California seniors with Medicare drug plan could see insulin costs capped by inflation bill

·4 min read

Thousands of Medicare beneficiaries in the Sacramento region are paying an average of $54 to get a 30-day supply of insulin that is produced for a fraction of that cost.

It looks as though consumer advocates have finally persuaded Congress to help bring down those out-of-pocket payments.

On Friday, the U.S. House of Representatives is expected to vote to cap Medicare beneficiaries’ monthly out-of pocket expenses for insulin at $35 as part of a sweeping health care, climate change and tax bill. If approved, the bill would then go to President Joe Biden for his signature.

The nonprofit Kaiser Family Foundation estimated that 332,770 Medicare beneficiaries in California could save on insulin under the new program. A low-Income subsidy program helps nearly half of those beneficiaries with their premiums, deductibles and cost sharing.

While the Kaiser researchers estimated the average monthly cost of insulin at $54 for Medicare beneficiaries in 2020, they noted that spending on many insulin products was much higher, as much as $116 for a month’s supply. The 2020 data were the latest available statistics.

If the House bill passes, it would mean people who use Medicare Part D, the prescription drug benefit for seniors and some others, would pay no more than $35 for each insulin prescription each month. It would not apply to people with private insurance who buy insulin products.

Diabetics use insulin to manage their blood sugar levels. The price of products and the numbers of people using them has gone up quickly in recent years.

Democrats have sought for years to curb insulin costs. Out-of-pocket spending by Part D beneficiaries for insulin products quadrupled between 2007 to 2020, the Kaiser foundation found.

The number of Part D enrollees nationwide using insulin doubled during that period, so the spending increase was not simply a function of more users.

Insurers, drug makers blame each other

Consumer advocates point to major pharmaceutical companies to account for the drug’s rising costs.

“Three companies — Eli Lilly, Novo Nordisk, and Sanofi — dominate more than 90% of the insulin market, meaning that while production of insulin costs less than $6 per vial to manufacture, these three companies are charging around $300 for a single vial of insulin,” said Shaina Kasper, the policy manager for the nonprofit advocacy group T1 International. “Many people need two to four vials per month, often of different dosage forms and types, ... leading to costs of over $1,000 a month.”

The drug makers, however, have said that insurers and other middlemen in the supply chain have negotiated deep discounts on insulin, but have not passed those discounts along to consumers or retailers.

“These rebates, discounts and other payments made by insulin manufacturers lowered the cost of the most commonly used insulins by 84% on average in 2021, and the average net cost of the most commonly used insulins is 20% lower today than in 2007,” according to the Pharmaceutical Research and Manufacturers of America. “Unfortunately, this doesn’t always lead to lower costs for patients at the pharmacy.”

But America’s Health Insurance Plans, which represents that industry, told The Sacramento Bee that “insulin prices are too high because Big Pharma alone sets and controls the price. While health insurance providers work to reduce insulin costs, this policy unfortunately does nothing to lower the price of insulin but simply shifts costs to others through higher insurance premiums and copays.”

The bill does not limit what drugmakers can charge, but it will mean insurers and others in the supply chain are likely to bear a greater proportion of the cost.

Expensive insulin

An analysis by the Kaiser foundation’s Juliette Cubanski and Anthony Damico found that in 2020, unsubsidized beneficiaries paid an estimated $16 out-of-pocket for Humulin N, an intermediate-acting insulin, but $116 for Humulin R U-500, a short-acting concentrated insulin.

Other often used-product costs: Novolog Mix 70-30 Flexpen, $77 per prescription; Tresiba Flextouch U-200, $70 per prescription and Levemir, $67 per prescription.

There will be some controversy when the House debates the plan on Friday.

Democrats who wrote the bill had included the $35 cap on insulin products for those with private insurance. The Senate parliamentarian said that did not belong in the bill, which is supposed to deal only with budgetary matters, and several Republicans banded together to make sure that provision stayed out.

The pharmaceutical industry has branded the overall legislation a disaster, saying supporters are “misleading the American people when they say this bill fixes the affordability challenges patients face. This bill provides almost no relief to millions of individuals trapped in an insurance system that discriminates against sick patients,” said Stepen Ubl, president and chief executive officer of PhRMA.

Sen. Patty Murray, D-Washington, had a very different take.

After the Senate rejected an effort to restore the $35 cap for private insurance patients, she said the rejection would force “countless patients to continue rationing their insulin—putting their lives at risk. Everyone should be able to afford the lifesaving medicine they need. This is shameful.”