Sense or 'nonsense'? Senators blast Lilly's generic insulin, but CEO Ricks strikes back

David Ricks
After senators blasted Lilly's authorized generic program for insulins, CEO David Ricks defended the move. (LillyPad)

Insulin producers have faced years of negative headlines as prices and rebates rose in lockstep. So Eli Lilly tried to thwart the rebate effect with a half-priced version of its top insulin Humalog—and it attracted some positive coverage in the process.

But did Lilly's move really amount to a positive for patients? Not so much, according to a report (PDF) from senators Elizabeth Warren and Richard Blumenthal. A national survey of pharmacies found the authorized generic isn't widely available.

Lilly "failed to take consequential steps—such as simply lowering the list price of Humalog—to provide lower-cost access to this important diabetes drug," the report noted, echoing what critics have been saying of the plan all along.

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Not surprisingly, Lilly CEO David Ricks disagrees. In an interview with CNBC's Jim Cramer, Ricks said the conclusions drawn in the senators' report are “nonsense." What’s limiting uptake for the cheaper option is that pharma middlemen prefer higher list prices and higher rebates, he said. One national wholesaler opted not to pick up the discounted option at all, he added. 

RELATED: Lilly answers insulin price-hike critics with 50% off Humalog generic 

“This doesn’t show that we didn’t try,” he said during the interview. “We did try. … This shows what’s broken in the rest of the pharmaceutical system.” 

In their survey, the senators found that the authorized copycat wasn't available at 83% of pharmacies surveyed. When the cheaper option was in stock, half of the pharmacies didn’t offer it as the first option for patients.

The senators’ report concluded that “despite Eli Lilly’s public promise about the availability of a less expensive, authorized generic version of its brand-name insulin drug, the vast majority of pharmacies do not offer access to this drug.” 

RELATED: Novo Nordisk rolls out authorized insulin generics, following similar moves by Lilly, Sanofi 

Lilly and its peers Sanofi and Novo Nordisk produce 80% of the world’s insulin, the senators note, and have gradually raised prices over the years. Now, many patients ration insulin and have trouble affording the key drugs.

For their part, the drugmakers have argued they've had to offer increasingly bigger rebates to pharmacy benefit managers to secure formulary positioning.

The drugmakers haven't denied the affordability problems. Even as Lilly has rolled out its authorized generic, Sanofi went another route and has kicked off a $99-per-month subscription for its insulins. 

Novo Nordisk is pursuing both options with programs starting in January. It’s rolling out authorized generics to its insulins at half price, as well as a flat-rate cash offer that would cover most insulin users for $99 per month.

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