KONNOR VON EMSTER – MARCH 16TH, 2020
EDITOR: SEAN O’CONNELL
Anthony Di Franco is a Type One diabetic. He stands among the 100 million diabetics worldwide that rely on daily, intravenous insulin to stay alive. Blood sugar in most people is regulated by the hormone insulin which helps transport glucose into cells. However, in diabetics natural insulin is denatured or insufficient in regulating blood sugar concentration which can lead to life-threatening diseases including uncontrollable infection, blindness, and neuropathy. To make matters worse, these people have experienced an overwhelming surge in insulin prices; between 2012 and 2016 insulin prices doubled, far outpacing the consumer price index and healthcare specific inflation.
However, Di Franco has a vision that could entirely disrupt the $25 billion insulin industry: public production. The project plans to give the power of insulin production to individual diabetics by publishing free research on insulin synthesis procedures in addition to selling his organization’s insulin at the marginal cost of materials, capital, and labor. In pursuit of this goal, the OpenInsulin Project was founded in 2015 with funding from a successful crowdfunding campaign on Experiment.com. Di Franco launched the project in a small Silicon Valley-based community lab filled with self proclaimed “biohackers” (laymen biologists tinkering with biological mechanisms that often lack the money, proceedings, and scientific gravitas as university labs) with a fiery desire to change the nature of insulin production. This lab may fulfill the longstanding wish of many diabetics: cheap insulin that competes with monopolistic insulin manufacturers.
To understand the desire for such a project, one must first understand insulin’s price volatility and the extent of its price fixing. Insulin is a biologic, meaning that its production is very different from small molecule drug development. The FDA classifies biologics as medical treatments that “are isolated from a variety of natural sources — human, animal, or microorganism.” This contrasts with small molecule drugs that use identical copies of the same molecule pressed into a solid pill for delivery. Conversely, biological compounds are often complex molecules that are less well defined. Unlike small molecule drug manufacturing, in which all of the compounds in a pill are identical pill by pill and batch by batch, biologic drug production is more like wine making as a vineyard may aim to make the same type of wine year after year, but each harvest will yield a slightly different result. Small molecules are comparable to sodas like Coca Cola that have specific, defined recipes ensuring homogeneity of products, batch after batch, year after year.
At the moment three companies control the vast production of insulin supply: Eli Lilly, Novo Nordisk, and Sanofi. They represent an oligopoly, or as some prescribe, a cartel. To many, their high prices seem like a classic case of price gouging, but the companies contest that biologic manufacturing costs in production and purification far outweigh those of small molecule drug manufacturing, and therefore high prices are required to remain profitable.
These claims that the price increases are due to manufacturing costs have been called into question considering their prices have skyrocketed from first release. Take Lantus, Sanofi’s long acting modified insulin, for which prices have skyrocketed to $305.53 in 2019 from $34.81 a vial when it was first priced in 2001. The story is the same for Eli Lilly and NovoNordisk’s short acting insulins, Humalog and Novolog. Humalog rose 1,124% over a 20 year time span, and Novolog jumped 642% over a 15 year time span. To many diabetics this appears to be predatory price gouging, as pharmaceutical manufacturing costs are much lower than developmental costs.
These companies also claim their synthetic insulin is substantially differentiated in medical treatment from homologous human insulin. Because biologic treatments are extremely complex molecules and change in each batch, treating insulin and other biologics as perfect equivalents to their generic counterpart is misleading as some compounds are more durable while others are more rapid acting. Therefore generic insulin like that made in the OpenInsulin Lab would act more like a substitute in consumption than direct replacement for mass-market synthetic insulin like Lantus, Humalog, and Novolog. Just because OpenInsulin is not a perfect substitute does not mean it would not be able to replace these synthetic insulins. It would instead require different dosing and injection frequency.
For Di Franco and other diabetics, insulin “is a life-and-death situation,” according to Dr. LaShawn McIver, senior vice president of government affairs for the American Diabetes Association (ADA). Every price hike means more people cannot pay for enough insulin to survive, leading many to skip or ration doses. Skipping doses can lead to serious health consequences and even result in death. This points to the extreme inelasticity in demand for insulin. When extreme inelasticity is combined with monopolies, inflated pricing occurs.
Enter Biosimilars: an FDA drug classification as a generic opportunity for biologics. These biosimilars would be made by generic manufacturers to bring down insulin costs through market based competition as an alternative to government interventions including regulation, deprotection of patents, and public manufacturing. Their goals echo the sentiments of David Mitchell, founder of Patients for Affordable Drugs and an activist for insulin price controls, who testified to the U.S. Senate Committee on Health, Education, Labor, and Pensions that “drugs don’t work if people can’t afford them.” For many diabetics, this statement holds true, with both biosimilar companies and OpenInsulin working to right this injustice.
What many did not anticipate was the difficulty in developing and approving biosimilars. Small molecule generic drugs are of identical composition and formula as their branded counterparts (think Advil versus Ibuprofen) and thus are perfect substitutes in consumption. By contrast, biosimilars, such as insulin, are hard to replicate and approve because they are not strict formulas but rather complex molecules that can take on many small changes in formula. In continuation with the wine metaphor, producing biosimilars would be comparable to setting up a small batch winery that attempts to replicate a well established winery’s product. Not only would the new vineyard need to reverse engineer many of their competitor’s winemaking techniques, but they would then have to legitimize their product. This is the challenge that biosimilar companies face when entering the insulin market, which is why, even with biosimilars on the market, large drug companies often continue to enjoy monopolistic profits as a result of market power and proven efficacy.
Because of these issues, biosimilar development and rollout has been retarded, despite the substantial market potential for such generics. Currently there is only biosimilar insulin on the market in Europe. Prospects for many more appear to be near in the future but have been slowed by regulatory hurdles and development costs. Because biosimilars do not come from formulated chemical reactions but are instead byproducts of a living organism such as bacteria or incubated cells the FDA has required additional testing for biologics than standard small molecule generics.
Because competition has not been supplied by traditional manufacturers that may be able to produce biosimilars, OpenInsulin has high hopes to enter the market using a grassroots research movement centered around community labs (fully functional wet labs analogous to maker spaces) to create their own publicly available biosimilar for insulin. In its attempt to give insulin production to the people, OpenInsulin has committed to publishing their insulin production process for free so that community labs can produce their own insulin as needed. The Open Insulin Project has committed to selling their product at the cost of capital, materials, and labor in a non-profit manner. Estimates have ranged on their market size and capital costs per production facility, but their current over-the-counter estimate of $7 per vial would represent a stunning 98% decrease in drug costs for diabetics and insurance companies. Even if it is not a perfect substitute for the insulin made by the three current monopolistic producers, it is a useful substitute for diabetics who could change from longer lasting formulas to OpenInsulin if they have to pay much less for it.
That being said, diabetics should not be expecting OpenInsulin any time in the immediate future. There are still many hurdles regarding safety, development, and manufacturing to overcome. The project is led by scientists who have different day jobs, which means development of the product has been slow and currently incomplete. Nevertheless, the Open Insulin Project is keeping the dream of affordable insulin alive for many while other biosimilars struggle to enter the market. This grassroots movement shows the possibilities of biohackers working on projects that have the possibility to disrupt an entire industry. For diabetics currently rationing their doses due to cost, affordable insulin may just save their lives.
Note: If you are interested in the work of the Open Insulin Project, check out their website openinsulin.org or stop by weekly lab meetings at Counter Culture Labs in Oakland, CA.
Featured Image Source: Makery
Featured Image Description: Anthony Di Franco, Founder of Open Insulin Project
Disclaimer: The views published in this journal are those of the individual authors or speakers and do not necessarily reflect the position or policy of Berkeley Economic Review staff, the Undergraduate Economics Association, the UC Berkeley Economics Department and faculty, or the University of California, Berkeley in general.
One thought on “Power to the Diabetics: Non-Profit Production at the Open Insulin Project”
Can you tell us more about this? I’d want to find out more