APRIL 5, 2014

lt’s the most expensive thing I own, aside from my house. CATHERINE HAYLEY, whose diabetes was diagnosed when she was 9, describing the digital insulin pump that helps keep her alive. Credit Luke Sharrett for The New York Times
MEMPHIS — Catherine Hayley is saving up for an important purchase: an updated version of the tiny digital pump at her waist that delivers lifesaving insulin under her skin.

Such devices, which tailor insulin dosing more precisely to the body’s needs, have transformed the lives of people with Type 1 diabetes like Ms. Hayley. But as diabetics live longer, healthier lives and worries fade about dreaded complications like heart attacks, kidney failure, amputations and blindness, they have been replaced by another preoccupation: soaring treatment costs.

“It looks like a beeper,” said Ms. Hayley, a 36-year-old manager here for an environmental services company, referring to the vintage 2007 pump on the waistband of her jeans. “It’s made of plastic and runs on triple-A batteries, but it’s the most expensive thing I own, aside from my house.”

A new model, along with related treatment supplies, prices out at tens of thousands of dollars for this year and will cost her about $5,000, even with top-notch insurance. “It’s great,” Ms. Hayley said, “but it all adds up.”

Traditionally, insurers lost money by covering people with chronic illnesses, because they often ended up hospitalized with myriad complications as their diseases progressed. Today, the routine care costs of many chronic illnesses eclipse that of acute care because new treatments that keep patients well have become a multibillion-dollar business opportunity for device and drug makers and medical providers.

The high price of new treatments for diabetes, rheumatoid arthritis, colitis and other chronic diseases contribute mightily to the United States’ $2.7 trillion annual health care bill.

More than 1.5 million Americans have Type 1 diabetes and cannot survive without frequent insulin doses, so they are utterly dependent on a small number of producers of supplies and drugs, which have great leeway to set prices. (Patients with the far more common Type 2 diabetes — linked to obesity — still produce insulin and can improve with lifestyle changes and weight loss, or on oral medicines.)

That captive audience of Type 1 diabetics has spawned lines of high-priced gadgets and disposable accouterments, borrowing business models from technology companies like Apple: Each pump and monitor requires the separate purchase of an array of items that are often brand and model specific.

A steady stream of new models and updates often offer dubious improvement: colored pumps; talking, bilingual meters; sensors reporting minute-by-minute sugar readouts. Ms. Hayley’s new pump will cost $7,350 (she will pay $2,500 under the terms of her insurance). But she will also need to pay her part for supplies, including $100 monitor probes that must be replaced every week, disposable tubing that she must change every three days and 10 or so test strips every day.

That does not even include insulin, which has been produced with genetic engineering and protected by patents, so that a medicine that cost a few dollars when Ms. Hayley was a child now often sells for more than $200 a vial, meaning some patients must pay more than $4,000 a year. Other refinements have benefited a minority of patients but raised prices for all. There are no generics in the United States.

Cost to Treat One Woman's Diabetes 2014
Source: Catherine Hayley; Photographs by Luke Sharrett for The New York Times
Companies that produce the treatments say the higher costs reflect medical advances and the need to recoup money spent on research. But David Kliff, a financial analyst who is editor of Diabetic Investor, an independent newsletter on the industry, points out: “Diabetes

Those companies spend millions of dollars recruiting patients at health fairs, through physicians’ offices and with aggressive advertising — often urging them to get devices and treatments that are not necessary, doctors say. “They may be better in some abstract sense, but the clinical relevance is minor,” said Dr. Joel Zonszein, director of the Clinical Diabetes Center at Montefiore Medical Center.

“People don’t need a meter that talks to them,” he added. “There’s an incredible waste of money.”

“People don’t need a meter that talks to them. There’s an incredible waste of money.” DR. JOEL ZONSZEIN, director of the Clinical Diabetes Center at Montefiore Medical Center. Credit Karsten Moran for The New York Times

Even patients with insurance often feel squeezed by large out-of-pocket costs, and many describe holding old pumps together with duct tape, rationing their test strips and skimping on insulin. Dr. Jeoffry B. Gordon, a family practitioner in San Diego, said he had patients with failing kidneys and others who had ended up in emergency rooms because they could not afford their maintenance care.

“From a guy on the front lines, the improvements have been miraculous,” he said. “But the acquisition cost is very high, and the pricing dictates what treatment you get.”

Complication rates from diabetes in the United States are generally higher than in other developed countries. That is true even though the United States spends more per patient and per capita treating diabetes than elsewhere, said Ping Zhang, an economist at the Centers for Disease Control and Prevention.

The high costs are taking their toll on public coffers, since 62 percent of that treatment money comes from government insurers. The cumulative outlays for treating Type 1 and Type 2 diabetes reached nearly $200 billion in 2012, or about 7 percent of America’s health care bill.

Expenditures could well double by 2030, according to estimates by the C.D.C., in large part because the number of Americans found to have diabetes has been increasing more than 50 percent every 10 years. Most of the increase is attributable to Type 2 diabetes patients, whom manufacturers are encouraging to try insulin treatment and glucose monitoring, even though that is rarely medically required. Also, the Affordable Care Act requires health insurers to cover people with chronic disease, meaning they will have better access to treatments.

“This is not just a health care crisis,” said Mr. Kliff, the newsletter editor, who has Type 1 diabetes. “It’s an economic crisis as well.”

Maintaining Control

Catherine Hayley was born in 1977, the year before the first synthetic human insulin was made using new gene-splicing technology. Her diabetes was diagnosed when she was 9, about the time this new generation of genetically engineered insulin was brought to market. One of her earliest memories is practicing insulin injections on an orange.

The development of insulin therapy in the 1920s was one of the great medical triumphs of the 20th century, on a par with the discovery of antibiotics. Before then, Type 1 diabetics often died within a year and were on such restrictive diets that they sometimes succumbed to starvation.

Diabetes is an autoimmune disease in which the pancreas stops producing the hormone insulin. Without it, sugars build up in the blood, producing symptoms like blurry vision, exhaustion and frequent urination and leading to a severe accumulation of acids that can be rapidly fatal. Even when treated with insulin shots, moderately high sugar levels over the long term can damage the eyes, heart, kidneys and nerves. But if too much insulin is given, blood sugar can plummet, leading to unconsciousness and seizures. Because digestive enzymes degrade insulin, it cannot be swallowed, and must be injected.

THE BUSINESS OF ILLNESS The American Diabetes Association’s recent exposition in New York attracted all manner of vendors. Pictured: An appearance by an Ironman facsimile against an insurer’s backdrop. Credit Christopher Gregory for The New York Times

When Ms. Hayley’s diabetes was diagnosed, maintaining that balance involved testing a drop of blood on a paper strip that would change color to indicate — within a wide range — the patient’s glucose level. Patients would typically give themselves a shot of insulin morning and night in response to the results.

“What I ate was all very regimented, and it had to be at the same time each day,” she recalled. At school every day at 10 a.m., she pulled out a snack of a precisely weighed chunk of cheese and rice cakes.

The treatment tools were initially cheap: simple syringes and pig insulin, which is almost identical to that made by the human body. But that all changed after a landmark study in 1992 showed that patients did better if they maintained very tight control — keeping their blood sugar within a nearly normal range by checking it frequently and taking multiple insulin shots a day. Around the same time the business of American medicine was changing, too, with direct-to-consumer advertising, proprietary treatments and designer insulin in development.

When Ms. Hayley left Memphis for Colorado College in 1996, she was using a tiny meter through which she could get more precise measures of her blood sugar level, a penlike injector containing insulin with an adjustable dose, and human insulin made with gene-splicing technology. All were covered by patents.

A saleswoman for Medtronic demonstrating one of the company’s insulin pumps. Credit Christopher Gregory for The New York Times

She did not switch to a pump until 2006 when, after years of waiting tables and studying in graduate school, she got her first job with insurance benefits. “It controls my blood sugar better,” she said, on her way to a dinner that included sharing a once-forbidden fruit cobbler. “I’m really able to live how I want. However, the price has increased dramatically.”

The tiny squirts from her pump are delivered more precisely by patented systems with microchip sensors and Bluetooth capability, with technical support by company representatives in endocrinologists’ offices. When Ms. Hayley pricks her finger, it is with a customized lancet to go with a customized test strip that fits into a customized meter, which transmits the result wirelessly to her compatible insulin pump, which delivers the appropriate insulin dose. (There is not yet a one-device-does-all that automatically performs the pricking, measuring and dosing.)

While some components, like the meters, are low cost or even free for patients, their supplies are costly. Dr. Spencer Owades, a dentist in suburban Denver with Type 1 diabetes, said he was shocked to discover that his test strips — which cost just pennies to make — were priced at $1.50 apiece when he ran out and had to buy them at a pharmacy. He usually received them in the mail through his insurer and uses five to 10 a day.

“It’s a printer model,” he said, “where the printer is cheap, but they get you on the cartridges.” He added: “But if you have diabetes, they have you over a barrel.”

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