Rising Insulin Costs in US Get Pushback as Basaglar Launches

Alicia Ault

December 15, 2016

The upward trajectory of insulin prices in the United States seems to be hitting a speed bump, as two of the biggest manufacturers are now pledging to restrain increases and offer discounts to patients.

The moves come as pharmaceutical benefits management (PBM) firms said they would cut higher-priced insulins out of their formularies and as Eli Lilly rolls out Basaglar, its follow-on biologic of insulin glargine (Lantus, Sanofi).

The list price — $316.85 for a pack of five pens — puts it at a 15% discount to Lantus and Toujeo (Sanofi), a 21% discount to Levemir (insulin detemir injection, Novo Nordisk) and a 28% discount to Tresiba (insulin degludec, Novo).

And the political establishment has also begun to take a closer look at rising drug costs.

President-elect Donald Trump, for one, has indicated he's interested in going after increasing pharmaceutical costs. "I'm going to bring down drug prices," said Trump, in an interview with Time magazine. "I don't like what's happened."

Whether he follows through or not, some US lawmakers have already asked for a federal inquiry into insulin prices, and the American Diabetes Association (ADA) has called on Congress to hold hearings.

The ADA, which is also seeking more transparency in the insulin market, estimates that the average price of insulin in the US tripled between 2002 and 2013.

Europeans pay a sixth of what Americans do for the product, says the ADA.

A little more than one million Americans have type 1 diabetes, all of whom require insulin to stay alive.

And 28 million Americans have type 2 diabetes, with around 15% to 23% of these patients thought to be using insulin too, according to a lengthy look at the global insulin market by Health Action International, a nonprofit pharmaceutical policy organization based in the Netherlands.

The reason why manufacturers have continued to raise US prices? "There's nothing to stop them," Ira Loss, a senior healthcare analyst at Washington Analysis, told Medscape Medical News.

Aaron Kowalski, PhD, chief mission officer of the JDRF, agrees but says change may be coming.

Five years ago, "if the retail price went up, nobody noticed," because most patients with insurance had fixed deductible copays, he told Medscape Medical News. But now, more people with diabetes must meet high deductibles for pharmaceuticals, which means they see the retail price.

Insulin makers have been reticent to divulge whether or how they discounted their products to PBMs or other purchasers.

But Congress, the media, patient advocates, and others have shone a bright light on increasing drug costs.

Drug makers "are being hung out there, and there's going to be a lot more transparency," predicted Dr Kowalski.

The Basaglar Effect?

Even before it was introduced, Lilly's follow-on biologic of insulin glargine was putting pressure on pricing. Analysts predicted that Basaglar would be priced at 15% to 20% less than the brand-name insulins. That's not the usual 80% to 90% discount seen with generics, but it was enough to move the market.

PBMs — which, according to the industry trade group, the Pharmaceutical Care Management Association (PCMA), provide pharmaceutical coverage for 266 million Americans — indicated early on that they would favor Basaglar on 2017 formularies.

America's second- and third-biggest PBMs — CVS Caremark and UnitedHealth — said in August that Basaglar would have preferred formulary status in 2017.

CVS said it anticipates "significant savings for many clients and members," with the "removal of higher-cost products" like Lantus from its formulary.

At the same time, the nation's largest PBM, St Louis, Missouri–based Express Scripts, said it might reassess the basal insulin category "later this year to reflect anticipated product launches." The company has since added Basaglar to its 2017 formulary, according to Lilly.

Express Scripts also has introduced a "Diabetes Care Value Program," in which the PBM is guaranteeing its subscribers that per-patient drug spending will be half of the forecast 18% growth in 2017.

And CVS has just initiated a similar program its Transform Diabetes Care, which, among other things, will guarantee its clients that diabetes drug spending will not increase more than 9% in 2017.

"In 2016, antidiabetic drugs were the leading driver of gross costs for our clients," said Jonathan Roberts, president of CVS Caremark, in a statement.

He added that the new program will take direct aim at those costs.

Drug Makers Feel the Pinch

If PBMs are pledging to keep 2017 diabetes drug costs down for clients, they will likely extract greater discounts from pharmaceutical companies in exchange for a formulary position — or a more favorable position.

Sanofi, which is the third-leading insulin manufacturer in the world, after Novo Nordisk and Lilly, is feeling the pushback on Lantus. The company reportedly plans to cut 20% of its diabetes sales and marketing staff in early 2017.

PBMs — and insurers — have taken their toll on Sanofi, said the company, in a statement emailed to Medscape Medical News.

Sanofi has "not increased the list price of our basal insulin since November 2014," but the company has "significantly increased the amount of rebates paid to pharmacy benefit managers and insurers over the past few years to remain included on formulary at a favorable tier that provides an affordable out of pocket cost to patients."

Insulin prices aren't the problem, insists Sanofi.

Patients' cost burden "is to a much greater degree impacted by their insurance design," the company says.

Meanwhile, market leader Novo Nordisk, which has an estimated 52% share of the $27 billion world insulin market, is promising to curb its pricing enthusiasm.

In a late-November web posting, Novo Nordisk executive Jakob Riis said the company would be immediately "limiting any potential future list price increases for our medicines to no more than single-digit percentages annually."

The Endocrine Society has acknowledged the Novo pledge in a statement praising the move, but it also called for more work "to determine both the cause of increasing prices as well as additional ways to ensure access to insulin."

Novo Nordisk has not announced any layoffs, but Riis blamed PBMs and other payers for contributing to a declining profit margin at the company, which he said could harm innovation.

Eli Lilly also has not made any diabetes-specific cutbacks.

But, it, too, said its "net prices" — the revenue received after rebates and discounts — had declined. For Humalog, "Lilly actually receives a lower average net price now than in 2009," Lilly director of diabetes communications, Greg Kueterman, told Medscape Medical News.

Patients Left in the Lurch, Forgoing Other Things to Buy Insulin

Insulin makers blame patients' rising costs on PBMs and also on high-deductible health insurance plans that mean patients pay list prices until the deductible is met.

PBMs point the finger back.

The PCMA said that PBMs account for 4% of the net cost of a brand name prescription, while manufacturers account for 88%.

The group also said that without PBMs, drug costs would be at least 50% higher.

PBMs "claim to provide a service where everybody wins," says Loss, of Washington Analysis. "That's just not possible. Somebody's losing."

And the companies are a black box, he adds: "You don't know what's going on in there."

Patients are the ones ultimately paying for the lack of transparency in the market, says Robert Ratner, MD, chief scientific and medical officer of the American Diabetes Association.

Having coverage is no buffer against rising insulin costs. Some people are paying $6000 before their insurance benefits kick in, he told Medscape Medical News.

Medicare beneficiaries get stuck with big bills, too, when they fall into the "doughnut hole," a period of time when patients have to cover all costs until catastrophic coverage begins.

Then there are those who have no insurance at all. Four million Americans have no prescription drug coverage and 26 million are uninsured, estimates the PCMA.

Dr Ratner said a recent ADA survey of some 700 people who depended on insulin found that "they are forgoing things to pay for their insulin, or people are rationing their insulin." That, he said, "puts their health at risk."

All of the companies said they offer assistance programs for those who can't afford medications.

Lilly also just launched a new discount program.

Beginning in January, when most people with insurance have to start paying new deductibles, anyone who pays the retail price for any Lilly insulin will be eligible for discounts of 40% or more, if they use an app hosted by Blink Health. People who have prescription drug coverage that is reimbursed by a government program, however, are not eligible.

Enrique Conterno, president of Lilly Diabetes, said in a statement that the program "is a first step that will drive more thinking and innovative solutions for people with diabetes."

Lilly will also be offering discounts for Basaglar, although the company's details are a bit fuzzy. A spokesperson says, "If eligible, people will pay as little as $5 a month, with a maximum saving up to $150 for a monthly prescription, for each of a person's first 24 prescriptions."

But even Novo Nordisk's Riis acknowledges the drug companies' actions — and blame assessing — might not be enough.

"While we can debate who pays what in different scenarios, it doesn't change the fact that many patients simply can't afford the medicine they need," he said, in his blog post.

Congressional Action Soon?

The continued lack of affordability of insulin in the US will likely garner some Congressional attention in early 2017, Dr Ratner believes.

"We're optimistic that the Hill will take this on in the next Congress, and we hope that they can illuminate all those financial transfers that we've been unable to identify," he told Medscape Medical News.

He said the ADA has been in talks with various Congressional committees and with drug makers, as well: "It's clear it's not just the manufacturers; it's the entire supply chain."

Some members of Congress have already indicated their displeasure with rising insulin costs. Sen Bernie Sanders (I-VT) and Rep Elijah Cummings (D-MD) have asked the US Department of Justice and the Federal Trade Commission to investigate potential collusion among the drug companies in setting prices for diabetes products.

A political focus on drug costs is almost a certainty in the coming year, predict Loss and his colleagues at Washington Analysis.

"Given the ongoing public outrage over high drug prices, we think Congressional hearings and even reimbursement demonstrations are likely, the latter of which we believe investors have largely dismissed," they say in a December note to clients.

They state that the Centers for Medicare and Medicaid Services could go after pricing by ordering demonstration projects that bundle payment for services, including pharmaceuticals.

"While we remain skeptical that a GOP Congress would agree to government negotiation for Medicare drugs or mandatory pricing transparency, it could be amenable to capping pharmaceutical out-of-pocket costs for patients," say the analysts.

The JDRF has not pushed for hearings, in part because "we think we don't know all the facts yet," said Dr Kowalski. He said JDRF would like to "find the sweet spot to drive innovation," while also controlling costs.

People want high-quality, better insulins, and they want a broad choice, he said. The question is how much they are willing to pay for choice.

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