The House decided last week to cap the cost of insulin, and Democrats believe they have found a winner to save seats in November. What ghoul could argue against cheaper insulin? Alas, the bill misdiagnoses the problem and serves as a pretext for more political control of drug prices, which will not serve suffering Americans.
The Affordable Insulin Now Act caps insulin cost-sharing at $35 per month for people with diabetes with private insurance or on Medicare Part D. The bill’s Democratic sponsors call it “critical pricing reform drugs” to cope with “the skyrocketing cost of insulin”. The bill passed 232-193.
The real story is more complicated. Insulin sticker prices have gone up, but those calculations don’t take into account discounts negotiated by pharmacy benefits managers. Over the past five years, drugmakers’ net revenues from diabetes drugs “have declined and patient disbursements have either remained flat or increased only slightly,” says a 2020 report from the IQVIA Institute. for human data science. It’s not a story of greed that pharmaceutical companies earn less and less.
The gap between list prices and net prices can be huge, and many discounts don’t reach customers at the counter, a real problem although smaller than advertised. In 2019, patients paid less than $30 out of pocket for 74% of all diabetes prescriptions, according to IQVIA analysis. More than nine out of 10 were below $75. But people can find themselves stuck paying exorbitant prices if they are uninsured or have to spend a large deductible before coverage begins.
What would the House bill do for the uninsured? No nothing. Insulin manufacturers are treated like bad guys, but they try to help these customers. Lilly’s Insulin Value Program offers a $35 monthly insulin discount card.
The Trump administration in 2019 revised federal guidelines to allow high-deductible plans to cover more chronic disease care before the deductible, including insulin. It seems to have helped. Some 76% of employers said in a 2021 Employee Benefits Research Institute survey that they had added pre-deductible coverage as a result of the change, most often for diabetes or heart disease. .
As for the House bill, insurers will meet the additional costs by increasing premiums. The great irony of Democrats claiming to be tough on Big Pharma is that drugmakers would no longer have any incentive to cap price increases, believing patients won’t notice and insurers may be stuck with the bill. Great job, everyone.
The premium spikes also mean the bill increases federal spending — for example, for ObamaCare grants — that Democrats would fund by pretending to delay a long-dead Trump drug pricing rule. This “paying for” is as bogus as the political solution.
Insulin markets need more competition, contrary to what the House bill encourages. Congress would be smarter to get the Food and Drug Administration to ease the approval of generic equivalents, an issue that has long vexed insulin markets.
Democrats have not been shy about offering their broader plan to control drug prices by the euphemism of “negotiating” Medicare. This tells investors: Move your money away from better drugs or long-term cures and into companies that are not under political assault.
This would be a terrible development for diabetics, especially since cell therapies could one day cure them. As former FDA Commissioner Scott Gottlieb said recently, affordable diabetes treatments are critical, but Congress and the public must remember that “the ultimate goal is to free patients from insulin”.