California State Sen. Scott Wiener, D-San Francisco, recently introduced legislation that would cap cost-sharing for insulin at $35 a month, regardless of whether a patient has public or private insurance.
It’s a popular idea. But it may not be necessary. The cost of insulin has been falling due to market forces. Most insured patients already pay less than $35 a month. Six years ago, the average monthly out-of-pocket cost for insulin made by Eli Lilly was $38.64. It’s now $17.16, a 56% drop.
In other words, insulin manufacturers have been dropping their prices because of old-fashioned competition. And that’s largely solved the problem the proposed out-of-pocket cap is meant to fix.
Three major manufacturers, Eli Lilly, Novo Nordisk, and Sanofi, which together supply most insulin in the United States recently announced 70% to 75% price reductions on their insulin products. And those reductions apply to the products’ list prices.
In reality, patients pay much lower net prices. After all rebates and discounts are tallied, the typical patient today pays $5 per vial of Humalog, a popular insulin, and just $3.40 for its unbranded equivalent. Patients typically need about two vials a month.
Curiously, California’s government is moving ahead with plans to spend $50 million to produce its own biosimilar insulins — copies of branded products — via a contractor. The contractor has said it will recommend a price of “no more than $30 per vial” — meaning it could be many times more expensive than some currently available options.
It’s evident that competitive market forces can deliver insulin more affordably than government efforts can.
Sen. Wiener has introduced a separate bill, SB 41, that could have a much bigger impact on the affordability of insulin and other drugs. It targets pharmacy benefit managers, or PBMs — healthcare middlemen who use their gatekeeping power to decide which drugs a patient’s health plan will cover — and what price they’ll pay.
In September, the Federal Trade Commission filed suit against the three largest PBMs for “engaging in anticompetitive and unfair rebating practices that have artificially inflated the list price of insulin drugs, impaired patients’ access to lower list price products, and shifted the cost of high insulin list prices to vulnerable patients.” Together, the three PBMs administer roughly 80% of all prescriptions in America.
Drugmakers offer discounts to PBMs to gain favorable positions on their insurer clients’ lists of covered medications. But instead of passing these savings along to patients, PBMs often pocket them instead.
Lilly, for example, recently revealed that the list price of its Humalog insulin held steady between 2018 and 2022. But the net price it received after discounts declined 35%.
Insurers and PBMs have generally kept calculating patients’ cost-sharing as a percentage of that higher list price — and kept the savings for themselves.
This payment structure gives PBMs an incentive to prioritize more expensive drugs on the formularies they build for insurers. Federal investigators have found that when drugmakers make lower-priced insulins available, PBMs intentionally exclude those options because they receive less in rebates. Wiener’s second bill would add transparency to PBM activities and prohibit some of their most egregious practices.
SB 41 would, among other things, require PBMs to pass through all the rebates they negotiate to payers or patients and ban PBMs from charging health plans more than they pay a pharmacy for a drug.
If California patients pay more than $35 per month for insulin now, it’s in large part because PBMs have rigged the system in their favor. Market forces can deliver affordable drugs, if we allow them to.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “The World’s Medicine Chest: How America Achieved Pharmaceutical Supremacy—And How To Keep It” (Encounter 2025). Follow her on X @sallypipes.