Insulin Costs Remain Top Target Beyond Biden’s Drug Price Cuts

A broad push by federal, state, and private sectors to lower insulin costs in the US is likely to persevere even as the Medicare drug price negotiation program faces legal resistance from the pharmaceutical industry.

Insulin’s cost has been at the top of federal and state government agendas as prices have risen alongside the number of Americans with diabetes. Over 37 million Americans have diabetes, according to the Centers for Disease Control and Prevention. And according to Yale, more than 7 million people need insulin daily.

One of the biggest moves to tackle insulin costs recently was from the Biden administration’s Inflation Reduction Act, which capped out-of-pocket costs at $35 per monthly prescription for Medicare enrollees. Meanwhile, 25 states and the District of Columbia have capped copayments for insulin in the $25-$100 range under state-regulated commercial health insurance plans, according to the American Diabetes Association.

In the world of costly drugs, insulin is “unique,” with price points “simultaneously being impacted by several different measures,” said Mariana Socal, assistant scientist at Johns Hopkins Bloomberg School of Public Health.

The Inflation Reduction Act, however, offers another avenue to drop insulin costs going forward. That’s the Medicare drug pricing negotiation program, a plan to set the price of 10 drugs identified by the administration that has drawn a spate of lawsuits from a pharmaceutical industry trying to block its implementation.

If the program can withstand the legal challenges, millions of Americans covered by private insurers may see major savings due to the unprecedented transparency it forces on drugmakers over pricing. Taken together, the program, the law’s cap for Medicare participants, and state efforts are on track to help lower insulin prices.

“There are many moving parts here. In addition to the negotiation of prices under Medicare in the list of 10 drugs, even if that gets set aside, there still is the $35 cap on out-of-pocket costs for Medicare recipients,” said Stephen Schondelmeyer, a professor at the University of Minnesota College of Pharmacy.

Insulin manufacturers have been feeling the squeeze, pledging to lower out-of-pocket costs on their products. Even without price negotiation, drugmakers “at least publicly had made statements and promises that they would lower their price anyway,” Schondelmeyer said.

Eli Lilly announced this year a 70% price cut for its most commonly prescribed insulins. Sanofi said that in 2024, it plans to cut the price for the most widely prescribed insulin in the US, Lantus, by 78%. Novo Nordisk will lower its list price for several of its products by up to 75% that same year.

The Department of Health and Human Services found that the national average for out-of-pocket cost was $58 per insulin fill in 2019, typically for a 30-day supply. Patients under private insurance or Medicare paid about $63 per fill on average. For patients uninsured, the average cost per fill for the entire year was $123.

“We have to see if they live up to those promises or if they renege on that agreement in some way,” Schondelmeyer said.

Negotiation Impact

Companies targeted in the first phase of Biden’s price negotiation program have largely objected to the administration’s implementation process.

Novo Nordisk, which saw six of its insulin products subjected to price negotiations, filed a lawsuit earlier this month alleging the program is unconstitutional and that Medicare officials unlawfully deemed the different Novo products a single biologic product.

A company spokesperson said Novo Nordisk offers various affordable options, and they “do not believe the implementation of the government drug price setting provisions of the IRA is the right approach to help ensure patients living with diabetes can afford our insulins.”

Nevertheless, the company will “comply with the law,” the spokesperson said in an email statement.

Given that “insulin is a very commonly prescribed drug used by the elderly and accounts for a lot of expenditures,” Schondelmeyer said, “it wasn’t surprising” to find the drug among the 10 selected by the Biden administration for negotiating a Medicare price.

But Karen Van Nuys, executive director of the value of life sciences innovation program at the University of Southern California Schaeffer Center for Health Policy and Economics, said it remains unclear whether this is going to “move the needle further or not” for costs.

“Insulin has always been a unique drug in these markets, just by virtue of the number of people who use it, by virtue of truly life or death kinds of consequences,” Van Nuys said.

According to the Centers for Medicare & Medicaid Services, over 3.3 million Medicare beneficiaries use one or more of the common forms of insulin.

If the out-of-pocket caps included in the Inflation Reduction Act had been in effect in 2020, an estimated 1.5 million Medicare beneficiaries who use insulin would have saved $734 million in Part D and $27 million in Part B, the Department of Health and Human Services said.

In Medicare Part D prescription plans, if an insulin is covered, there’s a $35 cap for a month’s supply on each product, according to the CMS. As for Medicare Part B, if insulin is delivered via a traditional pump covered by the durable medical equipment benefit, an individual’s cost-sharing amount is topped at $35 for a month’s supply.

Other Efforts to Lower Costs

The nine pending lawsuits against the Medicare price negotiation plan could partially throw off the administration’s push to lower insulin costs, but federal and private sector efforts still hold some weight to lower prices.

“If the negotiation process was brought down in court, what we would lose is the transparency. That would be a loss. But the pricing behavior has already changed,” Socal of Johns Hopkins said.

The Johns Hopkins Bloomberg School of Public Health is supported by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.

States that have insulin copayment caps apply them to state-regulated commercial health insurance plans. According to the American Diabetes Association, some states also incorporate this provision for state employee health plans or capped copays for other diabetes medications or supplies. The caps throughout states range between $25 and $100.

At the federal level, some Senate leaders this year have addressed their concerns about high insulin costs. Sens. Raphael Warnock (D-Ga.), Elizabeth Warren (D-Mass.), and Richard Blumenthal (D-Conn.) released a report this summer on the cost and availability at the pharmacy counter of Eli Lilly’s authorized generic, Insulin Lispro, for Americans without insurance.

Still, while there’s been “a lot of talk” around lowering insulin prices, there’s been “relatively little action” at the federal level, said Shaina Kasper, policy and advocacy director at T1International, a nonprofit advocacy group.

And“in having to go through some of the transparency measures from the Medicare negotiation process,” Shaina Kasper, policy and advocacy director at the nonprofit T1International, said she hopes insulin and other drugmakers will be pressured to lower costs for people regardless of insurance. In 2022, Yale researchers reported that over 35% of insulin users were on private insurance.

“Insulin has been a really big cash cow for these manufacturers for many years,” Kasper said.

Role of PBMs

Sarah Ryan, a spokesperson for the drug industry trade group the Pharmaceutical Research and Manufacturers of America, noted that insulin instead serves as “a prime example of how insurers” and pharmacy benefit managers “drive up costs for patients.”

“Rebates and discounts lower the average price insurers and PBMs pay for insulin by 80% or more, but they often make patients pay full price. At the same time, biopharmaceutical companies have introduced lower cost versions of insulins, but PBMs refuse to cover them,” Ryan said.

“Policymakers can’t improve affordability for patients if they don’t reform these misaligned incentives that benefit middlemen at the expense of patients,” Ryan said.

The next big change for insulin costs will be in 2024 when the out-of-pocket caps from drugmakers kick in. Lowered prices for certain insulin products selected for Medicare price talks won’t go into effect until 2026.