Eli Lilly’s Insulin Cost Cut Bolsters Supporters of Price Cap

Eli Lilly’s decision to cut the price of its insulin products has emboldened supporters who want to create a federal cap on prices of the diabetes medicine.

Senators on both sides of the aisle this week said the move by Eli Lilly and Co. to reduce the price of its most commonly prescribed insulins by 70% and cap what patients pay at $35 per month only reiterates the need for a federal law capping all insulin at $35 per month.

“This was an affirmation that this is the right way to go,” said Ron Wyden (D-Ore.), chairman of the Senate Finance Committee. Senators are working to “redraft” legislation to cap insulin prices that fell just three votes shy of getting through the Senate last year, in the hopes of putting it to a floor vote this year.

More than 37 million Americans have diabetes, and many of them manage the condition with insulin. The cost of insulin in the US varies depending on a person’s insurance coverage and the product the individual buys. More than half of people with employer-sponsored insurance spent over $35 out-of-pocket on average for a 30-day supply of insulin in 2019 and 2020, according to data from the Health Care Cost Institute; about 5% spent more than $200. That so many people need the medicine has made capping costs a big campaign issue, especially for Democrats.

Taylor Jane Stimmler, who’s had type 1 diabetes since she was a teenager, displays her insulin on March 2, 2023 in New York City. Drugmaker Eli Lilly will cap the out-of-pocket cost of its insulin at $35 a month.

Spencer Platt/Getty Images

The three major manufacturers of insulin—Eli Lilly, France’s Sanofi, and Danish Novo Nordisk A/S—have long pointed to pressure from insurers and pharmaceutical middlemen as the cause of rising list prices for their products.

Lawmakers for years have said insulin prices don’t reflect innovation by companies or the cost of manufacturing the product, prompting interest in laws that fix what people pay at a certain price.

Senate Legislation

Eli Lilly’s CEO announced last week it would cut the price of Humalog, its most commonly prescribed insulin, by 70% effective the last quarter of this year. It would also reduce the list price of Lispro, another insulin product, to $25 per vial.

Read More: Heeding Biden, Lilly Caps Out-of-Pocket Insulin Costs at $35

The company advertised its action as making its medicines more affordable. Some analysts, though, say the move will actually net Eli Lilly more than $500 million by avoiding hefty rebates it would have otherwise owed to states in Medicaid rebates, due to the fact that the company raised the price of its drugs faster than inflation

But Sen. Susan Collins (R-Maine) said Eli Lilly’s decision “shows that the market has reacted to the prospect of legislation.” Collins said she and Sen. Jeanne Shaheen (D-N.H.) are “redrafting” their insulin legislation, which seeks to cap insulin costs for people with private insurance at $35 per month and change rules for drug rebates aimed at lowering the list price of the medicine. They hope to bring to the Senate floor this year, she said, without offering specifics.

Last year, the Democrats’ Inflation Reduction Act (Public Law 117-169) package included a $35-per-month cap on insulin costs for people on Medicare. Seven Republicans voted with all 50 Democrats to extend that cap to private plans, falling just three votes short of becoming law.

‘Muddy and Messy’

Whether the legislation has enough supporters to get through this Congress remains to be seen. Prospects for the bill in the House are slim because a key Republican lawmaker has opposed capping insulin prices.

The cap is akin to “socialist price-schemes” that could raise Medicare premiums, Rep. Cathy McMorris Rodgers (R-Wash.), chair of the House Energy and Commerce Committee, said in February.

Sen. Mike Crapo (R-Idaho) said he didn’t support the larger drug-pricing legislation Democrats passed last Congress to begin with, and doesn’t support expanding it.

Sen. Chuck Grassley (R-Iowa), who didn’t vote for extending the insulin price cap but has backed the Collins-Shaheen bill, noted the Eli Lilly decision doesn’t end the uncertainty around pricing that many insulin-dependent people face going to the pharmacy.

“It’s ridiculous: from several hundred dollars to $25, to some instances giving it away, it’s just muddy and messy that you don’t get a clear understanding of it,” Grassley said. “It’s still going to bring Congress’s attention to it,” he said of the differences in prices people pay.

Sen. Josh Hawley (Mo.), one of the Republicans who backed extending the cap to private plans, said he’s still a supporter. He said Eli Lilly’s shift shows the threat of federal legislation is putting pressure on drugmakers and Congress should keep pursuing it.

“We ought to take that to the bank and make it a law,” Hawley said.