Sanofi announced Thursday that it is cutting the price of its most-prescribed insulin drug, Lantus, by 78%, starting Jan. 1, 2024. The healthcare company follows in the steps of rivals Eli Lilly and Novo Nordisk, which have also lowered pricing.

The move follows passage of the Inflation Reduction Act, which requires out-of-pocket insulin costs to be capped at $35 per month for Medicare Part D beneficiaries, as reported in President Joe Biden’s remarks at the White House this week.

The act also requires that drug companies raising prices faster than inflation must pay that difference back to Medicare. Of that, Biden noted that “last quarter, drug companies hiked the prices for 27 drugs that are on the market above the new limit. Now those manufacturers are going to have to pay the difference back to Medicare.”

The Senate’s one-page summary of the Inflation Reduction Act said the bill will allow Medicare to “negotiate for prescription drug prices and extend the expanded Affordable Care Act program for three years, through 2025.”

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Sanofi, Eli Lilly and Novo Nordisk

Sanofi, Eli Lilly and Novo Nordisk — the drug companies that produce the most insulin in the U.S. — have also been experiencing a decline in revenue in recent years and may not see insulin as a high-profit market anymore, according to CNN.

Eli Lilly announced its 70% insulin price reductions and expansion of its Insulin Value Program on March 1, as Deseret News reported. CEO David A. Ricks said that while the healthcare system provides access to life-sustaining drugs, “it still does not provide affordable insulin for everyone and that needs to change.” He said while the price reductions may take time to take place, capping out-of-pocket expenses at $35 for all insulin consumers would be effective immediately.

Two weeks after Eli Lilly’s announcement, The Wall Street Journal reported that Novo Nordisk intends to cut the price of several insulin drugs by up to 75%.

Sanofi announced its cut to the price of Lantus in a press release.

All three companies said they were driven by trying to reduce financial burden for their customers.

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Why is insulin so expensive?

Time said the reasons why the cost of insulin has been so high is complicated, due to its intricate drug pricing system which webs throughout different manufacturers. Chief advocacy officer for the American Diabetes Association Lisa Murdock told Time, “There is a lack of transparency,” which makes tracing the source of high pricing difficult.

Per Deseret News, “Insulin manufacturers have been accused of deliberately keeping the price high,” adding the accusation by others that “they change the molecules in their insulin product ‘just ever so slightly and re-patent them to extend patent protection,’ a practice called ‘evergreening.’”

Dr. Joel Lexchin, professor at the School of Health Policy and Management at York University, told the National Library of Medicine, “Typically, when you evergreen something, you are not looking at any significant therapeutic advantage. You are looking at a company’s economic advantage.”