A Questionable Conflict of Interest

This spring closes UChicago’s first full year with Provost Katherine Baicker, who brings an impressive résumé to her new role. However, one aspect of her career has received little scrutiny: since 2011, she has served on the Board of Directors of pharmaceutical giant Eli Lilly, one of America’s most notorious insulin profiteers. Baicker’s role overseeing both Eli Lilly’s insulin price gouging and the company’s shadowy political dealings merit attention and discussion from the University community. 

Eli Lilly, along with Sanofi and Novo Nordisk—the “Big Three” insulin companies—together control 90 percent of the insulin market in the U.S. and 99 percent of the market worldwide. They have incredible pricing power because many people who rely on insulin cannot safely use less of it in response to a price hike; their lives are at stake. Insulin costs less than six dollars per vial to produce—yet in 2011 (when Baicker began her tenure on Eli Lilly’s board), Eli Lilly charged a list price of $122.60 for one 100 units per milliliter vial of Humalog, their flagship insulin. By 2019, the price of a vial had ballooned to $275. These soaring prices have had dire consequences: more than one million Americans with diabetes are forced to ration insulin due to cost, risking life-threatening complications. Closer to the University, almost one in five residents of Chicago’s South Side are diabetic. Insulin access is a matter of life and death for millions—a fact that Eli Lilly has ruthlessly exploited.

Baicker does not singlehandedly set insulin prices. However, the Board elects the company’s executives, including CEO David Ricks, who concurrently serves as Chair of the Board. Baicker’s responsibilities as a Board member include “providing general oversight of the business” and “approving corporate strategy.” Damningly, the Board itself admitted in 2019 that it directly “review[s] and discuss[es]” Eli Lilly’s insulin pricing strategy with company executives. Furthermore, during Baicker’s tenure, the Board has signed off on a combined $38 billion in stock buybacks and shareholder dividends even as the company astronomically raised its insulin prices. Put simply, under Baicker’s oversight, Eli Lilly has been quite literally making a killing. And Baicker has shared amply in these profits: each year, she earns a total retainer of $133,000, plus $200,000 worth of company stock. This stock-based compensation incentivizes Baicker and the Board to take actions that grow their personal portfolios: per her latest SEC filing, Baicker owns $13.5 million worth of stock in Eli Lilly.

Baicker’s role at Eli Lilly presents ethical quandaries for us as a community. As Provost, she oversees and manages the University’s budget, including that of institutional efforts to increase access to diabetes care on the South Side. The Office of the Provost also holds ultimate, broad oversight of the University’s research, including the Center for Chronic Disease Research and Policy, which aims to influence public policy related to the financing and adoption of diabetes treatments. It is entirely possible that one of the University initiatives under Baicker’s purview could produce scholarship that threatens Eli Lilly’s bottom line or public image. Baicker should publicly address her role in Eli Lilly’s insulin price hikes, and—given her substantial financial stake in Eli Lilly’s continued profitability—should clarify how she will manage potential conflicts of interest. 

A much broader conflict of interest stems from how Baicker, in partnership with the rest of the Board, exercises oversight of Eli Lilly’s “political expenditures and lobbying activities.” Through its direct corporate expenditures, its affiliated Political Action Committee, its charitable foundation, and its membership in trade organizations such as Pharmaceutical Research and Manufacturers of America (PhRMA), Eli Lilly has poured tens of millions of dollars into campaign donations and lobbying efforts against legislation that would bring down the price of prescription drugs for ordinary Americans. In the 2022 election cycle, Eli Lilly spent $7.5 million on lobbying and $1.3 million on campaign donations, and PhRMA spent over $30 million on lobbying (Baicker’s Board colleague and Eli Lilly CEO David Ricks sits on PhRMA’s own board). The ostensibly charitable Eli Lilly Endowment has used its “community development” fund to quietly funnel millions of dollars to think tanks and research institutes who lobby against any government regulation of insulin prices. 

These activities reveal inconsistencies behind many of Eli Lilly’s public statements. For example, in March 2023 the company announced a $35 per month cap on the out-of-pocket cost of its insulin. However, the impetus for this move was not altruism but rather government regulation through the Inflation Reduction Act, which mandates a $35 out-of-pocket cap for Medicare beneficiaries, and implements new Medicaid rules that would have forced Eli Lilly to pay up to $430 million in charges had they kept their prices inflated. These regulations have broad public approval. Despite this, Eli Lilly, through PhRMA, is currently suing the federal government to prevent the law’s drug pricing regulations from being implemented. A more sinister example: after the January 6 attack on the US Capitol, Eli Lilly announced that it would cease donating to Members of Congress who had voted to overturn the election, saying that these Members promoted “sedition”. Less than a year later, Eli Lilly abruptly reversed course and now continues to donate tens of thousands of dollars to the lawmakers it had condemned as threatening democracy. Eli Lilly’s Directors, including our Provost, have apparently decided that the potential loss of our democratic system of government is a small price to pay for a boost to their quarterly earnings.

This ought to spur the University community into debate and discussion. Is it right that the University’s biological research and policy centers are now overseen by someone who has spent a decade profiteering from lifesaving medications? Is it right that we are represented at the University’s democracy-related events by someone who bemoans election deniers in public but still slips them money in private? Through polite but firm questioning at the public events where she represents the University—represents us—students should press Provost Baicker to clarify her roles’ vastly diverging values and aims. This tension between public service and private profit, democracy and plutocracy, arguably constitutes the central theme of the University of Chicago’s history. But despite the University’s past, it is the choices we make and the paths we take right now that will shape the University’s future—and our own.

Rand Perry is a fourth-year MPP student in the Harris School of Public Policy