March
11, 2022 Christopher Holt
White House officials are once again circling Senator
Joe Manchin in hopes of reviving a pared back version of the Build Back Better
Act (BBBA)—this time centered on tax increases and cutting prescription drug
prices, with the revenue split between deficit reduction and climate
change. It seems unlikely, however, that House progressives are ready to
jettison their domestic spending goals and embrace deficit reduction. If a
larger deal on drug prices doesn’t emerge, Senate Majority Leader Chuck Schumer
has floated carving
out the BBBA’s provisions targeting insulin prices and moving that as a
standalone bill. Recent developments in
the insulin market, however, raise questions about whether the BBBA’s insulin
proposals are really the right approach.
As
detailed in past American Action Forum (AAF) research, diabetes cost the United
States $327 billion in 2017, making it one of the nation’s most expensive
chronic diseases, and the United States spent $48 billion on insulin—prior to
any rebates or other discounts. Further, the average list price for insulin
increased 11 percent annually between 2001–2018, climbing to an average
per-capita insulin cost of almost $6,000 annually. List price, of course, is
not indicative of what insurers or government payers are actually charged
because of the complex system of rebates and discounts, but list price does
dictate patient out-of-pocket costs.
President
Biden highlighted one family’s struggle to afford insulin during the State of
the Union, but there are myriad similar examples. The BBBA would require
all insulin products to have their price set by the Secretary of Health and
Human Services (HHS)—as part of a larger proposal to
have Medicare “negotiate” drug prices—and would unilaterally limit cost-sharing
for insulin through Part D to $35 per month. The BBBA’s insulin provisions
would also reach into the group and individual insurance markets to limit
patient insulin costs. Starting in 2023, health insurers offering
group or individual health insurance coverage would be required to provide
coverage for at least one of each insulin dosage form (vial, pump, or inhaler)
of each type of insulin (rapid-acting, short-acting, intermediate-acting,
long-acting, and premixed). Plans would also have to limit patient costs for
insulin to either $35 for a 30-day supply or an amount equal to 25 percent of
the HHS-negotiated price for a 30-day supply—net all price
concessions—whichever is lower.
There have been regulatory hurdles to generic (or more accurately,
biosimilar) insulins until recently, resulting in a lack of competition. New
AAF research published
this week, however, suggests that amid recent regulatory changes, competition
is increasing. Several authorized generic insulins and a biosimilar
have come to market, leading to a 6.8 percent drop in the per-unit price of
insulin on average across all but ultra-long-acting insulin between 2018–2020.
In other words, competition is lowering prices. Yet uptake of these lower
priced alternatives is negligible—at least in Medicaid and Medicare Part D. It
is likely that many insurers are still providing preferential treatment on the
formulary to the brand-name products because such products typically come with
substantial rebates—reportedly averaging between 30-50 percent.
While progressives focus on price-fixing—at the risk of curtailing
innovation around insulin products and delivery mechanisms—competition is starting
to take hold in the insulin market. The obstacle to lower prices for patients appears to be the
complex system of rebates that serve to keep list prices high and more
affordable insulins off formularies. Rather than seeking to artificially lower
prices, Congress should revisit rebate reform as a means to change this dynamic
and allow the public to reap the benefits of these lower cost products.
Disclaimer
https://www.americanactionforum.org/weekly-checkup/the-build-back-better-act-and-the-challenge-of-insulin-prices/#ixzz7ONAR7utf
Follow @AAF on Twitter
No comments:
Post a Comment