How Payers Are Reacting to Insulin Price Changes

Today’s guest post comes from Nicole Mayer, Senior Analyst at MMIT.

Nicole summarizes MMIT’s research on payers’ views of two crucial market changes: (1) the Inflation Reduction Act of 2022’s requirement to cap insulin prices at $35 for Medicare beneficiaries, and (2) manufacturers’ reduction in list prices for certain insulin products. She also discusses MMIT’s research on such glucagon-like peptide 1 (GLP-1) drugs as Ozempic and Mounjaro.

Click here to learn more about MMIT’s Biologics & Injectables Index, a research series that provides unblinded payer perspectives.

Read on for Nicole’s insights.

How Payers Are Reacting to Insulin Price Changes
By Nicole Mayer, Senior Analyst, MMIT

Over the past two decades, skyrocketing list prices for insulin have threatened medication adherence for the estimated 7.4 million American diabetics who rely on insulin to manage their disease. According to the American Diabetes Association, nearly one in four insulin-dependent diabetics have decreased or skipped doses because they could not afford to maintain their regimen.

With the passing of the Inflation Reduction Act of 2022, Congress addressed the financial strain on nearly three million diabetics by capping insulin prices at $35 a month for Medicare beneficiaries, beginning Jan. 1, 2023. In response to escalating pressure to lower costs for the millions of diabetics still subject to high insulin co-pays, Eli Lilly, Novo Nordisk, and Sanofi—which together produce 90% of insulins on the market—subsequently reduced the costs of their products for all patients, including those who are uninsured or covered by commercial plans.

While this is a huge step forward for patient access, what will these insulin price caps mean for health plans? To learn more, the MMIT Index team fielded one of its monthly Rapid Event Primers to survey payers on the real-world implications.

Payers are cautiously optimistic about price cuts

With insulin now more affordable for a larger percentage of patients, the need to skip or ration doses is expected to decrease. Our survey respondents anticipate this change will lead to improved treatment adherence nationwide. According to one payer, improved insulin affordability should "lower costs both medically and pharmacy-wise due to greater compliance and less missed insulin doses, and the complications that may arise from [that]." As another stated, "providing medications with low or no cost-sharing has been shown to increase medication compliance and results in better long-term health outcomes."

Payers predict this increase in compliance will ultimately lead to fewer ER visits and hospital admissions, better management of comorbidities, a reduction in medical and pharmacy costs, and an overall increase in quality of life for patients with diabetes. As the prevalence of diabetes continues to climb, these outcomes could have a significant impact on the overall economic cost of the condition.

Although the outlook on how the caps might affect patients is exceedingly positive, responding payers did express concern over the financial impact caps might have on their organization. In particular, payers are apprehensive that the reduction in insulin rebate revenue could have a detrimental effect on their margins, potentially necessitating an increase in co-pays and premiums.

Weight loss drugs could become a saving grace

While manufacturers and payers might see a cap-related decline in revenue, losses could be offset by the market entrance of glucagon-like peptide 1 (GLP-1) drugs, such as Ozempic and Mounjaro. In addition to treating type 2 diabetes, many GLP-1s can also treat obesity, which has led to an explosive increase in demand, increased off-label use, and supply shortages.

Among payers, there is a growing interest in covering Wegovy and other GLP-1s approved for weight loss, especially by employer groups. The popularity of these drugs might enable manufacturers to maintain their earnings despite lowering the cost of their insulin products. Rebate revenue from insulin could be replaced or superseded by contracting to receive aggressive rebates in exchange for looser restrictions or a more favorable tier placement for a given GLP-1 drug.

Additionally, there is the decrease in overall healthcare spending to consider. Even though many patients still require insulin while taking GLP-1s, the GLP-1s ultimately reduce the root cause of insulin resistance, which also decreases the risk of other comorbidities, like heart disease and joint disease. Outcomes-based contracting could result in shared risk between payers and manufacturers, improving patient monitoring and facilitating broader access to these therapies.

At present, these GLP-1s are quite expensive, but as more come to market (such as Pfizer’s oral drug, danuglipron), we can expect a decrease in prices. Though GLP-1s are presently covered only for diabetes under Medicare, the Treat and Reduce Obesity Act could soon allow them to be prescribed for weight loss. Given the current price of these drugs—Wegovy costs approximately $13,600 per year—and the prevalence of obesity among American adults, GLP-1s may also be among the drugs included in the Medicare Drug Pricing Negotiation Program, which would further reduce the cost burden for payers.

Creating an accessible, sustainable future

Clearly, the work being done to reduce out-of-pocket healthcare expenses for diabetics has the potential to significantly improve outcomes and enhance the quality of life for millions of Americans. Capping insulin prices is an excellent starting point in the journey toward more effective cost control of this chronic condition. "Any medication cost reductions to chronically sick patients always offers an opportunity for better wellness. This is true for insurers that hold both medical and pharmacy cost for patients," said one pharmacy director at a large national plan.

Regardless of the outcome of current legislation, payers and manufacturers will find it advantageous to prioritize access to GLP-1s for both diabetic and obese patients. With the right strategies in place, the decrease in insulin prices can have a neutral or even positive financial impact on all stakeholders, paving the way for a more accessible, sustainable future for diabetes care.

Learn how MMIT’s Biologics & Injectables Index can help your organization gain insights from unblinded payer perspectives.

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