Frederick Banting sold the patent for insulin to the University of Toronto in 1921 for one dollar. He said it belonged to the world. Three corporations disagreed.
Eli Lilly, Novo Nordisk, and Sanofi together control roughly 90 percent of the global insulin market, according to testimony submitted to the United States Senate Committee on Health, Education, Labor, and Pensions. That concentration is not a coincidence of innovation or a reward for superior science. It is the engineered result of a patent system, a pricing structure, and a regulatory environment that has allowed three companies to hold a perpetual monopoly over a century-old molecule that people with diabetes cannot live without. Economists have a word for what three firms controlling 90 percent of a market looks like. The word is oligopoly. What it looks like on the ground is a 26-year-old man in Minnesota named Alec Smith dying of diabetic ketoacidosis in 2017 because he aged off his mother’s insurance and could not afford the next vial.
The $3 Drug That Costs $300
Insulin is not a new drug. It is not a breakthrough therapy developed at enormous research expense. The molecule itself has not fundamentally changed since it was first extracted from a dog’s pancreas more than a hundred years ago.
What has changed is the price. A peer-reviewed analysis published in the Journal of Law and the Biosciences found that the insulin market represents a persistent oligopoly both nationally and globally, with only three companies supplying the entire United States market despite the existence of several other manufacturers globally. The Senate HELP Committee, citing pharmaceutical industry data, placed the manufacturing cost at eight dollars per vial. Before the 2023 price cuts, Sanofi’s Lantus listed at $292 per vial. Novo Nordisk’s Novolog at $289. Eli Lilly’s Humalog at $275. The gap between what it costs to make insulin and what Americans pay to buy it was not a margin. It was a markup of more than 5,000 percent.
Prices have come down since 2023. Under mounting political pressure and, some observers would note, the specific heat generated by a string of very public deaths, all three manufacturers announced voluntary price reductions of between 70 and 78 percent, alongside $35 monthly caps for patients with commercial insurance. The companies presented these reductions as acts of corporate responsibility. What they were, structurally, was a concession extracted from firms whose previous pricing only held because there was no competitive pressure to lower it.
How the Oligopoly Stays Intact
The question that does not get asked often enough is why, a century after insulin’s discovery, three companies still control the supply.
The answer is not patents on the original molecule those expired long ago. What the three manufacturers have done is build a fortress of secondary patents around delivery mechanisms, formulations, and analog versions of insulin that are incrementally different from the original but clinically similar enough to function as substitutes. Each modification generates a new 20-year patent window. Each new patent resets the clock on competition. The Yale Law School analysis found that even without active compound patents, the vast majority of insulin products still carry patent protection on the pens and delivery devices, and because those devices can only be used with one brand of insulin, competition on those products is effectively delayed indefinitely.
The biosimilar insulin market exists, but barely. Biocon-Viatris’s Semglee became the first interchangeable biosimilar insulin approved in the United States in 2021. Civica Rx launched a biosimilar insulin glargine at $30 per vial in 2024. These are meaningful developments. They are also, in the context of a $26 billion global market, modest. The infrastructure costs for biomanufacturing, the five-to-eight-year regulatory approval timeline, and the established relationships the three majors have built with pharmacy benefit managers make entry difficult enough that the competitive pressure remains limited. The insulin pricing oligopoly is not just three companies being greedy. It is three companies operating inside a system specifically structured to reward their dominance.
What Rationing Actually Means
A report from the United States Department of Health and Human Services found that approximately 17 percent of insulin-dependent patients in the United States reported rationing their insulin, with the rate rising to 29 percent among the uninsured. These are not patients who decided insulin was too expensive and found an alternative. There is no alternative. Rationing insulin means taking smaller doses than prescribed. It means skipping injections. It means living with blood sugar levels high enough to damage kidneys, nerves, and eyes over time and, in acute cases, high enough to trigger diabetic ketoacidosis, a condition that can kill within days.
A Yale University study published in late 2024 found that even after the 2023 price cuts, more than a third of insulin-dependent patients surveyed still reported rationing due to cost, insurance delays, or pharmacy shortages. After the reforms. After the headlines. After the Senate hearings, the press conferences, and the $35 caps.
The caps help people with commercial insurance. They do not help the uninsured. They do not help the underinsured. They do not help patients whose specific insulin formulation was not included in their manufacturer’s voluntary reduction program. The Right Care Alliance documented at least four deaths per year from insulin rationing between 2017 and 2019. Five people died in 2019. Each of those deaths was preventable. Each of those deaths occurred because a medication that costs six dollars to manufacture was priced beyond what a human being could pay.
Why the Price Was Never About the Science
The companies will tell you that insulin prices reflect the cost of research, clinical trials, and manufacturing infrastructure. There is some truth buried in that claim. Biomanufacturing is genuinely complex. Regulatory compliance is expensive. The cold-chain logistics required to keep protein-based drugs stable across a global supply network are not free.
But insulin is not a new drug, navigating its first trials. The three dominant manufacturers have recouped their research investments many times over. Novo Nordisk reported net profits of $8.4 billion in 2023. Eli Lilly’s net income that same year was $5.2 billion. These are not companies struggling to fund their pipelines. They are companies that have used the oligopolistic structure of the insulin market to generate returns that no genuinely competitive pharmaceutical market would sustain.
The parallel to other sectors of American healthcare is not subtle. The same logic that drove private equity to systematically acquire and extract value from medical practices operates here: find a market where demand is inelastic, control access to the essential service, and charge what the captive population cannot refuse. Diabetics cannot refuse insulin. The demand curve for a drug you die without is vertical.
The Steelman: What the Industry Gets Right
Dismissing the manufacturers’ defense entirely would be convenient rather than honest.
Analog insulins, the newer formulations that make up the bulk of the market, genuinely do offer clinical improvements over older human insulin products. They are faster-acting, more predictable in their onset and duration, and easier to dose accurately. The research that produced those improvements was real, and it cost money. The biosimilar pathway that now allows competitors to enter the market exists in part because the regulatory framework the three majors helped build also created pathways for challengers to follow.
The 2023 price cuts were also larger than critics anticipated. A 70 to 78 percent reduction in list prices is not nothing. For the millions of commercially insured Americans who now pay $35 per month for insulin they were previously paying $300 for, the change is material. The manufacturers did not volunteer those cuts out of altruism; they required years of legislative pressure, three Senate hearings, and a reputational crisis to arrive, but they happened.
The argument that the insulin pricing oligopoly is acceptable because prices have now been capped runs directly into the data. The caps apply to some people, in some insurance categories, for some insulin formulations. More than one in three insulin users still rationing in 2024 are the people who fell through every gap in that framework.
The $35 Cap That Does Not Cover Everyone
Congress has spent years trying to pass a universal $35 insulin cap. In August 2022, a measure to extend the cap to anyone with private insurance, not just Medicare recipients, was blocked by Senate Republicans, who cited concerns about government intervention in pharmaceutical pricing. The Inflation Reduction Act capped costs for Medicare enrollees. The insulin manufacturers voluntarily extended similar caps to commercial insurance holders in 2023. Neither action reached the uninsured.
Seventy-one percent of Americans who reported rationing insulin in 2021 were under 65, too young for Medicare. They are the ones rationing. The policy that would have helped them most was defeated on a procedural vote. The argument that the free market should determine insulin pricing is an argument that has a documented body count attached to it, and the bodies are concentrated among the youngest and most economically precarious patients.
The financial pressures that insulin rationing creates do not stay contained within the healthcare system. A diabetic who rations insulin and develops kidney disease is looking at dialysis costs, lost work capacity, and the kind of cascading medical debt that feeds into the broader economic fragility building through household balance sheets across the American economy. Individual pricing decisions by pharmaceutical companies have macroeconomic consequences. That connection rarely appears in earnings calls.
The Patent That Was Sold for a Dollar
Banting’s quote has become something of a cliché in arguments about insulin pricing. That is partly because it is so precise. He did not have to sell the patent for a dollar. He chose to. He understood that insulin was not a commercial product in the conventional sense; it was a necessity, and necessities should not be owned.
The three companies that now control 90 percent of the global insulin supply made a different calculation. They looked at a drug that people cannot live without, a patient population with no alternatives and no ability to reduce demand, and they built a pricing structure designed to extract the maximum possible revenue from people with no other options. The insulin pricing oligopoly did not emerge from superior science. It was constructed, maintained, and defended by firms whose shareholders benefit from the gap between what insulin costs to make and what the market will bear when the market is dying people.
The 2023 price cuts changed some of that. The patents remain. The market structure remains. The manufacturers who cut prices voluntarily can raise them again without a vote, without a law, without asking anyone. And the uninsured patient who cannot navigate the savings programs, who just needs a vial and cannot pay for one, is still facing the same arithmetic that killed Alec Smith in 2017.
Understanding how pharmaceutical markets concentrate and what tools are available when they do is the kind of financial literacy that most people are never taught, but that affects every decision about coverage, medication, and the real cost of staying alive in a system built around paying for it.
Three companies. Ninety percent of the supply. A drug that costs six dollars to make.
Frederick Banting sold the patent for a dollar because he believed insulin belonged to the world. What the insulin pricing oligopoly has demonstrated, over a century, is exactly who it belongs to instead.
