The Investor's Guide to Disrupting Drugmakers Insulin — the substance millions of diabetics in the U.S. need every day to stay healthy and alive — should be cheap. The patent on its most basic form expired long ago, so you'd expect generic drugmakers to rush in and fill the gap. Instead, a powerful trio of pharmaceutical companies has kept tweaking and improving insulin to keep it under patent and more profitable, even as insurers and pharmacy benefit managers push them to keep prices down. That tug of war has led to a grim paradox: Overall revenue from insulin sales is down for its manufacturers, but the list price of insulin — which doesn't factor in insurers' often sizable discounts — keeps rising. In 1996, a vial of Humalog insulin cost $21. Today, it's $324, a 1,400% jump, even though manufacturing costs aren't much higher than they've ever been. Insurance absorbs or negotiates away most of that increased expense, but for people without it, or people whose insurance doesn't cover the kind of insulin they need, rising costs can be a killer. Literally. In Oakland, California, a group of amateur scientists are responding to this problem by trying to produce their own insulin on the cheap for anyone who needs it. Healthcare providers are banding together to try to produce lifesaving drugs when the market won't. And Presidential candidate Elizabeth Warren has proposed letting the government do the same thing. But as Fool Brian Orelli explains, investors in drugmakers need to worry less about these potential rivals — and more about competition from a more conventional angle. Read the rest to learn what drug investors should watch out for.
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