However, the bill might also say that insurance companies must keep the out-of-pocket costs under $100 or that the state will make up any amount over $100.
In reality, it seems unlikely to harm insulin availability since most jurisdictions have cheap insulin and the cost in the US seems to be significantly higher.
Theoretically, price caps can be set low enough that no one will produce and sell an item. If you capped the price of computers at $100, no one would be making and selling computers and you wouldn't be able to find a computer without going to the black market. Countries like Venezuela have tried price caps on goods and what has happened is that those goods can't be found. Retailers won't sell items for less than they can get them from a supplier and suppliers won't sell for that price, possibly due to the cost of inputs, production, shipping, etc.
In this case, there's evidence that prices have been inflated unfairly with insulin and therefore this just hurts suppliers' margin without really changing availability. However, there is the potential that suppliers won't work with the price restriction. Let's say that you're CVS and you're buying an insulin drug from BigPharmCo at $150. Illinois has a new law such that you can't sell insulin for more than $100 so you tell BigPharmCo that you need supplies at $60 so that you can sell it for $100 and pay for stores, employees, etc. BigPharmCo decides that they'd rather not sell it to you at $60 because they'd rather write off Illinois sales all together rather than reduce their price to $60. Illinois is only about 4% of the US population. If you lower your price to $60, you're losing 60% of your revenue. If you write off Illinois, you're only losing 4% of your revenue.
Now, you might argue that they'd only have to give CVS a discount on supplies for Illinois, but that would be hard to enforce. It seems legal to ship medical stuff across states. Would it be legal to prevent someone from entering into interstate commerce they've always been accustomed to? I have no idea. Maybe suppliers would only supply a certain amount they deemed necessary for the Illinois population to CVS at the discounted price. However, then why wouldn't CVS just stop selling in Illinois and sell the discounted insulin for a higher price in other states?
Even if one can prevent cross-state shipment of insulin, suppliers might deem it worth their while to make an example out of Illinois. If they don't make an example out of Illinois, other states will likely follow. They might get some bad press, but at some point the state would need to act to protect the welfare of its people and repeal the restriction.
I'm not saying that any of these things are good or righteous. It's just harder to force people to do what you want than many people think. Given that forms of insulin are generic, maybe the answer is that we need more generic manufacturers to make it competitive.
Again, I don't think shortages are likely to happen. GoodRx shows generic Humalog available for under $70, but many others are much more expensive. I don't know enough about insulin prices to really know what will happen. However, in many instances, price caps haven't been really effective at helping people.
This will most likely lead to higher insurance premiums for policies which cover prescription drugs. Certainly the insurers and suppliers aren't going to be the ones paying for it.
[1] http://www.ilga.gov/legislation/fulltext.asp?SessionId=108&D...
Google says there are 1.5-3 million insulin users in the USA - lets call it 1% of the population. Let's say that their drugs cost $300 / month, but they pay $100. The extra $200 will be shared between 100 people's premiums, so $2 extra per month.
But studies show that the US currently pays as much as 7x what the UK does for insulin[0]. How can insulin be so cheap in some places but so expensive in others to the point that manufacturers stop making it?
0: https://insulinnation.com/treatment/u-s-pays-much-uk-insulin...
so it comes out of the higher taxes.
Nobody has an obligation to manufacture insulin.
I'm not saying the costs are $110. I don't know. I'm just explaining why this can result in lost insulin.
That's well below the $1,200 a year cap.
We know what it costs to manufacture insulin, and it's literally a few bucks per vial [1]. You're framing this as if it represents the larger debate between fixing medical costs and the free market, but it's not that at all, and no one is going to lose their insulin.
[1]: https://www.businessinsider.com/insulin-prices-could-be-much...
Others are observing that the current prices are not currently anywhere near $100. That's completely unrelated to what I'm explaining.
I'd also point out that is a temporary fact, not a permanent fact. If, let's say, in two months the Coronavirus has mutated into a mark 2.0 and is sweeping through Illinois [1], getting insulin may become much more expensive due to all the measures needed to prevent spread of infection. If it becomes more than $100 worth of expensive, it's going to be difficult to distribute. There can be supply disruptions due to source contamination, whoknows what else. Even if today this seems like a generous cap, an inflexible cap can still be a problem tomorrow.
Of course, the last few years being what they are in online discourse, a large number of you will be inclined to read this as a defense of high prices, rather than what it actually is, which is an observation that price fixing has certain effects and that we don't know the future very reliably. Screwing around with insulin prices just because you can is evil and should be the grounds of a presumptive collusion, oligarchy, or monopoly investigation. But that doesn't mean that fixing the price is a good idea, or going to fix it. Personally I'd suggest getting a few state attorney's together and digging into why the price is so high, with an eye towards criminal charges or anti-trust action, would be much more effective. You might even find that "feels better" than mere price caps. Remove the incentives for people thinking they can get away with this sort of thing scott-free, rather than trying to treat the symptoms far down the pipeline from the root cause.
(Downvoters are invited to consider my replacement suggestion of criminal charges or significant antitrust action before deciding that I'm "defending" anything. This is a silly papering over of the problems by people who ought to have the power to do a lot more.)
[1]: A totally absurd, impossible scenario, of course. https://chicago.cbslocal.com/2020/01/24/first-case-of-corona...
People will die, that's the system we have. The only question is do we relent and give in to what amounts to terrorist demands?
https://www.vox.com/2019/4/3/18293950/why-is-insulin-so-expe...
> The US is a global outlier on money spent on the drug, representing only 15 percent of the global insulin market and generating almost half of the pharmaceutical industry’s insulin revenue. According to a recent study in JAMA Internal Medicine, in the 1990s Medicaid paid between $2.36 and $4.43 per unit of insulin; by 2014, those prices more than tripled, depending on the formulation.
The current top-shelf insulins were not discovered in the 1920s and are considerably better than the ones that were. The older insulins (going back to R, L, N sold in the 80s) are fairly inexpensive; on the order of $25 per bottle (and I believe can be bought over the counter). The newer insulins sell for on the order of $275 per bottle.
The numbers I see say it should cost about $300 for a years supply for me (given my current usage) if everything was optimal (non-greedy, short supply chain). Then assume it goes through 3 hands to get to me (original manufacturer, distributor, plan manager; I'm ignoring the pharmacy since I assume they're at least partially altruistic) and add 50% each time for a total of 1012.50 (300 * 1.5. * 1.5 * 1.5). So even then, it's still less than 100 per month expected cost. Though that's for only the short acting insulin, not the 24hour.
What it would really cost without insurance right now is thousands per month. They're making bank on it.
Is the $100 indexed to inflation?
Separately, this is a supply-side problem. Why can’t I start a business that manufactures insulin while selling it at a reduced—but profitable—margin? Those barriers to entry are a fundamental issue.
Why shouldn't governments own private industry if it still competes through the market?
In competitive space, what do we do when the government fails to check itself against anti-competitive behavior?
I guess it also depends on the profit margin at that price and how it compares with the "market price".
Edit: Care to explain the downvotes? I'm just putting forward what could happen in the real word, not voicing my opinion of what is right.
I would love to see those marketing execs strung out in the court of public opinion for denying life saving medication because "omg our margins!"
That might just be enough to start lighting the fires that need to burn.
Maybe we would all be better off in the long term if they did. Probably wouldn't work out great for them, however.
