U.S. drug makers are now getting $15 billion in revenue per year from sales of insulin — a generic drug that keeps people with diabetes alive — and that’s up from about $5 billion per year just 15 years ago, according to Dr. Alvin Powers, a representative for the Endocrine Society.
Yale University researchers concluded in 2013 that the high price of insulin may be responsible for as much as $5 billion in annual spending on preventable hospital care for people with diabetes, according to Dr. Kasia Lipska, a Yale medical school endocrinologist.
(Related: Lilly Offers Half-Price Insulin)
Powers and Lipska testified about the effects of high insulin prices on drug makers’ revenue, and patients’ hospital bills, Tuesday, at a hearing on insulin prices organized by the House Energy and Commerce oversight subcommittee.
About 7.4 million U.S. residents need to take insulin to control their diabetes, according to a hearing memo release by the committee staff.
Researchers discovered insulin in 1923. They took care to make the process for producing insulin available to all, according to the staff memo.
Today, however, although the cost of manufacturing a vial of insulin ranges from about $2.28 to $6.34 per vial, the typical list price for insulin is about $400 per vial, according to the staff memo.
Gail deVore, a hearing witness who has Type 1 diabetes, testified that she takes four vials a month, and that the full price of the four vials is about $1,600.
Even when health insurance is available, the high list price may affect patients with high-deductible health plans who are buying insulin early in the year, and patients who need to take a type of insulin not included in the plan formulary, deVore said, according to a written version of her testimony on the committee website.
“Some insurance plans require us to purchase 60- and 90-day supplies of insulin,” deVore said, according to the written version of the testimony. “That makes the immediate price tag even worse since it must be paid in full upon delivery.”
Dr. William Cefalu, the chief scientific officer at the American Diabetes Association, said one problem is that the current pharmacy benefit manager (PBM) system encourages manufacturers to set high list prices, because PBMs earn revenue tied to the differences between drug list prices and the discounted prices the PBMs negotiate for health insurers and employer-sponsored plans.
The PBM clients “are not privy to these negotiations, nor do they know the net price obtained by the PBM for insulins,” Cefalu testified, according to his written testimony.
Regulatory restrictions have limited the number of different insulin products available, and that limits the amount of real competition for certain specific types of insulin products, Cefalu said.
Insulin Price Management Proposals
Cefalu talked about recommendations developed an Americans with Diabetes Association working group. Here are five of the recommendations:
- Providers, pharmacies, and health plans should discuss the cost of insulin preparations with people with diabetes, to help them understand the financial implications of using the various alternatives.
- Providers should prescribe the lowest-price insulin required to safely achieve treatment goals.
- Co-payments, deductibles and other cost-sharing payment requirements for insured people should be based on the lowest price available.
- The list prices for insulins should more closely reflect the true net prices, with less reliance on rebates and other discounts.
- Payers, insurers, manufacturers, and PBMs should design pharmacy formularies that put a wide range of insulin preparations, including human insulin and insulin analogs, in the lowest cost-sharing tier.
Cigna Corp. recently completed the acquisition of Express Scripts, a large PBM.
Cigna responded to the insulin hearing by announcing that it and Express Scripts will ensure that eligible people with diabetes in participating plans pay no more than $25 for a 30-day supply of insulin.
” Cigna and Express Scripts clients will activate this new program for participating plans by moving covered insulin products to a lower copayment,” Cigna said.
In 2018, the average out-of-pocket cost for insulin was $41.50 for a 30-day supply, Cigna said.
Links to more information about the hearing, including a video recording of the hearing, are available here.
— Read Drugs Might Be the 2019 Health Cost Good Guy: CMS Actuaries, on ThinkAdvisor.