Estimated Sustainable Cost-Based Prices for Diabetes Medicines

Key Points Question What could prices of insulins, sodium-glucose cotransporter 2 inhibitors (SGLT2Is), and glucagonlike peptide 1 agonists (GLP1As) be if they were closer to the cost of production? Findings In this economic evaluation of manufacturing costs, estimated cost-based prices per month were US $1.30 to $3.45 for SGLT2Is (except canagliflozin), and $0.75 to $72.49 for GLP1As, substantially lower than current market prices in nearly all comparisons. Twice-daily mixed human insulin NPH could cost $61 per year, while basal-bolus treatment with insulin glargine and aspart could cost $111 per year, with reusable pen formulations having the lowest estimated prices. Meaning The findings of this study suggest that insulins, SGLT2Is, and GLP1As can likely be manufactured for prices far below current prices, enabling wider access.

Data on shipments were manually cleaned to exclude shipments that did not represent genuine API, for example, shipments of finished pharmaceutical product (Appendix Table 2).Shipment of very low weight were also excluded, as these are likely to represent samples or working standards, rather than API bought for formulation.Low weight shipment were defined as those smaller than 10,000 WHO defined daily doses (DDDs).Outliers, defined using the IQR rule, were censored.Weighted least-squares regression was used to fit linear models, with weights corresponding to the volume in kilograms of shipments.The outcome (unit cost) was logtransformed to reduce skew in the residuals.The predicted value on 1 December 2022 was used as the assumed average market price for API.API cost per unit is calculated as milligrams of API per unit multiplied by API cost per kilogram.The amount of API per unit is adjusted for the molecular weight of the hydrate or salt form, where relevant (e.g.canagliflozin hemihydrate).
Statistical analyses were performed in R version 4.2.2.

Note on comparison between different types of insulin
a This database (Export Genius) has data on some additional countries (Argentina, Bangladesh, Botswana, China, Ethiopia, Ghana, Indonesia, Kazakhstan, Kenya, Lesotho, Liberia, Malawi, Nigeria, Panama, Russia, Tanzania, Turkey, Uganda, Ukraine, USA, Uzbekistan) but does not allow data downloading, and, based on comparison of shipments returned by identical search queries, appears to have a dataset that is less comprehensive than in the Panjiva database.
3][4][5][6][7][8][9] While some newer analogues and biosimilars utilize different cell platforms (e.g.Pichia pastoris), the use of new cell platforms is driven by a desire to reduce cost of goods sold (COGS), for example, through lower purification requirements. 10,11For different insulins, it is likely that manufacturing costs are related more to manufacturing capacity (economies of scale) and how modern the equipment used is, rather than differences in the molecular structures.Production capacity (kilograms per year) and yield are the dominant factors in determining COGS for biologic medicines. 12,13Additionally, biologics manufacturing costs in general have fallen rapidly over the past three decades, as manufacturing equipment and techniques improve.eTable  No data on API shipments were found for insulin icodec, lixisenatide, or tirzepatide.
Where both price quotes received from manufacturers and exim data were available, we assumed the lower price for the purposes of calculating a sustainable cost-based price.

Note on exenatide
For exenatide, all observed API was shipped by the same company, with prices ranging 542,500 US$/kg to 1,007,140 US$/kg, with more costly API destined for high income countries in Western Europe and lower-priced API observed sold to less wealthy countries.The most recent shipment was twice as expensive as shipments observed to less wealthy destinations, resulting in the linear prediction model showing a sharp increase in price.Given that the product description and company are identical, we assume that this is a tiered price model, and use the lower level (542,500 US$/kg) as the API price.This analysis found that API manufactured in-house was priced 23% lower than outsourced API.This cost saving was assumed in the "competitive" costing algorithm (Figure 1 in main text).

Capital and operating expenditures, logistics, taxes, and mark-up
Manufacturing any product requires capital expenditures, such as up-front investments to build a manufacturing plant.Some earlier analyses of health product manufacturing costs account for capital expenditure separately from ongoing costs (operating expenditure). 14The cost inputs used for API, vial, cartridge, and pen device costs represent commercial prices on current markets, obtained through review of commercial data and informant interviews (eTable 1).These prices (assuming the manufacturers are not selling at a loss) cover the relevant capital expenditures, and, as we argue below, likely cover most operating expenditures.
The cost of fill and finish for parenteral formulations was based on currently available prices of simple injectable productswater for injection (WFI) and sodium chloride.The lowest cost vials of WFI or sodium chloride are priced around US$0.10 per unit.The price of these products includes raw materials costs, costs of sterile formulation, costs of secondary packaging, quality standards of a stringent regulatory authority (SRA), and a profit margin.As raw material costs and profit margins are likely to be very low for these products, we conservatively assume that this price represents the cost of sterile formulation alone, and add this to the costs of primary packaging materials.For an upper-bound assumption representing lower volume manufacture, we double this cost to US$0.20 per unit.We assumed 7% overfill for vials, following USP recommendations. 15We assumed 3% overfill for prefilled syringes. 16We assumed 3% overfill for cartridges, by analogy to prefilled syringes, which require little to no overfill. 16r solid oral formulations (tablets and capsules), we assumed a formulation cost of US$0.01 per unit, based on our previous work, which reflects capital and operating expenditures for a plant formulating API into solid oral formulations. 17range of 10-50% was assumed for profit margin.The corporate tax rate was assumed to be 25%, the global average. 1824 Barber MJ et al.JAMA Network Open.

Cost of vials, cartridges, and pen devices
Insulin can be injected in three ways: using a vial and insulin syringe, disposable pen (a pen prefilled with an insulin-containing cartridge, with the entire device discarded once the cartridge is empty), or a reusable pen that accepts cartridges.In all cases, a new needle must be used for each injection.GLP1As are injected using disposable pens pre-filled with cartridges, except for the oral formulation of semaglutide.
We contacted manufacturers of injection devices, identified through review of trade magazines.There are relatively few actors in this sector, and our interviewee sample represents a substantial proportion of active firms.Interviewees reported that there were no more than 14 total manufacturers active in these markets; this estimate is in line with trade reports that identify 10-17 major global insulin pen manufacturers. 19,20We identified 22 potential interviewees on the basis of work experience, identified through trade magazines, LinkedIn, or snowball referrals.Six consented to be interviewed for this publication, having experience in 11 companies, including former employees or consultants from all 'Big 3' insulin companies.Representatives of Sanofi did not respond to emails requesting interviews.Eli Lilly and Novo Nordisk declined to be interviewed, with an employee of Lilly writing that they do not "typically engage in external discussions around the costs of our insulin or injection [devices]" and an employee of Novo Nordisk writing that "in general Novo Nordisk is not sharing any input on [their] manufacturing cost".Interviewees were informed that any information shared would be reported in a way that would not be identifiable to them.In some cases, we followed up with interviewees if clarifications were needed, and to ensure that they were comfortable with the degree of detail published in this study.In some cases, manufacturers were willing to give specific quotes for prices at given volumes.

Vial material costs
We assumed that the material costs for glass vials range US$0.155-0.21,based on Clendinen 2016 and CEPI 2020. 14,21sposable pens One interviewee estimated that the cost of manufacturing disposable pens at large volumes is in the range US$0.30-0.70 per unit, while cost at lower volume would be US$1.00-2.00 per unit.
One interviewee estimated that the cost of manufacturing disposable pens at large volumes is US$0.50-0.70 per unit.
One interviewee reported that the price offered by a large European-based devices company would be US$1.2-2.5 for an order quantity of 0.5-1 million units.

Reusable pens
One interviewee mentioned US$20 per reusable pen (ex works) at a volume of 1 million per year.
One interviewee mentioned that COGS for high-quality reusable pens manufactured in Germany is around US$15 per unit.One interviewee mentioned that a reusable plastic pen that is made in India for the Indian market would have COGS below US$5 per unit.
One interviewee reported that the price offered by a large European-based devices company would be US$8-10 for an order quantity of 0.5-1 million units.
One interviewee, who had undertaken a market survey for prices of reusable pens available for purchase online, reported a range of US$8-58 per unit.
While we did not undertake an extensive search for current prices for reusable pen devices, two examples are the Chinese manufacturer Delfu citing a price of US$8-12 per unit for ≥1000 unit order quantity (see https://www.delfu-medical.com/sale-2800707-manual-plastic-diabetesinsulin-pen-for-prefilled-3ml-cartridge.html ), and the GensuPen 2, manufactured in Poland, sold for around US$6 per unit online (see https://allegro.pl/listing?string=gensupen ).

Cartridges
One interviewee reported that, for a large European-based devices company, the cost of a cartridge (without API) would range between US$0.10-0.20.

Insulin syringes with needles
This cost component is used only for calculating the cost per patient per year for insulin delivered by vial and syringe versus by a pen device, in Table 2 of the main text.MSF reported that their projects procure insulin syringes with a luer-lock needle at US$0.07 per unit ( https://msfaccess.org/sites/default/files/2022-05/Diabetes_NCDs_TechBrief_AC-SD_Diabetes-resolution_ENG_May2022.pdf ), which we use as the lower-bound assumption.To provide an upper-bound assumption, we use the mean cost of procurement reported in a survey of 37 centers providing diabetes care in LMICs, of US$0.32 (Klatman EL, Ogle GD.Access to insulin delivery devices and glycated haemoglobin in lower-income countries.WJD 2020; 11: 358-69.).

Estimating costs per person per year
The combined yearly cost of insulin treatment can be calculated.While insulin requirements vary, WHO suggests a standard daily dose of 40 units is used for comparisons. 22This would equal 1,200 units per 30 days.However, calculation on this basis represents 'perfect' use (for example, with no wasted insulin).MSF field analyses suggest real-world usage is closer to 1,500 units per month among people living with T1D and T2D receiving care in MSF projects; 23 we have therefore assumed 1,500 units per month for both T1D and T2D for the purposes of this high-level comparison, equivalent to 60 300-unit cartridges per year.For basal-bolus regimens, we assumed that insulin dosage is split equally between basal and rapid-acting insulins, i.e. 25 units of each per day.
The cost of a reusable pen is added by spreading a cost of US$5-10 (eTable 1) over two years, or 0.7-1.4 cents a day.The cost of needles at US$0.03 per unit (eTable 1) is added as two needles per day when using mixed insulin, and four needles per day when using a basal-bolus regimen (1 basal and 3 bolus injections).The cost of an insulin and syringe (when drawing insulin from a vial) is added as US$0.07-0.32 per injection, at the same daily use as above.For most people using insulin for T2D, a single daily injection of long-acting insulin will be used.

Cost of developing biosimilars and generics
For insulins and GLP1As, we added costs for biosimilar development.Developing a biosimilar is more expensive than developing a generic version of a small-molecule medicine (see also in Discussion).In our earlier analysis, we used an assumption of US$100 million per biosimilar, which we noted was likely conservative (high). 24Since then, new data have been published, including actual development costs reported by biosimilar insulin manufacturers.Analysis by the Medicines Patent Pool (MPP) estimated that the cost of bringing biosimilars to market ranges US$4-53 million, with the top of the range representing monoclonal antibodies, which are significantly more complicated than smaller biologics like insulin or GLP1As. 25Additionally, a Chinese biosimilar insulin manufacturer has published breakdowns of development costs, indicating a total cost of US$11 million for development of an insulin glargine biosimilar, 26 which falls within the range estimated by MPP. 26 We assumed that biosimilar development costs range US$11-53 million, and are recouped over five years.Assuming 1 million consumers for a new biosimilar insulin (about 3% of estimated insulin users globally), 27 this adds a cost of US$2.2-10.6 per consumer per year, over five years.
For GLP1As, we assumed a biosimilar market of 5 million consumers for a new biosimilar GLP1A.In addition to being indicated for a significant proportion of people with T2D, GLP1As are, GLP1As are generally indicated for people with BMI >30kg/m 2 , or around 650 million adults worldwide. 28The assumed 5 million consumers would thus represent just under 1% of clinically eligible adults globally.
For generics of SGLT2Is, which are small molecules, we assumed development costs based on a 2021 analysis reporting a modelled average cost of US$2.4 million per generic, of which US$1 million is attributed to API development, and around US$400,000 is budgeted for FDA regulatory submissions. 29We use US$2.4 million as the upper-bound (conservative) estimate, and assume a lower-bound (competitive) estimate of US$1 million, based on much generic manufacture taking place in LMICs, where costs are lower, and considering that in the scenario modelled here, already-developed generic API would be used.
As for insulin, we assumed 1 million consumers for a new generic SGLT2 inhibitor.Given the number of patients clinically eligible for SGLT2 inhibitors is likely to be substantially greater than for insulin, this is even more conservative as an assumption.
© 2024 Barber MJ et al.JAMA Network Open.

Costs of excipients
Excipients are ingredients other than the API which are added in a given formulation.Excipient prices were sourced from bulk commercial suppliers.Excipient information was sourced from package inserts, published information related to regulatory approval, or trade literature.Commercial suppliers are generally for lab use rather than high volume manufacturing.These costs are therefore conservative.Insulin NPH is produced by mixing human insulin with protamine, zinc, and phenol.Market costs for protamine, zinc, and phenol were added to the cost of human insulin API to estimate insulin NPH API costs.
Semaglutide is a biologic, first approved in injectable form.In 2019, a new oral formulation of semaglutide was approved, making it the first approved oral GLP1 agonist, 30 and one of few available biologics that are orally bioavailable.The oral bioavailability of the product is made possible primarily by using the excipient salcaprozate sodium (or SNAC), which protects semaglutide from degradation in gastric acid. 30Each tablet of oral semaglutide contains 300mg SNAC, independent of semaglutide dosage; available formulations are semaglutide/SNAC 3/300mg 7/300mg 14/300mg. 31We extracted data on SNAC market prices as for API, described above.
Twice-daily and once-weekly formulations are available for exenatide.The long-acting pharmacokinetics of once-weekly exenatide are enabled by encapsulating exenatide in PGLA microspheres. 32We did not include the long-acting formulation of exenatide in this analysis, due to challenges in accounting for the cost of the PGLA formulation process.
Insulin NPH contains 0.35mg protamine per 100u human insulin. 33rrent market prices Current market prices were collected from publicly available sources for 13 countries (eTable 6) in January 2023.For each product and formulation in each country, the lowest available price was recorded.Vial-sharing and pill-splitting were permitted, with WHO DDDs are used for standardization for SGLT2Is and GLP1As, and MSF field usage data (1500 units per month) used for insulins.Where multiple databases are available for one country (e.g. for government procurement versus private market), we used the lowest price available across databases.Where different types of prices are reported (e.g.price for sale to the government versus price for sale to pharmacies, price including or excluding tax), we used the lowest available price.

eFigure 3 .
Lowest market prices and cost-based prices (per month, US$): GLP1 agonists eFigure 4. Lowest market prices and cost-based prices (per month, US$): human insulins eFigure 5. Lowest market prices and cost-based prices (per month, US$): insulin analogues 2. Search criteria and salt forms of included medicines 4 summarizes data on API shipments and modelled average API prices, and bubble plots visualising API shipment data are shown in eFigure 1.Among insulins, global API data were available for RHI, NPH, and glargine.Limited data (n=4) were available for aspart.Results from weighted least-squares regression suggest predicted average prices on 1 December 2022 of US$31,169/kg for recombinant human insulin (RHI), 29,732 US$/kg for NPH, 65,665 US$/kg for glargine, and 81,164 US$/kg for aspart.No data were observed for insulin degludec, detemir, or glulisine.We received price quotes from 1 manufacturer for dulaglutide and liraglutide.
Note: Export data were downloaded from a commercial trade database (Panjiva).See note Analysis of global API market data for more information on the sources and structure of this data source.eTableliraglutide, and 70,569 US$/kg for semaglutide.We received quotes from manufacturers for liraglutide (500,000 US$/kg) and dulaglutide (1,500,000 US$/kg).
=   +  1  +  2  +  3 ℎ +   The model accounts for time trends and fixed-level effects for individual APIs.In this model,   is the log-transformed price of API i at time t,  1 is the time trend,  2 adjusts for confounding by volume of shipment size, and in-house is an indicator variable that is 1 when the shipment is declared as in-house and 0 when it is not.Standard errors are clustered at the API level.
© 2024 Barber MJ et al.JAMA Network Open.
eTable 6.National drug price sources.Sustainable costs for diabetes medicines, by formulation.Vials containing 1000 units in 10mL, disposable pens and cartridges containing 300 units in 3mL, unless otherwise indicated.The 'current lowest market prices' represents the range of lowest available prices across the countries sampled, for those countries where price data were available.Percentage difference between current lowest market prices and cost-based estimated generic prices represents the range from the difference between the lowest cost-based estimated generic price and the country with the lowest current market price, to the difference between the highest cost-based estimated generic price and the country with the highest current market price. *