Although progress has been made in reducing out-of-pocket costs for many diabetic patients taking this drug … [+]
In describing the financial burden caused by the high price of insulin products, Fortune article summarized the problem: “In a drug pricing system driven by perverse incentives and greed, everyone wins except patients suffering from America’s most expensive chronic disease [diabetes].”
The piece was written in 2021. Since then, there has been substantial relief for diabetes patients, as a combination of federal government policies and pharmaceutical companies have reduced out-of-pocket costs. But for some patients, the affordability and even availability of insulin remain critical issues.
Before this year, drug makers increased list prices for insulin for more than two decades. This increased the out-of-pocket costs for diabetes patients; for the uninsured paying full list price, the increase is dramatic; for those insured who pay a percentage of the list price, it was a steadily increasing financial burden.
At the same time, payers—usually through intermediaries called pharmacy benefit managers—have negotiated escalating rebates that lowered the net price of insulin. This meant that the difference between the gross and net prices for insulin products widened significantly over time. But the discounts were not passed on to the patient at the pharmacy counter. What followed was growing public dissatisfaction among the more than seven million American patients who depend on insulin.
Last year Novo Nordisk announced plans to reduce the list prices of several of its insulin products from January 1, 2024, including the long-acting basal insulin Levemir. The company lowered its price by 65%. Sanofi also cut the price of its long-serving rival Lantus. In addition, Novo Nordisk and Eli Lilly have significantly reduced the prices of the fast-acting NovoLog and Humalog, respectively.
The price reductions occurred for several reasons, including increased competition in the insulin market, between branded products and due to the emergence of biosimilars with active properties similar to previously licensed original biologics that reference them. Additionally, beginning in 2024, there was a significant policy change regarding how Medicaid-specific rebates are calculated.
Medicaid has a new rebate rule for prescription drugs whose list price has increased significantly in the past. Until this year, Medicaid rebates — which drug manufacturers owe to the government — were limited to the total price of a drug. But thanks to a provision in the American Rescue Plan Act of 2021, the cap has been reached eliminated. Drug manufacturers must also pay Medicaid special rebates if they have previously raised the price of their drugs above the inflation index.
This implies that drug manufacturers could ultimately sell drugs to Medicaid at a loss. Companies can prevent this by substantially lowering the prices of their drugs, as insulin product manufacturers have now done.
So far, this sounds like a win for patients. But Novo Nordisk has decided to stop production of Levemir at the end of this year. STAT news reported what factors may have led to the decision. When halting production, companies like Novo Nordisk often blame supply chain constraints, including challenges posed by PBMs that design formulas. These are lists of covered prescription drugs and their reimbursement terms, such as patient cost sharing and prior authorization protocols.
In addition to Levemir, there are several other basal insulin options available to patients. For example, Novo Nordisk produces another long-acting insulin called Tresiba. But the price has not been reduced. Other products made by various manufacturers include Basaglar and Rezvoglar, as well as Lantus and the referenced biosimilar, Semglee. Importantly, however, access to treatment alternatives depends on an individual’s health insurance coverage. In addition, Levemir is the only insulin approved by the Food and Drug Administration for use during pregnancy.
Senators Jeanne Shaheen, Raphael Warnock and Elizabeth Warren criticized The actions by Novo Nordisk and in a letter demanded clarification on whether patients would have access to affordable long-acting insulin alternatives, including Tresiba. Specifically, they asked the company whether it plans to lower the price of Tresiba. Interestingly enough, the senators’ investigation isn’t just about the company’s pricing behavior. It also asks about the form placement challenges faced by Novo Nordisk and how they may have led to the discontinuation of Levemir. Additionally, the letter explores whether there are steps Congress could take to alleviate such problems in the future.
As part of the Inflation Reduction Act, effective January 1, 2023, out-of-pocket costs for insulin will be limited to $35 per monthly prescription among Medicare beneficiaries enrolled in the outpatient or Part D program. During his campaign, President Biden often referred to this as one of the signature achievements of his administration.
After signing the IRA in 2022, Novo Nordisk, Ely Lilly and Sanofi pledged to cap the price patients pay for insulin at the pharmacy counter at $35 for those with commercial insurance.
For Medicaid beneficiaries who use insulin, there are only nominal out-of-pocket costs.
President Biden has done that suggested expanding the $35 limit to the commercially insured population. However, this would still leave the uninsured, whose precarious position is highlighted by continued Medicaid disenrollment, and the underinsured vulnerable.
Out-of-pocket costs for insulin have fallen in recent years for most people, including those with private health insurance. Still, about one-fifth of commercially insured patients pay more than $35 per month for insulin New York Times article reported this week. For these individuals, insulin affordability – and even availability in the case of pregnant women who will need Levemir in 2025 and beyond – remain pressing issues.
