In 1937, early in Eli Lilly & Company’s corporate history, Josiah Kirby Lilly Sr., the son of the founder of the company, pledged stock options to a private foundation to support a lasting philanthropic legacy to shape Indiana’s civic society.
“Our community development grantmaking focuses primarily on enhancing the quality of life in Indianapolis and Indiana,” the Lilly Endowment declares on its website. “We grant funds for human and social needs, central-city and neighborhood revitalization, low- and moderate-income housing, and arts and culture in Indianapolis.”
But many large grants distributed by the Lilly Endowment, led in part by former Eli Lilly executives and still financed by corporate stock options, are given far from Indiana to think tanks that work to shield corporations from taxation or government regulation. The foundation has provided millions of dollars over the years to libertarian groups that lobby against any price controls on insulin, a key product for Eli Lilly.
The Federalist Society, for example, has received over $1.5 million from the charitable arm over the last decade and is listed under “community development” grantees of the Lilly Endowment. The Washington, D.C.-based group is a professional society for conservative attorneys, with an eye toward pro-business ideological positions.
The Federalist Society funds included a $150,000 grant last year, at the same time that the group was sharply criticizing a new Minnesota law that forces manufacturers to provide free or affordable insulin to low-income residents. The law “[inflicts] an injustice upon companies that are regularly demonized in the media,” an attorney for the Goldwater Institute writes on the Federalist Society’s website.
The Lilly Endowment describes itself as independent and “a separate entity from the company, with a distinct governing board, staff and location.” The board, however, includes Daniel P. Carmichael, who previously led Eli Lilly’s lobbying operations and served as a spokesperson for the company. Eli Lilly II, the great-grandson of the founder, is on the Lilly Endowment board. And Eli Lilly the corporation has touted joint philanthropic efforts with Lilly Endowment in the past.
The Lilly Endowment is also the largest shareholder of Eli Lilly, with 104,161,053 shares — an ownership stake worth approximately $31 billion.
“Lilly Endowment for many years has made modest general operating support grants to the four organizations you listed, each of which conducts public policy research and educational programs on many important issues relevant to our work in community development,” wrote Judy Cebula, a spokesperson for the Lilly Endowment, in a statement. “These grants are not restricted or directed to specific issues, and as a matter of practice we do not share publicly our discussions with potential or actual grantees.”
Over the last 80 years, the endowment has provided $10 billion to over 10,000 charitable organizations. Many of the recent grant recipients include traditional service-oriented groups, such as the Career Learning & Employment Center for Veterans in Indianapolis and the American Red Cross.
Other recipients of Lilly Endowment “community development” funds, however, have advocated on issues central to Eli Lilly’s bottom line.
Sally C. Pipes — an outspoken voice on health care issues who campaigns against single-payer and other government interventions into the health care market — is heavily funded by the Lilly Endowment, which has provided $175,000 per year in grants to her nonprofit, the Pacific Research Institute for Public Policy, since 2015.
Pipes has authored multiple opinion columns assailing any effort to cap the monthly copayment price of insulin at $35. The proposal was part of the failed Build Back Better legislation debated last year. Last weekend, Senate Republicans defeated an amendment to attach the price cap for individuals with private health insurance to the Inflation Reduction Act before the overall bill reached passage out of the chamber. The legislation only curtails costs for Medicare Part D prescription drug beneficiaries.
The Pacific Research Institute, which has offices in Pasadena and San Francisco, has slammed a California initiative to develop a government-supported generic manufacturer of insulin to compete with for-profit drugmakers. “The state would be better served if the governor tabled this idea,” wrote a senior fellow at the Pacific Research Institute in a column published in the San Francisco Chronicle.
The Lilly Endowment is also a longtime supporter of the American Enterprise Institute, a prominent think tank in Washington that opposes most health care price regulations and supports corporate tax cuts.
Last month, prior to the release of the Inflation Reduction Act negotiations, a bipartisan group of lawmakers introduced the Improving Needed Safeguards for Users of Lifesaving Insulin Now, or INSULIN, Act. The bill, like the defeated amendment, would lower insulin out-of-pocket expenses by ensuring that insurance plans waive deductibles and provide cost-saving programs to patients so that insulin never costs more than $35 per month or 25 percent of list price.
In response, AEI swiftly condemned the proposal, arguing that the INSULIN Act “would likely undermine competition and raise costs more broadly.”
Eli Lilly is one of the three companies that control the insulin industry, along with the French company Sanofi and Novo Nordisk, which is based in Denmark. Last year, Eli Lilly collected over $2.4 billion in revenue from its insulin products, including the brand Humalog, with roughly $1.3 billion of that from U.S.-based sales.
“One vial of Humalog (insulin lispro), which used to cost $21 in 1999, cost $332 in 2019, reflecting a price increase of more than 1,000%. In contrast, insulin prices in other developed countries, including neighboring Canada, have stayed the same,” wrote S. Vincent Rajkumar in the journal of the Mayo Clinic in 2020.
The political demands to address the soaring costs of insulin have grown as the price paid by patients and the government has steadily increased. The out-of-pocket spending by Medicare beneficiaries for insulin products increased from $236 million to $1.03 billion between 2007 and 2020, according to figures compiled by the Kaiser Family Foundation.
Out-of-pocket costs for individuals with high-deductible plans can require patients to pay as much as $8,000. The Minnesota law that makes insulin more accessible to low-income residents was passed in honor of Alec Smith, a 26-year-old diabetes patient who died because he rationed his insulin after struggling to pay the $1,300 monthly costs.
Repealing the Minnesota law has been a focus of the pharmaceutical industry. The Pharmaceutical Research and Manufacturers of America, a drug lobby group that counts Eli Lilly as a member, is currently in federal appeals court attempting to overturn the law as unconstitutional. Eli Lilly, in response to the push in Congress to regulate the costs of insulin, has deployed lobbyists on a variety of cost-control proposals, disclosures show.
In the past, Eli Lilly and other drugmakers have blamed pharmacy benefit managers, which negotiate deals between pharmacies and insurance companies, for the high cost of insulin.
Update: August 11, 2022
This story was updated with a statement from the Lilly Endowment sent following publication.