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How Big Pharma and insurers are leaving Minnesotans sick, hospitalized, even dead

Abigail Hansmeyer describes months on the phone, hoping to find some remnant of heart in an industry not known for its mercy.

Abigail Hansmeyer describes months on the phone, hoping to find some remnant of heart in an industry not known for its mercy. Colin Michael Simmons

Quinn Nystrom’s inbox is a repository of despair for Minnesota’s diabetics.

There’s the dispatch from the bride-to-be wondering if Nystrom has any insulin to spare. The woman can’t afford insurance and wishes not to be sick, if only for her wedding day.

There’s the father of a diabetic 8-year-old. He works multiple jobs, yet is unable to cover his deductible.

Then there’s the pregnant woman who makes $35,000 a year, too little to stay healthy. “She begged me to bring back insulin from Canada,” says Nystrom, where it sells for one-tenth of the U.S. price.

Nystrom has been a diabetes advocate since age 10, when her 5-year-old brother contracted Type 1, known as juvenile diabetes. She began going door-to-door in her hometown of Baxter, Minnesota, raising money for research. Three years later, she was afflicted herself.

Some 460,000 Minnesotans have diabetes. Type 1 is the most versatile, vicious of the lot, seeming to probe the body for opportunity. Left uncontrolled, it can bring on heart attacks and strokes, damage to the eyes, kidneys, nerves, and arteries, along with a cast of ailments too numerous to mention.

“Do I buy groceries?” asks Diane Heidt. “Or do I buy insulin to keep myself alive?

“Do I buy groceries?” asks Diane Heidt. “Or do I buy insulin to keep myself alive? Colin Michael Simmons

Insulin is the lone barrier between breath and death. “It’s like the oxygen you need to live,” says Nystrom.

Yet over the past decade, its price has inexplicably tripled. Wages, of course, have not.

“People are dropping out of college,” says Nicole Smith-Holt. “They’re cashing in their retirement, cashing in their children’s college account, just to stay alive.”

For the insured, the out-of-pocket costs routinely surpass $500 a month, akin to life-long payments on a new Mercedes, with interest rates jacked at whim. For the uninsured, it’s like being forced to buy a second home, easily surpassing $1,000 a month.

These days, one-quarter of all insulin prescriptions go unfilled. Diabetics are forced to ration or do without. They’re dying after losing jobs, aging out of their parents’ insurance, or watching insurers drop coverage for the kind they need.

Smith-Holt’s son, Alec, is Minnesota’s standard-bearer. He aged out of mom’s policy at 26. Buying his own insurance meant $450 a month—with a $7,000 deductible. He decided it was cheaper to go it alone.

Insulin consumed half of his paycheck, so he rationed to stay afloat. Alec was dead within a month.

These are merely the headline cases. Left unchecked, thousands more are destined to die quietly from complications, desperate and broke.

While the rest of the developed world regulates the price of medicine, this is a crisis unique to America’s winner-take-all health system. Asked why, its victims inevitably circle back to a single word.

“I hate to say it, but greed,” says Deb Souther, who can no longer teach preschool.

“Absolutely money and greed,” says Michele Holcomb, whose daughter has been hospitalized multiple times.

“It’s Big Pharma’s greed,” says Diane Heidt, a retiree from Eden Prairie who can rarely afford to leave her house. “‘Hey, we can charge what we want, and if you wanna stay alive, you’ll pay it.’”

The predators’ turf war

Insulin was invented by Canadian doctors a century ago, before pharma grew its fangs. They sold their patent to the University of Toronto for $3, forgoing treasure to lift humanity.

Scroll forward 100 years and just three companies—Novo Nordisk, Sanofi, and Eli Lilly—control an estimated 96 percent of the world market. You could say they’re rather fond of treasure.

Alec Smith spent half his paycheck on insulin. He was dead within a month of aging out of his parents’ insurance.

Alec Smith spent half his paycheck on insulin. He was dead within a month of aging out of his parents’ insurance.

Insulin is cheap to produce, costing between $3 and $7 a vial, according to a recent Harvard study. The drug’s last significant improvement came in the mid-1990s.

But since then, the price has rocketed by 1,200 percent. A single vial now runs $300 to $400.

Ken Inchausti, spokesman for Novo Nordisk, says other costs factor into this skyward leap, such as regulations, research for newer drugs, and those batteries of sales reps swarming your doctor’s waiting room.

Yet across the border in Canada, our northern neighbor places a higher premium on the health of its citizens, limiting what drugmakers can charge. Those same vials go for around $30.

Pharma execs admit insulin is still profitable at the Canadian price. Their balance sheets reveal companies fat and happy. Novo Nordisk, for example, registered profits of $1.57 billion for the first quarter of this year alone.

This leads American diabetics to a singular conclusion: They’re being fleeced.

Manufacturers “can charge whatever they want here,” says Minnesota state Sen. Matt Little (D-Lakeville). “And they’re proving they will charge anything they want here. People know they’re getting gouged.”

Erin Little is what’s known as a “medical refugee,” fleeing America for countries that place a higher premium on their citizens’ health.

Erin Little is what’s known as a “medical refugee,” fleeing America for countries that place a higher premium on their citizens’ health.

A three-company industry might suggest some form of competition. That’s only true in theory. The human body is a delicate instrument. While one brand of insulin might keep a diabetic healthy and fit, another may render them fatigued or prone to allergic reaction. This often whittles their choice to a single option, providing manufacturers no incentive to compete on price.

Examine any graph of rate hikes over the years, and you’ll see all three firms raising prices in seeming choreography. When one goes up, the others briskly follow.

“Those charts don’t lie,” says Smith-Holt. “Those three companies simultaneously raise their prices in lockstep.” Last fall, former Minnesota Attorney General Lori Swanson filed suit, charging them with “deceptive, misleading, and misrepresentative” pricing.

Yet Big Pharma isn’t the only Goliath feasting on the ill. Insurers are muscling in on its territory.

Your insurance company employs something called a pharmacy benefits manager. It’s charged with negotiating prices with drugmakers, and it wields a mighty sword. If insulin firms offer insufficient discounts, rebates, and fees, they face the threat of lost sales when insurers drop their wares from coverage.

Put in gangland terms, it’s as if the original extortionist is now being extorted by a meaner crime family.

Nicolas Kressmann, a spokesman for Sanofi, says his company’s price to insurers has actually fallen by 25 percent since 2012. These savings are ostensibly passed on to patients. At least that’s the claim. The money trail says otherwise.

Since prices keep levitating—along with premiums and deductibles, which have quadrupled in the past decade—all that coin appears to be landing in the pockets of benefit managers and giants like Minnetonka’s UnitedHealth, the nation’s largest health insurer. Its profits for the first quarter of this year: $3.5 billion.

Diabetics are not only left to fund this battle. They’re paying with their health.

When insulin-makers won’t bow, insurers drop coverage and force patients to switch brands. They know they’re defying doctors’ orders, leaving their customers sickly from medicine that doesn’t work, or broke from paying out-of-pocket for insulin that does.

Patients can appeal, but it’s a gauntlet of torment, seemingly designed to bring surrender. Abigail Hansmeyer is a New Brighton mom with Type 1. She describes months on the phone—aided by calls from nurses, letters from doctors—hoping to find some remnant of heart in an industry not known for its mercy.

All this leaves Minnesotans to take matters into their own hands. They’re organizing caravans and bus trips to Canada, a country that declines to play host to this parasitic frenzy.

Minneapolis mom Kristen Hoatson has an 11-year-old with Type 1. On a recent trip to Ontario, she paid less than $300 for a three-month supply, no prescription required. The retail price in America: $4,000.

In the stark relief of dollars and cents, it’s the difference between a nation that cares for its afflicted, and one that does not.

The misery index

Diane Heidt is a retired customer service rep living in Eden Prairie. If you can call this living.

The 64-year-old was diagnosed with Type 1 at age 5. Though insured, her out-of-pocket costs run $600 every month and a half, leaving her a choice between eating and breathing.

“Do I buy groceries?” she asks. “Or do I buy insulin to keep myself alive? We hardly ever go out to eat, to a movie, whatever. It’s depressing. I’m pretty much stuck here, looking out my window.”

Deb Souther knows the ravages of Type 1. Her eyesight is going. She can’t feel her feet and struggles to walk, forcing her to retire from her job as a preschool teacher when she kept tripping over the kids. Hospitalization arrives multiple times each year. Her insurer does its best to stoke her agony.

Insulin costs her $700 a month. So when Souther’s insurer dropped coverage for the brand that worked, the St. Paul Midway resident couldn’t afford to pay hundreds more out-of-pocket.

As she appealed, the company forced her to spend three months trying another brand. “I was quite sick because that insulin just didn’t work for me,” she says. “I was constantly fighting the insurance company.”

The van she drives is “beat up and dented and rusted. It always breaks down.” So she recently hitched a ride to Ontario, where two months of insulin cost $209. The American retail price: $2,588.

“Our country is one of the wealthiest in the world,” Souther says, “and this is still happening.”

That’s due in part to another enemy equal to Big Pharma and insurers. It’s called the Republican Party, a virtuoso in blocking any reform. Instead of helping the infirm, it’s on the attack.

Take the Affordable Care Act—aka Obamacare—a godsend for diabetics. It bars insurers from excluding coverage for preexisting conditions. It allows kids to stay on their parents’ insurance until age 26, giving them a running start at affording insulin on their own. It also expanded Medicaid coverage for hundreds of thousands of people too poor to buy medicine.

But as a point of pride, congressional Republicans have voted no fewer than 60 times to repeal the law. Conservative lawsuits wend their way through the courts, hoping to get Obamacare declared unconstitutional. With the judiciary increasingly stacked with Donald Trump appointees, diabetics’ life preserver now rests on perilous ice.

The GOP’s rationale is part ideological, the belief that untethered capitalism lifts all boats. But it also rises from a meaner wisdom, one that says misfortune—at least for the little people—is a byproduct of moral failing or an aversion to hard work. Even if said misfortune was delivered in preschool.

Then there’s the mother’s milk of politics: cash. Pharma is America’s most profitable industry, allowing it to spend more than any other on lobbying, campaign contributions, and the untraceable loot funneled to interest groups. Or as Jimmy Carter recently called it, the “unlimited political bribery” that’s created “a complete subversion of our political system as a payoff to major contributors.”

The broke and the sick cannot afford to buy equal attention.

Though Trump has prattled loudly about reining in drug prices, his actions betray him. Enter Alex Azar, Trump’s appointee as secretary of Health and Human Services, the man charged with overseeing drug companies. As the former president of Eli Lilly’s U.S. division, Azar tripled the price of insulin.

Asks an incredulous Nystrom: “He’s the one tasked with lowering prescription drug costs?”

Then there’s the U.S. Senate’s point man on medical reform, Sen. Rick Scott (R-Florida). He’s a former CEO of Columbia/HCA, which owned 340 hospitals. Under Scott’s reign, the company committed “the largest health-care fraud case in U.S. history,” as the Justice Department put it.

Columbia swindled Medicare and Medicaid by falsifying records and billing for unnecessary tests. It ended up paying $1.7 billion in fines, damages, and penalties.

The hunt to say alive

Erin Little is intimate with life before Obamacare. In her early 20s, she worked on health tech startups, at times paying up to $4,000 a month to battle Type 1.

Little rationed and bought leftover insulin from the families of the dead, a “kind of online black market of sorts.” The incessant hunt to stay alive left her haggard and depressed. “It was horrible. It’s the overwhelming feeling of being extremely, extremely stressed. I more or less decided I’m done with this.”

So she joined the ranks of the medical refugees, those fleeing American avarice for more compassionate lands. For six years Little called India home, where insulin runs one-tenth the U.S. price. She now lives in Hong Kong, where subsidized medicine means paying nothing. Foreign shores have returned her to health.

Julius Hayes also knows the import of Obamacare. Type 1 runs through his family. The Minneapolis music video director was spending as much as $540 a week on insulin, so he’d go without for months at a time.

Hayes was working long hours. He could feel his body breaking down.

“When you don’t take it, it just makes you sick. My vision was blurry. You just randomly fall asleep. You just can’t get up.”

He endured multiple hospitalizations. Two years after he was diagnosed, his life was likely saved when he qualified for Medicaid.

Others find no such luck. Michele Holcomb’s daughter is a grad student at Montana State. Samantha Holcomb works at Wendy’s, her wages nowhere close to covering insurance, much less a $1,200-a-month insulin bill.

She found temporary reprieve by buying from an acquaintance prescribed more than he needs. Then the man went AWOL. She too has been hospitalized multiple times, once after falling unconscious at work.

Michele can only watch from afar as her daughter struggles. She lives in Ramsey, in the suburban reaches north of Minneapolis. Her husband is disabled and “our income is really low,” Michele says. There’s nothing left to ship westward for her daughter’s rescue.

Insurrectionists at the door

Few expect Congress to help. Any remedy must have the blessing of Senate Majority Leader Mitch McConnell (R-Kentucky), whose voting record is a faultless mirror of corporate interests.

Insurers and drugmakers have piped $3.7 million his way. Thus far, it’s purchased impregnable armor.

Even Obamacare did little to stem prices. When it became law in 2010, Democrats were just as wary of stepping on Goliath’s feet. So they simply threw money at soaring costs. Think of it as solving bank robberies by reloading vaults, rather than arresting the suspects.

This leaves any help to come from the states. Small-town legislators don’t have the luxury of barricading themselves behind yes-men, scripted town hall meetings, and prepared statements. They have no choice but to face the suffering that thrives from their neglect.

So the Minnesota Legislature is finally responding.

This year saw an outbreak of battle plans. They would force pharmacy benefit managers to disclose kickbacks, and return any savings to patients. They would make insulin co-pays mandatory from the opening bell, instead of forcing diabetics to burn through thousands in deductibles before coverage begins.

Even rank-and-file Republicans got in on the act. Sen. Julie Rosen (R-Vernon Center) is pushing a bill that would require drugmakers to alert the state 30 days before price hikes, along with an explanation for why they’re needed. The idea is to make them publicly justify what they cannot, the shame presumably bridling their lesser instincts. Failure to do so would mean $10,000-a-day fines.

But if Washington has Mitch McConnell, Minnesota has his Mini-Me, Senate Majority Leader Paul Gazelka, a Nisswa insurance agent. He too has a voting record that spoons with corporate interests. And he tends to see diabetics and groups like Minnesota #insulin4all not as despairing constituents, but as fronts for the DFL.

“Yes, I’m a Democrat,” admits Nystrom. “Shocker. I’d like to stay alive. Most of us with diabetes are Democrats, because we’re just trying to stay alive. Senator Gazelka puts profits over people, and people are going to die in Minnesota because of him.”

Take the Alec Smith Emergency Insulin bill, which would provide 90-day supplies for the broke and desperate, to be funded by fees on manufacturers. Alec’s mom, Nicole Smith-Holt, believes it was ransacked by pharma lobbyists who swarmed St. Paul.

Legislators aren’t assumed to be experts in all. So Republicans in particular rely on corporate lobbyists to relay the nuances. They had a compelling tale to tell.

Lobbyists noted insulin-makers’ patient assistance and coupon programs. Eli Lilly’s plan to release a new half-price brand. And Novo Nordisk’s “Walmart insulin,” as it’s known, which sells for $25 a vial. Spokesman Ken Inchausti estimates it’s used by 500,000 Americans.

Taking those examples at face value, one could believe the fine people of pharma are doing all they can to allay the pain. But lobbyists were peddling “a lot of half-truths to our senators,” counters Smith-Holt.

The programs and coupons are “very difficult to get, with very specific qualifications,” says Souther. Eli Lilly’s half-price drug will still comes with a 400 percent markup over the Canadian rate. And many diabetics note that Walmart insulin is built from pre-’90s science, unstable and leaving them sick.

Republicans blocked the Alec Smith act, preferring it be funded by charities and voluntary donations from pharma, along with millions from the state. Diabetics were defeated again.

“Why would we not have the manufacturers included in the solution, when they created the problem?” asks Nystrom. “Why would we have the good citizens pay for emergency insulin, which only encourages these manufacturers to keep raising those prices?”

If Republicans balk at nicking pharma for something as basic as emergency aid, they’re sure to recoil at Lakeville Sen. Matt Little’s cure, an idea tested and true across the industrialized world. He wants Minnesota to regulate prices at every stage, from insurer to pharmacy.

Minnetonka mom Sara Ginsburg can only imagine such a world. She has Type 1, as does her son. But Josh Ginsburg recently aged out of his parents’ insurance. A job selling cars will inevitably fall short of funding his insulin, Sara is certain. “I don’t want him to have this burden his whole life.”

On a recent trip to Ontario, she paid $30 for “a little tiny vial” that runs $340 back home. “When we were in Canada, it was like gold was handed to us.”

Senator Little admits his plan is “drastic.” It requires his colleagues to choose between the thickness of CEO wallets and the lives of countless Minnesotans. For the past 20 years, a majority have stood with the wallets.

Yet there’s a growing recognition that the gluttony has turned lethal. Woe to the politician who continues to defend the defenseless.

So Little will keep shoving. It’s time, he believes, “to do the right thing.”