What Legislation Has to Say about the Soaring Cost of Insulin

What Legislation Has to Say about the Soaring Cost of Insulin

Republicans and Democrats Vow to Combat Insulin Cost Surge

A three-hour-long hearing on April 10 with pharmaceutical benefit managers, drug manufacturers, and lawmakers seemed to end in a bipartisan understanding dedicated to addressing the outcry of thousands of people unable to afford the medicines they need – specifically, insulin. Both Democrats and Republicans expressed serious frustration with the recent enormous increases in insulin prices that are fueled by convoluted arrangements to drive up list costs of the drug and out-of-pocket costs for diabetics.

“This is going to end,” Representative Earl L. Carter (R) of Georgia promised. His comments were echoed by Representative Jan Schakowsky (D) of Illinois, who agreed: “On both sides of the aisle, there is a commitment” to end price gouging by manufacturers of insulin. Those manufacturers claim that price increases are justified because of the many improvements they have made in insulin products, which in turn leads to better treatment, a higher quality of life, and a longer lifespan for diabetics.

Isn’t innovation supposed to drive prices down?

This was the question posed by Representative David B. McKinley (R) of West Virginia as he stood in the hearing, baffled. Drug makers claim they cannot reduce list prices because as it now exists, it isn’t feasible to do so in “the system.” Insurance companies demand discounts, and so do the middlemen, along with price concessions and rebates that are calculated as a percentage of list prices…and consumers have to pay more to cover it instead of receiving the benefit of those discounts.

Three by Three: Insulin Makers and Middlemen

The three main insulin manufacturers – Novo Nordisk, Sanofi, and Eli Lilly were heard during the hearing. Three middlemen who manage drug benefits for many Americans were also on-hand: Express Scripts, acquired last year by Cigna; OptumRx, part of UnitedHealth Group; and CVS Health.

Kathleen Tregoning, Executive Vice President of Sanofi explained, “The average net price of Lantus, our most prescribed insulin, has declined by over 30% since 2012.” She then added that over the same time period, the average out of pocket costs for patients with Medicare and commercial insurance has increased by almost 60%.

Senior Vice President of Eli Lilly also claimed that the pharmaceutical giant could not reduce its insulin list costs because it would be “too disruptive to the system.”

Too disruptive?

He did also say, however, that “The current system is not working. We agree 100%.”

Representative Diana DeGette, a Democrat from Colorado with a 25-year-old diabetic daughter said, “The people who are suffering are the people who need insulin every second of every minute of every day or they will die.” She sees a good chance for bipartisan agreement on legislation to combat the issue.

In general, the drug companies endorsed a proposal by the President of the United States that would make payment of rebates illegal unless the benefits were passed to consumers. However, pharmacy benefit managers – the middle men – said insurance premiums will increase if they didn’t continue receiving rebate payments.

Large Price Increase Justification: Legislation or Distraction?

On April 9, 2019, a bill that requires drug makers to justify large price increases publicly for existing drugs and new products was unanimously approved by the House Ways and Means Committee. Companies will have to report the expense of their manufacturing, research and development, and advertising of drugs.

Also on that day, the business practices of pharmacy benefit managers were the focus of a hearing held by the Senate Finance Committee. Senator Charles Grassley of Iowa and Chairman of the committee said, “The current system is so opaque that it’s easy to see why there are many questions about PBMs’ [pharmacy benefit managers] motives and practices.”

In addition, Rhode Island Senator Sheldon Whitehouse commented that insulin manufacturers had performed a “remarkable act of political jujitsu” as they moved the blame for skyrocketing prices to the pharmacy benefit managers.

Senator Ron Wyden (D) of Oregon stated that those middlemen “raked in profits while drug prices have shot into the stratosphere.” He also commented that it was a mystery as to whether pharmacy benefit managers bring any real value to taxpayers.

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By |2019-06-20T20:49:50+00:00May 30th, 2019|

About the Author:

Jonathan Gilde

Jonathan is a digital marketer based in San Diego. Whether developing a content marketing strategy for a Fortune 500 company or helping an emerging small business develop a brand, he’s passionate about delivering results.