In this file photo taken on February 17, 2014 A high speed production line of insulin is pictured at the factory of Novo Nordisk, a global healthcare company, in Chartres, on February 17, 2014. Picture: JEAN-FRANCOIS MONIER / AFP
In this file photo taken on February 17, 2014 A high speed production line of insulin is pictured at the factory of Novo Nordisk, a global healthcare company, in Chartres, on February 17, 2014. Picture: JEAN-FRANCOIS MONIER / AFP

Geneva — Drug maker Eli Lilly will offer a half-priced version of its blockbuster insulin, becoming one of the first companies to effectively cut the price of a top-selling drug amid the ongoing US debate over pharmaceutical costs.

While it will continue selling its brand-name version at the existing price, Lilly will also sell a half-cost “authorised generic” for $137.35 a vial, or $265.20 for a five-pack of injectable pens. That will give a better deal to customers who pay cash, or who are in insurance plans that make them pay a percentage of a drug’s list price.

Insurers and pharmacy benefit managers (PBMs) do not typically pay the listed prices for drugs, and instead negotiate discounts and rebates that can help lower premiums as a whole, but that can result in large out-of-pocket costs for some patients on costly medicine or who have chronic conditions that force them to take treatments year-round.

“The significant rebates we pay on insulins do not directly benefit all patients. This needs to change,” Lilly CEO David Ricks said in a statement announcing the move. “We hope our announcement is a catalyst for positive change across the US healthcare system.”

Lilly’s move is one of the first by a major drug maker to offer a cut-price version of a major product, and could put pressure on other pharmaceutical companies to do the same. Mylan faced a similar outcry over the price of its EpiPen allergy shot, and in 2016 announced a lower-cost authorised generic. But such moves have been rare, despite drug company CEOs having been called before Congress and facing frequent criticism from both US political parties.

There are millions of people with diabetes in the US, and insulin has become a particular flashpoint for the debate over the cost of drugs. Lilly, Novo Nordisk and Sanofi were sent letters by a Senate committee in February asking how they set insulin prices, and Sanofi CEO Olivier Brandicourt was among the pharma bosses who headed to Washington in February month to testify about drug costs.

Shares of Novo Nordisk, the world’s biggest maker of insulin, fell as much as 2.8% after Lilly’s announcement.

Lilly, Novo and Sanofi all heavily discount the price of many of their diabetes medications, and there is typically a wide difference in the list and net prices.

Sanofi’s CEO said in his testimony that the average net price of Lantus, the company’s most prescribed insulin, has fallen more than 30% since 2012, yet out-of-pocket costs for patients with commercial insurance and Medicare have increased about 60%. In an e-mailed statement, Sanofi said it had a competing version of Humalog, called a biosimilar, that it sold under the name Admelog. The company said it also offered a variety of discount programmes for patients.

With James Paton

Bloomberg