Profits, Innovation and Financialization in the Insulin Industry

Rosie Collington ()
Additional contact information
Rosie Collington: University of Copenhagen

No inetwp120, Working Papers Series from Institute for New Economic Thinking

Abstract: The list prices of analogue insulin medicines in the United States have soared during the past decade. In the wake of high-profile cases of prescription medicine “price-gouging”, such as Mylan’s EpiPen and Turing-acquired Daraprim, actors across the insulin supply chain are today facing growing scrutiny from US lawmakers and the wider public. For the most part, however, the role of shareholders in the insulin supply chain has been overlooked. This paper considers the relationship between profits realized from higher insulin list prices, pharmaceutical innovation, and the financial structures of the three dominant insulin manufacturing companies, which set list prices. It shows that despite claims to the contrary, insulin manufacturers extracted vast profits from the sale of insulin products in the period 2009-2018, as insulin list prices rose. Distributions to the company shareholders in the form of cash dividends and share repurchases totaled $122 billion over this period. The paper also considers the role of other actors in the insulin supply chain, such as pharmacy benefits managers (PBMs), in the determination of list prices. The data and analysis presented in the paper indicates that financialization could be considered in tension with not only the development of new drugs that will be available to patients in the future, but also the affordability of products that already exist today.

Keywords: innovation; financialization; pharmaceutical industry; insulin; corporate governance, share buybacks. (search for similar items in EconPapers)
JEL-codes: D22 D53 G32 I11 L11 O32 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2020-03
New Economics Papers: this item is included in nep-cfn
References: Add references at CitEc
Citations:

Published

Downloads: (external link)
https://www.ineteconomics.org/uploads/papers/WP_12 ... insulin-industry.pdf (application/pdf)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3593906 First version, 2020 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:inetwp120

DOI: 10.36687/inetwp120

Access Statistics for this paper

More papers in Working Papers Series from Institute for New Economic Thinking Contact information at EDIRC.
Bibliographic data for series maintained by Pia Malaney ().