Insulin Copay Bill Advances In What Could Be US Senate Democrats Last Gasp For Price Reform
Executive Summary
Though popular, the proposal to cap insulin copays is a relatively minor part of the drug pricing reform package included in the stalled Build Back Better Act. But it may represent Democrats’ best chance of passing any drug pricing-related legislation while they still hold majorities in Congress.
Senate majority leader Chuck Schumer, D-N.Y., is planning to bring legislation to the floor for a vote in March that would cap insulin copays at $35 in Medicare Part D and private insurance plans. The move could represent a final attempt to pass some form of popular drug pricing legislation before Democrats face the possibility of losing their dual-chamber, albeit slim, majority in November.
The insulin bill has been carved out of the much broader drug pricing provisions in the stalled Build Back Better Act and positioned as a stand-alone bill in a move that may reflect the recognition that the BBB Act is beyond repair. Progress on the broader legislation has stalled mainly because of objections to various aspects of the bill from Sen. Joe Manchin, D-W.Va. (Also see "2022: The End Of The US Price Negotiation Debate?" - Pink Sheet, 11 Jan, 2022.)
Lead author of the stand-alone insulin bill is Sen. Raphael Warnock, D-Ga., and cosponsors, all Democrats, include Schumer, Finance Committee chair Ron Wyden, D-Ore., and several others.
The bill would require Part D and commercial plans to exclude insulin from deductible requirements and limit copays to $35 a month. Private plans would be required to cover one of each insulin dosage form (vial and pen) and insulin type (rapid-acting, short-acting, intermediate acting and long-acting) under those cost sharing terms. In Part D, plans would apply the copay limit for whatever insulin product they cover in 2023 and 2024 and for all insulin products beginning in 2025.
No Advance Of Part D Redesign, Though It Too Has Bipartisan Support
The possibility that the insulin legislation is the only pricing reform to emerge from the BBBA could be a relief to biopharma in that it means direct Medicare price negotiation probably won't be authorized, even if the negotiation process described in the bill was fairly limited. (Also see "Medicare Drug Price Negotiation Not A Major Threat To Pharma – Even If It Passes" - Pink Sheet, 3 Jan, 2022.)
But it would also be a disappointment to industry hopes for movement on a redesign of the Part D benefit, which is another policy in the BBBA that, like the insulin cap, has bipartisan support. Proponents of broad drug pricing reform also point out that the insulin legislation may not have that great an impact without accompanying provisions that would control prices through negotiation, or discourage price increases with inflation rebates.
“It would be a shame for this to be the only part of the BBBA to move forward,” health policy expert Stacie Dusetzina (Vanderbilt) told the Pink Sheet. In the BBBA, “insulin prices would have been negotiated [by Medicare], in addition to changing the cost-sharing arrangements for people on private plans and Medicare Part D.”
Bill Will Lead To Cost Shifting
Ultimately Warnock’s bill “would shift the cost of insulin from insulin users to everyone in the health plan and/or employers and taxpayers,” she pointed out. “This is not necessarily a bad thing, but when we say that ‘insurers will pay for it’ what we are saying is that people buying insurance will pay for it.”
The Congressional Budget Office projected additional federal spending of $1.4bn and a reduction in federal revenues of $4.6bn over 10 years associated with the insulin cost-sharing limits in the BBBA. And because Warnock’s bill does not include drug price negotiations for insulin, it is likely to increase spending further, assuming that CBO factored price negotiations into its calculations, Dusetzina noted.
AHIP echoed Dusetzina’s point about premium increases in a statement on the Warnock bill. “Capping cost-sharing merely shifts costs for insulin – it doesn’t lower them,” the trade group for insurers said. “Rather than paying for their expensive drugs at the pharmacy counter, patients would pay for them through their insurance premiums and copays. Cost-sharing caps do not hold drug manufacturers accountable, make underlying prices less transparent, and make health care less affordable for everyone.”
The Pharmaceutical Care Management Association, which represents pharmacy benefit managers, argued that the Warnock bill does not target the right problem. "The key to reducing drug costs is increasing competition, including for insulin products. Unfortunately, tactics used by drug manufacturers to avoid competition, including ongoing patent extensions on insulin products, are a significant barrier to getting costs down even further for people with diabetes,” the group said.
Dusetzina also pointed out that the legislation, though “politically popular,” is “likely not to help that many people.” She noted the Center for Medicare and Medicaid Innovation is already operating a demonstration that caps cost sharing for insulin in Part D called the Senior Savings Model. Launched in 2021, the demo provides beneficiaries with substantial number of plan options that offer insulin at a $35 copay per fill. (Also see "US Medicare Insulin Demo Could Expand To Other Drugs" - Pink Sheet, 26 May, 2020.)
Among the privately insured, “many are likely paying near the $35 copay amount today,” she maintained. Individuals in high deductible health plans may benefit from the policy, though some employers have elected to offer insulin coverage as “pre-deductible,” which means they would bypass any deductible responsibility for insulin and be responsible only for a copay, she noted.
Finally, the legislation would not provide relief to the uninsured, Dusetzina observed. “This group continues to pay hundreds of dollars per fill” and “insulin prices won’t go down and could go up” if insured patients become less price sensitive, she warned. Dusetzina is also a member of the Medicare Payment Advisory Commission.