, both sides benefited from high list prices even as net prices were lower. Executives at Lilly and Novo were aware that PBMs earn money from rebates and fees, and Novo's board voted down a proposed price decrease over concerns about reduced PBM revenue. The report concluded the system rewarded rising list prices, which uninsured patients and those with deductibles paid in full.
Q4Why does the gap between list price and net price matter to patients?
Florida's AG alleges Lilly returns ~$210 of every $280 Humalog vial as rebates and discounts — 75% of sticker price — while uninsured, underinsured and high-deductible patients pay the list figure, a gap that killed 26-year-old Alec Smith when he rationed insulin he could not afford.
Rebates are paid after the pharmacy sale, so patients paying cash, or paying a deductible or coinsurance based on list price, pay the inflated figure even when their plan ultimately pays much less. Florida's attorney general alleges that Lilly returns about $210 of every $280 Humalog vial to PBMs as rebates and discounts, about 75% of the sticker price, while the list price remains what many patients see at the counter. California's complaint made the same point: the list price visible to patients could be much higher than the amount ultimately paid after rebates, hitting the uninsured, underinsured and those on high-deductible plans hardest. The human cost became a national story through cases such as Alec Smith, a 26-year-old who died after rationing insulin he could not afford.
Q5What did the FTC do about insulin pricing?
In September 2024 the FTC sued Caremark, Express Scripts and OptumRx alleging they artificially inflated insulin prices by favouring high-rebate products — briefly paused when two Democratic commissioners were fired — before settling with both in 2026.
In September 2024 the FTC sued Caremark, Express Scripts and OptumRx and their group purchasing organisations, alleging they artificially inflated insulin prices by favouring high-list-price, high-rebate products. Its competition bureau also warned that it remained deeply troubled by the role of Lilly, Novo and Sanofi and might sue manufacturers in future actions. An FTC official said manufacturers further inflated list prices in response to PBMs' demands for higher rebates. The case was briefly paused in 2025 after the firing of the FTC's two Democratic commissioners left only two Republicans, who had to recuse. The PBMs countersued the FTC, but a court later dismissed that challenge following the settlements.
Q6How have the FTC's PBM settlements resolved the case?
Express Scripts settled in February 2026; Caremark in July 2026 — requiring point-of-sale rebate pass-through, an end to formulary discrimination and insulin affordability programmes — with the FTC projecting up to $8.5 billion in consumer savings over ten years.
Express Scripts settled first, in February 2026, agreeing to reforms intended to gouging/" target="_blank" rel="noopener noreferrer" class="article-link">delink PBM compensation from list prices and base patient cost-sharing on net prices. Caremark followed; the FTC announced its settlement in July 2026, requiring it to stop discriminating against low-cost versions on formularies, pass rebates to patients at the point of sale, and create insulin affordability programmes. The FTC projects up to $8.5 billion in consumer savings over ten years, plus $4.5 billion through point-of-sale rebates. The case against OptumRx was withdrawn from adjudication to consider a proposed consent agreement. Patient advocates welcomed the reforms but stressed that manufacturers raised prices in lockstep too and must also be held accountable.
Q7Have insulin manufacturers cut prices?
Yes — Lilly cut Humalog 70% in March 2023 (from $274.70 to $66.40), Novo up to 75%, Sanofi followed — and Lilly's unbranded lispro is now $25 a vial, cheaper than Humalog cost in 1999, though litigation for past harms continues.
Yes, starting in 2023. In March 2023 Lilly cut Humalog and Humulin list prices by 70% and capped out-of-pocket costs at $35 a month for many patients; the Humalog vial list price fell from $274.70 to $66.40. Novo Nordisk announced cuts of up to 75% on several insulins effective January 2024, and Sanofi also cut prices, according to AJMC. The Inflation Reduction Act had already capped Medicare insulin costs at $35 a month. Lilly also expanded its $35 cap to about 85% of US pharmacies and said its unbranded lispro at $25 a vial would be cheaper than a Humalog vial in 1999. Minnesota's attorney general later argued the settlements proved that the earlier price increases were "completely unjustified". The cuts delivered real relief, but litigation continues over damages for years of higher prices.
Q8What state lawsuits over insulin are ongoing?
Minnesota settled all three manufacturers for $35 insulin for all residents for five years; MDL 3080 in New Jersey consolidates 416 lawsuits as of June 2025; and Florida's September 2026 suit — notably — extends the rebate theory to GLP-1 drugs including Ozempic.
Many. Minnesota sued all three manufacturers in 2018 and settled with each, securing $35 insulin for all Minnesotans for five years, with or without insurance. A federal multidistrict litigation, MDL 3080 in New Jersey, consolidates claims from states, counties, cities, school boards and self-funded employers, with 416 lawsuits pending as of June 2025. In September 2026 Florida's attorney general sued the three manufacturers, the three PBMs and their rebate aggregators under state deceptive trade practices and antitrust laws, seeking restitution, disgorgement and penalties; notably, the Florida complaint extends to GLP-1 drugs such as Ozempic, Trulicity and Victoza. The defendants deny wrongdoing and argue that current insulin prices are low.
Q9What role do biosimilar and follow-on insulins play?
Lilly's Rezvoglar launched at $92 per five-pack — 78% off Lantus — but PBMs have been accused of favouring high-rebate branded products on better tiers; the Caremark settlement now bars formulary discrimination against lower-cost alternatives.
Cheaper biosimilar insulins should, in theory, drive down prices, but critics argue the rebate system has sometimes worked against them. PBMs have been accused of placing cheaper biosimilar and follow-on insulins on less favourable formulary tiers than high-rebate branded products, because lower list prices generate smaller rebates. Lilly's biosimilar to Sanofi's Lantus, Rezvoglar, launched in April 2023 at $92 per five-pack of pens, a 78% discount to Lantus. The FTC's Caremark settlement specifically bars discrimination against lower-cost versions on formularies. Whether these reforms allow low-list-price insulins to gain share will be an important test of whether the market can shift from rebate competition to price competition.
Q10What did the FTC's broader PBM investigation find?
The big three PBMs process 80% of US prescriptions; affiliated pharmacies earned ~$1.6 billion in excess revenue on two cancer drugs in under three years; and PBMs generated $7.4 billion by marking up 51 specialty generics — while nearly 30% of Americans reported rationing doses.
Alongside the insulin case, the FTC conducted a wider study of PBMs. Its July 2024 interim report found the three largest PBMs processed about 80% of the 6.6 billion prescriptions filled in 2023, and the six largest nearly 95%. It highlighted vertical integration with insurers and pharmacies, noting that pharmacies affiliated with the big three accounted for nearly 70% of specialty drug revenue, and found affiliated pharmacies earned nearly $1.6 billion in excess revenue on just two cancer drugs in under three years. A second report found the PBMs generated gouging/" target="_blank" rel="noopener noreferrer" class="article-link">$7.4 billion by marking up prices of 51 specialty generic drugs between 2017 and 2022. Nearly 30% of Americans surveyed reported rationing or skipping doses because of cost. The findings supported the argument that PBM incentives, not only manufacturer pricing, shape what patients pay.
Q11What is the bottom line on the insulin market?
Insulin became the defining case of rising costs for an old drug without new benefits — investigations, list-price cuts, FTC reforms and the Medicare $35 cap have delivered real relief, but states are still pursuing past damages and Florida's suit signals GLP-1 drugs are the next front.
Insulin became the defining example of how the US drug pricing system can produce rising costs for an old medicine without new benefits. Investigations found manufacturers raised prices in parallel, PBMs rewarded high list prices with higher rebates and fees, and patients who paid based on list price bore the burden. Since 2023, list price cuts, the Medicare $35 cap, state settlements and FTC reforms have reduced patient costs significantly. But the litigation is far from over: state suits and the MDL seek damages for past harm, and Florida's lawsuit suggests states will apply the same theory to GLP-1 drugs. Both manufacturers and PBMs deny wrongdoing and blame each other. Florida's lawsuit suggests many see the newer GLP-1 diabetes and obesity drugs as the next front in this fight.