Approximately with diabetes rely on insulin to prevent life-threatening complications from high blood glucose levels. Improving insulin affordability for these patients is an , as high costs are forcing some patients to take than they need. To achieve this goal, the U.S. House of Representatives recently passed that would require Medicare and private plans to limit out-of-pocket costs to $35 per 30-day supply of insulin or 25% of the price negotiated between insurers and manufacturers, whichever is lower. The U.S. Senate is currently considering a sponsored by Sen. Raphael Warnock (D-Ga.).
In Part 1 of this two-piece series, we discuss the potential winners and losers of the proposed federal insulin cost-sharing cap. We argue this cap must be coupled with additional reforms to improve insulin affordability -- reforms that we will explore in Part 2.
Winners
Insured patients who use insulin for diabetes
Our previous work suggests that a federal insulin cost-sharing cap, such as the one proposed in the House bill, could greatly improve insulin affordability for a sizable number of insured patients with diabetes. For example, using national private insurance claims data from 2018, the potential benefits of a federal law that capped insulin cost-sharing to $25 per 30-day supply among privately insured children and young adults with type 1 diabetes -- a condition in which insulin access literally means the difference between life and death. In our analysis, the patients paid an average of $494 for insulin in 2018; 1 in 8 patients paid more than $1,000. The federal $25 cap would lower annual insulin out-of-pocket spending for 60% of patients. Among these patients, this spending would decrease by an average of around $480, from $741 to $261.
In , we used 2019 national prescription dispensing data from IQVIA to assess the benefits of a federal law that capped insulin cost-sharing to $35 per 30-day supply among Medicare patients who use insulin. We estimated that such a cap would lower annual insulin out-of-pocket spending for 39% of patients. Among these patients, out-of-pocket spending would decrease by an average of $338, from $687 to $349. In the same analysis, we also used Medicare Advantage claims data from 2019 to demonstrate that the $35 cap would benefit a higher proportion of patients with type 1 diabetes than type 2 diabetes.
Insulin manufacturers
The three major insulin manufacturers in the U.S. -- Eli Lilly, Novo Nordisk, and Sanofi -- could also benefit from a federal insulin cost-sharing cap. These manufacturers set the list prices that dictate the amount many patients pay for insulin at the pharmacy counter. By improving insulin affordability, the cap could reduce political pressure to lower these list prices, which have over the past decade. Additionally, the cap could increase insulin use among insured patients who previously were owing to cost, thus increasing revenues. Finally, to support sales, the three manufacturers are currently investing heavily in efforts to mitigate insulin cost-sharing via patient and coupons. A federal insulin cost-sharing cap would decrease the need for these initiatives and therefore the amount of money the manufacturers spend on them, further increasing profits.
Losers
Insurers, their enrollees, and American taxpayers
A federal insulin cost-sharing cap would not address the underlying problem of high insulin list prices. For the privately insured, the cap would instead shift the burden of paying for insulin from patients to private insurers, which could respond by increasing premiums for all enrollees. In Medicare, the cap would shift the burden of paying for insulin both to Medicare Part D plans and to the federal government. Because federal spending is subsidized by taxpayers, all Americans would ultimately foot this bill.
Uninsured patients with diabetes and patients facing financial toxicity for other prescription drugs
Uninsured patients with diabetes are fully exposed to insulin list prices. Because of this, national data indicate they pay an average of for insulin, more than double the corresponding amount for the privately insured. In addition, exposure to list prices prompts uninsured patients to use insulin products, which result in in blood glucose more often than newer products. Unfortunately, the uninsured would not benefit from the federal cost-sharing cap proposed by the U.S. House of Representatives, which only applies to insured patients. If implementation of a cost-sharing cap reduces the urgency to rein in insulin list prices, uninsured patients with diabetes could indirectly be harmed.
More broadly, millions of Americans struggle to afford prescription drugs other than insulin. The outrage over insulin unaffordability has sparked policy momentum to reduce prescription drug prices and patient exposure to these prices. By defusing this outrage, an insulin cost-sharing cap could unintentionally inhibit this momentum, harming patients who face financial toxicity from other prescription drugs.
Moving Beyond a Stopgap Measure
In summary, the insulin cost-sharing cap proposed by the U.S. House of Representatives could benefit a large number of Americans who depend on this life-saving drug to manage diabetes. However, the cap would not address the underlying problem of high insulin list prices set by drug manufacturers or improve insulin affordability for the uninsured. While the cap is an important stopgap measure, other reforms to improve the affordability of insulin are urgently needed. We will explore these reforms in Part 2 of our series next week.
is an assistant professor of pediatrics in the Susan B. Meister Child Health Evaluation and Research Center at the University of Michigan Medical School. is an associate professor of markets, public policy, and law, and co-director of the Technology and Policy Research Initiative in the Questrom School of Business at Boston University.