US pharmaceutical giant Eli Lilly announced Wednesday it would cut the cost of its insulin by 70 percent, with President Joe Biden calling on others to follow suit to tackle soaring drug prices.

Manufacturers have ratcheted up insulin prices in recent years, hitting millions of Americans living with diabetes -- and drawing sharp political criticism.

"Insulin costs less than $10 to make, but Americans are sometimes forced to pay over $300 for it. It's flat wrong," Biden said in a statement. He hailed Eli Lilly's price cut as "huge news."

"It's time for other manufacturers to follow," Biden added.

Indianapolis-based Lilly announced a series of steps to rein in prices of the life-saving drug, such as capping out-of-pocket costs at $35 per month for people with insurance.

"Lilly is taking these actions to make it easier to access Lilly insulin and help Americans who may have difficulty navigating a complex health care system," the drugmaker said in a statement.

While the $35 cap takes effect immediately, other measures will be implemented in the course of 2023.

A centerpiece is the 70 percent price drop in Humalog, Lilly's most commonly prescribed insulin.

The incidence of diabetes in the United States in adults has doubled over the last 20 years, afflicting 37.3 million people, according to the US Centers for Disease Control and Prevention.

Insulin prices have soared in the country, with the drug costing over eight times more than in 32 comparable high-income countries, a 2020 Rand Corporation study found.

But much of the bounty from lofty prices does not go to pharma firms. Instead, it is passed on to health insurers in the form of rebates. As a result, the financial hit from Lilly's decision could fall hardest on insurers.

The unaffordability of insulin -- particularly for uninsured Americans -- has become a rallying cry for critics of Big Pharma.

- Self-rationing insulin -

The cost of a five-pack of Humalog is currently $530.40, although the out-of-pocket price to a user varies depending on one's insurance plan. Average monthly use varies by user, Eli Lilly says on its website.

Drug pricing in the United States is affected not only by the cost of producing and distributing the pharmaceutical, but also other players such as insurers and pharmacy benefit management companies.

Critics such as progressive Senator Bernie Sanders have blasted the industry as emblematic of "unacceptable corporate greed."

"At a time when Eli Lilly made over $7 billion in profits last year, public pressure forced them to reduce the price of insulin by 70%," Sanders said on Twitter after the price-cut announcement.

"Sanofi and Novo Nordisk must do the same," he added, referring to two other companies which along with Lilly dominate the insulin market.

Both Sanofi and Novo Nordisk released statements to AFP pointing to programs to help make insulin more affordable, including to uninsured users. But neither company commented directly on whether they would match the Lilly plan.

A survey by nonprofit T1International showed that one in four respondents living with diabetes reported rationing their insulin because of the financial strain.

The Inflation Reduction Act, signed into law last year by Biden, capped insulin prices for Medicare recipients at $35 per month, but people with private insurance and the uninsured were left out.

Biden, in his State of the Union Address, called on lawmakers to rein in Big Pharma and "finish the job this time" by instituting a national cap on insulin costs.

In the company's statement, Eli Lilly Chief Executive David Ricks urged rival producers to join the effort.

"We know that 7 out of 10 Americans don't use Lilly insulin. We are calling on policymakers, employers and others to join us in making insulin more affordable," said Ricks.

The company's statement referred uninsured consumers to an insulin affordability website, saying they could "receive Lilly insulins for $35 per month."

Lilly shares closed up about one percent at $314.17.

Because most of the price cut will affect rebates from Lilly to insurers rather than revenues to the drugmaker itself, Wednesday's announcement will leave "Lilly less affected than the price cuts would suggest," said Morningstar analyst Damien Conover in a note.

The cut should not "significantly disrupt" Lilly sales, while insurers "will need to take the hit" from Washington's fixation on runaway prices, he added.

"Addressing the pricing concerns around insulin should help Lilly maintain pricing power with new innovative drugs," said Conover.