Insulin Saccharin Agreements and Voluntary Price Controls

Tuesday marked the first day of summer, but the frequent return of the undead Build Back Better Act (BBBA) and its disembodied parts prove that on Capitol Hill, it’s always spooky season. This week’s episode of Frankenstein’s Undead Monster features some newly introduced insulin pricing legislation Senators Jeanne Shaheen (D-NH) and Susan Collins (R-ME)the law on improving the safeguards needed for users of insulin that saves lives now (INSULIN). Just like Frankenstein’s monster, the price of insulin is often misunderstood.

Recall that the Build Back Better insulin pricing initiative would have rrequired IThe insurance plans to cover at least one drug for each type of insulin and would cap patient out-of-pocket costs at $35 or 25% of the negotiated price – whichever is lower – in addition to submitting prices for the insulin to “negotiation” (read: price controls) by the federal government. The INSULIN Act would cap out-of-pocket costs at the same levels as the BBBA for privately insured and Medicare Part D beneficiaries for “certified” insulin (more on that in a moment). The INSULIN Act would also prevent the application of cost controls such as prior authorization or step therapy to insulin coverage, except in certain circumstances. In addition, bill would prevent insurance plans and drug benefit managers from obtaining price concessions on ‘certified’ insulin.

It is the “certified insulin” part that differentiates this legislation from the BBBA. The INSULIN Act would create a process by which a pharmaceutical manufacturer can seek “certification” for its insulin products. This certification would require manufacturers to implement a price cap “no higher than the weighted average Medicare Part D negotiated price for this insulin, net of all manufacturer rebates, received by plans in 2021.”Manufacturers seeking certification would also not be allowed to raise insulin prices. faster than inflation (which sounds like a great idea until inflation goes above 8%). It should be noted that this certification process is completely voluntary.

What do manufacturers gain by voluntarily lowering their prices? They get the name of their product on a list of “certified” insulins that the government will publish, and that’s it. One might wonder what would compel drugmakers to voluntarily lower their prices just because Uncle Sam kindly asked, and one would have to keep asking the question for quite a while. This is hard to believe that companies would jump through hoops and suffer significant financial losses just to be considered “certified”. It is possible that some pharmaceutical companies are participating in order to undercut their competitors’ prices in the hope of attracting enough customers to offset any decline in profits. Pharmaceutical companies aren’t known for being politically stupid, and they’re unlikely to gamble on this prisoner’s dilemma in order to win a few extra customers. Instead, the government should focus on things that have been proven to reduce insulin costs: generic and biosimilar competition. The likelihood of this legislation being passed in a mid-term year is slim, but the likelihood of it doing something to significantly lower insulin prices is even slimmer.

Chart review: COVID-19 incidence and hospitalizations among Medicare beneficiaries

Evan Turkowsky, Health Care Policy Intern

On June 17, the Centers for Disease Control and Prevention (CDC) released their report on hospitalizations and cases associated with COVID-19 among Medicare beneficiaries based on their eligibility and race/ethnicity. The study looked at approximately 69 million Medicare beneficiaries, of whom 78% were eligible for age and 22% were eligible for disability. Native Americans/Alaska Natives (AI/AN) make up approximately 1% of all Medicare beneficiaries, but have experienced the highest rates of COVID-19 incidence and COVID-19-associated hospitalizations in the two disability-eligible cases (13,891 cases per 100,000 and 4,962 hospitalizations per 100,000, respectively) and eligible age groups (12,924 cases per 100,000 and 5,024 hospitalizations per 100,000, respectively), as shown in the table below. Among all other racial and ethnic groups, hospitalization and incidence rates among disability-eligible recipients were significantly higher than those among age-eligible recipients.


Data source: The CDC: Weekly report on morbidity and mortality

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