Unpredictable and unaffordable copays for insulin could be a thing of the past for millions of people enrolled in certain Medicare Part D prescription drug plans.

With manufacturers picking up much of the tab, more than 1,750 plans have applied to lower insulin copays for the 2021 plan year – to a maximum of $35 for a month’s supply – through the Part D Senior Savings Model that was announced March 11, the U.S. Centers for Medicare & Medicaid Services (CMS) said Tuesday.

Participating plans would offer the low copay across a range of insulin products from the beginning of the year through the Part D coverage gap. Outside the model, seniors pay 25% of a drug’s list price while they’re in the coverage gap.

For beneficiaries, the $35 cap will translate into about $229 a year – an average annual out-of-pocket savings of $446. The lower copay will be funded in part by insulin manufacturers paying an additional $250 million of discounts over the five years of the model, according to CMS.

“This market-based solution, in which insulin manufacturers and Part D sponsors compete to provide lower costs and higher quality for patients, will allow seniors to choose a Part D plan that covers their insulin at an average 66 percent lower out-of-pocket cost throughout the year,” CMS Administrator Seema Verma said.

Currently, Part D plans that offer lower cost-sharing for insulin in the coverage gap accrue costs that manufacturers normally would pay; the plans then pass those costs on to beneficiaries in the form of higher premiums. The new insulin model addresses that disincentive by allowing manufacturers to continue paying the 70% discount in the coverage gap for their insulin products, even when the plan offers lower cost-sharing, according to CMS.

While the biopharma industry welcomes the lower payment for Medicare beneficiaries, it isn’t so pleased with how it’s being funded. “The model has the potential to meaningfully improve affordability and predictability for patients who rely on insulin, but it must be a shared responsibility between health plans and biopharmaceutical companies,” said Stephen Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA).

“Our industry is committed to doing our part,” Ubl said, but he added that all stakeholders should share the burden. Drug “companies already provide deep discounts and rebates on insulin – often in excess of the net revenues retained by the manufacturer – but Part D plans and PBMs [pharmacy benefit managers] are not sharing those savings directly with patients, whose out-of-pocket costs continue to soar,” he said.

PhRMA will continue to work with the administration to make drugs more affordable for patients through such measures as “modernizing Part D coverage and enacting comprehensive rebate reform to address misaligned incentives in the system,” Ubl said.

Insulin products have been the poster child of high drug prices, as many people with diabetes have had to ration or go without insulin because of their copays, which are based on the list price of the drugs rather than the rebated price Medicare and private plans pay. “Insulins are typically heavily rebated products, and Part D beneficiaries' out-of-pocket costs are based on a pre-rebated list price," Lindsay Bealor Greenleaf, vice president of policy at ADVI.

The big three manufacturers of insulin for the U.S. market – Eli Lilly and Co., Novo Nordisk A/S and Sanofi SA – have repeatedly blamed the ever increasing rebates they have to pay PBMs in exchange for preferred formulary placement for the escalating list prices of their drugs.

Aside from capping the out-of-pocket cost, the insulin model also protects Medicare beneficiaries from sticker shock each time they refill their insulin prescription. Under current plans, a beneficiary’s costs for insulin can fluctuate from month to month due to high deductibles and the different rules for each phase of the Part D benefit.

“This can be challenging for beneficiaries when budgeting for their drug costs,” CMS said. “These challenges can in turn lead to beneficiaries not being able to afford their medicine or resorting to medication rationing, resulting in worse health outcomes over time.”

To help beneficiaries choose plans participating in the model during open enrollment later this year, CMS is enhancing the Medicare Plan Finder with a filter to identify plans that will offer the capped out-of-pocket insulin costs.

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