Insulin Makers, Insurers Clash as Senate Looks to Lower Costs

Key senators are grappling with the best way to lower the cost of insulin for Americans, including a potential cap on what people with private insurance pay out of pocket for the medication and proposals to improve generic competition.

Heads of the three major drug companies that make insulin—Novo Nordisk Inc., Eli Lilly & Co., and Sanofi—and leaders from the three largest pharmaceutical benefit managers—CVS Health Corp., Express Scripts, and OptumRx—testified before a Senate committee Wednesday.

Manufacturers have characterized PBMs, which manage prescription drug coverage for health plans and others, as the main culprit behind rising drug costs, pointing specifically to rebates and fees PBMs collect from manufacturers.

But PBMs argue they work to make insulin more affordable for patients, and that the most effective way to lower prices is to encourage competition in the insulin marketplace.

‘Only One Part’

Committee leaders say they want to take aim at both what people pay at the pharmacy for insulin and market conditions that might raise costs for the insulin-dependent and the government, a major payer in the health industry.

“Lowering the cost of insulin is only one part of what we must accomplish,” Sen. Bernie Sanders (I-Vt.) said.

There’s bipartisan support for proposals to extend the Inflation Reduction Act’s (Public Law 117-169) $35 per month Medicare limit on insulin to patients covered by private plans.

But the two top members of the Senate health committee—Sanders and Sen. Bill Cassidy (R-La.)—have warned that such a proposal would need to be paid for, and that the move should be accompanied by other actions to address PBMs and additional areas that they say affect what Americans ultimately pay for prescriptions.

“You can have a cap on it, but that doesn’t mean its cheap,” Sanders said in an interview. “Somebody’s picking up the bill.”

Sanders has proposed legislation setting the maximum price for insulin—what drugmakers can charge—at $20 per vial.

That approach lacks support from Republicans, however.

“You could make every drug cheap right now but you’d have no more innovation. Whatever we do for policy has to make drugs affordable for the current generation, but it has to keep innovation possible and incentivized for the next generation,” Cassidy, a physician, said in an interview.

Bernie Sanders (I-Vt.), chairman of the Senate Health, Education, Labor, and Pensions Committee, holds a vial of insulin medicine during a hearing on Wednesday.

Photographer: Al Drago/Bloomberg via Getty Images

Rescheduled Markup

The Senate Health, Education, Labor, and Pensions Committee will hold a rescheduled markup Thursday on what Sanders called a “modest” package of additional drug pricing bills, including proposals to limit certain behaviors by drug manufacturers like using the Food and Drug Administration’s citizen petition process to limit competition and taking advantage of rare disease drug exclusivity to curb the entry of additional treatments to the market.

Sanders said in an interview before Wednesday’s hearing that a final drug pricing package will likely include components of various legislation under consideration. Committees in both chambers have considered other bills, including one that advanced out of Senate Commerce that would improve Federal Trade Commission oversight of PBMs.

The HELP committee has jurisdiction over an insulin cap bill, but hasn’t set a markup and Sanders hasn’t explicitly endorsed a cap approach.

Sens. Susan Collins (R-Maine) and Jeanne Shaheen (D-N.H.) have brought up a bill to cap what most people with private health insurance pay for insulin at $35 per month or 25% of the list price. The legislation would also require pharmaceutical benefit managers to pass rebates and other discounts negotiated with drugmakers to health plans, as well as extend a helping hand for companies to produce generic insulin.

Collins described the approach as “the most comprehensive.”

Sens. Raphael Warnock (D-Ga.) and John Kennedy (R-La.) have their own $35-per-month insulin cap bill that could also extend coverage to the uninsured. Warnock said Wednesday he’s supportive of including PBM changes in any insulin bill.

Industry Weighs In

The pharmaceutical industry has argued that an insulin price cap wouldn’t address the root cause of high drug prices.

“A cap on insulin reflects one approach for one class of medicines. It’s a band-aid on a broken system,” Sarah Ryan, a spokesperson for the Pharmaceutical Research and Manufacturers of America, said in an email.

“To improve affordability for patients, we need to hold PBMs and insurers accountable for how they drive up costs for patients,” Ryan added.

Both Eli Lilly and Sanofi have announced plans to cap costs for some insulin products at $35 per month.

But Sanofi’s CEO, Paul Hudson, told senators Wednesday that each time the company has introduced lower-cost medicines, they have “received very limited coverage” by PBMs and health plans.

The US drug pricing system is “largely driven by the financial structure that links rebates and fees to the list price,” Hudson said, adding that PBMs prefer to cover products with higher list prices.

Adam Kautzner, president of Express Scripts, said in the hearing that the argument that rebates are a “mechanism for increasing list prices and thus increasing costs for patients” is “false.”

“More than 95% of our rebates are passed to Express Scripts clients, which benefits Americans in the form of lower premiums, reduced out-of-pocket costs, and expanded coverage,” Kautzner said.

Heather Cianfrocco, CEO of OptumRx, said the company supports an expanded cap on insulin in the commercial market, arguing it “would close the gap for Americans who still cannot consistently afford insulin.”

She added, though, that “such a cap must preserve the ability of PBMs to negotiate or lower costs of insulin for other customers.”