A new Medicare pilot program would lower the cost of insulin to $35 a prescription for older Americans who need the lifesaving drugs, the Trump administration announced Wednesday.
If insulin manufacturers and insurers agree to offer the plans — which are voluntary — then people 65 and older who need insulin could save an average of $446 a year beginning in January 2021, according to Medicare officials.
More than 3.3 million Medicare beneficiaries take at least one of the common forms of insulin.
The average list price of insulin roughly doubled to about $450 a month in 2016 from around $234 a month in 2012.
And the cost has risen even higher since then, driving much of the outrage over high drug prices with Congress and the public pressuring drug makers and insurers to reduce the burden on consumers.
Many people who are diabetic need insulin and cannot live without it. Some have gone so far as to ration their doses, unable to afford to spend the money for their prescriptions.
“We’ve seen a lot of increases in the cost of insulin, and we hear a lot about it from our beneficiaries,” Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, said in an interview Tuesday night.
Several states, including Virginia, New Mexico and Colorado, have moved to force insurers to cap out-of-pocket insulin costs, as proposals in Congress that might address the issue have stalled.
The proposal could also give a political boost to President Trump in an election year. If insurers agree to offer the capped program, people could begin signing up Oct. 15, at the height of his campaign. Mr. Trump has made lowering drug prices a centerpiece of his health care agenda, although some of his biggest proposals have failed to materialize.
“We’re hoping that manufacturers and the plans will do the right thing here and come together with a plan that will lower out-of-pocket costs for insulin,” Ms. Verma said. “I think this is pretty significant.”
Sanofi, one of the three insulin manufacturers, said Wednesday that it would participate in the program. “We believe their plan, based on shared contributions from both manufacturers and Part D plans to directly lower out-of-pocket costs for Medicare beneficiaries, is the right approach,” Ashleigh Koss, a Sanofi spokeswoman, said in a statement, referring to the Part D drug coverage plans operated by private insurers. The two other insulin manufacturers, Eli Lilly and Novo Nordisk, did not immediately comment.
People who are covered by Medicare’s drug benefit program are particularly exposed to the rising list price of drugs because they enter several different phases of coverage, including an initial deductible phase in which they must pay close to the list price of a drug. Later in the year — after they and their plan have spent $4,020 on drugs — they enter a coverage gap (called the “doughnut hole”) in which they pay 25 percent of the drug’s price.
Under the proposed plan, those who need insulin would pay no more than $35 for a typical 30-day supply, no matter which phase of coverage they were in.
In reaction to government and public concerns, manufacturers have taken steps like offering discount plans and, in the case of Eli Lilly, selling a half-priced generic version of the brand-name Humalog.
Pharmacy benefit managers, which negotiate drug prices on behalf of insurers and large employers, have also offered plans that limit out-of-pocket costs. Last year, Express Scripts began offering a $25-a-month cap for all diabetes medications, including insulin, for employers who opted into the program.
In January, CVS began offering a zero co-payment program for insulin. CVS said that its members paid, on average, more than $400 out of pocket per year for diabetes medications, with about 12 percent paying more than $1,000 per year.
Ms. Verma said that until now, federal rules discouraged the private insurers who run the Medicare drug plans from offering a more consistent co-payment for insulin and other drugs. That’s because if the insurers limited the amount the consumer paid during the coverage gap, the plans would no longer get the 70 percent discount that manufacturers provide during that doughnut hole. Under the proposal, the pilot program would waive that restriction and would allow the manufacturers and insurers to negotiate more freely.
The pilot project would apply only to so-called enhanced Medicare drug plans, which typically offer more generous drug coverage but carry higher premiums. While a basic Medicare drug plan costs an average of $32.09 a month this year, the enhanced plans cost $49.32.
The agency said it expected the model would save the federal government about $250 million over five years because the new limit would slow consumers’ progression through the coverage gap phase. The federal government must pay 80 percent of the costs once Medicare recipients move through the coverage gap and into the so-called catastrophic phase, once they have paid $6,350 in out-of-pocket costs.
If their access to insulin improves, their health could also improve and they might need less medical care, federal officials said.
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