Diabetes Advocates: House Insulin Cost Report Lacks Bite

Alicia Ault

November 07, 2018

Advocates of individuals with diabetes say they welcome a new US House-issued report on the high cost of insulin, but some believe that although it is a significant step, the report fails in not calling for immediate action.

The report issued by US Representatives Diana DeGette (D-CO) and Tom Reed (R-NY), cochairs of the Congressional Diabetes Caucus, found that after tripling from 1992 to 2012, the price of insulin has more than doubled in the years since.

The year-long investigation into insulin pricing reveals what is already well-known by those following the issue, but is perhaps a revelation to those who are not: the marketplace is dominated by three manufacturers that make insulin in the United States — Eli Lilly, Novo Nordisk, and Sanofi — and three large wholesalers that control 85% of the distribution.

The congressional report makes 11 policy recommendations, including a call for increased transparency in pricing, elimination of rebates, and an embrace of value-based pricing. 

"The report is exciting to see because it shows that parties are taking the insulin price crisis seriously," Elizabeth Rowley, founder of the nonprofit advocacy group T1International, told Medscape Medical News. But, she said, "At the end of the day, this is simply a report, not a bill that is being proposed. It is a start, but we must see real action, not just talk."

T1International's #Insulin4all campaign has been especially vocal in its call for action on insulin prices.

Clayton McCook, of Edmond, Oklahoma, an advocate who has worked with T1International and the Washington, DC-based nonprofit Patients for Affordable Drugs, says he is grateful that Congress has devoted the time and energy to bringing attention to the issue, especially as many Americans probably still have no awareness of insulin's high price.

But, McCook told Medscape Medical News, "I hope it doesn't end with this report."

His 10-year-old daughter has type 1 diabetes and the cost of her insulin rose this summer from $331 a vial to $340, said McCook. "At some point we have to get past the talk and start to see some concrete action," he urged.

William T. Cefalu, MD, chief scientific and medical officer at the American Diabetes Association (ADA), told Medscape Medical News that the ADA applauds the Diabetes Caucus "for making a commitment to address the rising costs of insulin." Cefalu adds, "It is critical that Congress take an informed look at the escalating cost of insulin and work in a bipartisan fashion to address the issue."

Ending Gaming of the System

Advocates and professional societies generally agree with the report's policy recommendations, especially those aimed at increasing transparency and ending the gaming of the patent system.

Both the ADA and Endocrine Society have pushed for more transparency.

In a just-released report on insulin costs, the Endocrine Society notes, "the lack of transparency makes it difficult, if not impossible, to understand how much each stakeholder gains when costs to the patient increase." Having increased transparency is critical to understanding rising insulin costs, it says.

The Society also endorses limiting all patient cost-sharing to a co-pay, making NPH and regular insulin available at no cost, and passing rebates along to consumers without increasing premiums or deductibles.

The ADA's Cefalu says that "transparency must come from entities across the entire insulin supply chain, including manufacturers, pharmacy benefit managers, health insurers, distributors and pharmacies."

The ADA also agrees with the report's recommendations to move away from a rebate-based reimbursement system; to ensure people using insulin benefit from any discounts negotiated in the supply chain; and to limit out-of-pocket costs for prescriptions needed to manage chronic diseases like diabetes, Cefalu added.

The Juvenile Diabetes Research Foundation (JDRF) says it appreciates the leadership of DeGette and Reed on the pricing issue.

"The report's substantive findings align with JDRF's position that eliminating the use of drug rebates in favor of one where manufacturers offer their current net prices will reduce out-of-pocket expenses for people with type 1 diabetes," Cynthia Rice, JDRF senior vice president for advocacy and policy, told Medscape Medical News.

The Diabetes Caucus has made the following recommendations:

  • Promote the use of payment arrangements between insulin manufacturers and wholesalers that involve standardized fees instead of rebates.

  • Require insulin manufacturers, pharmacy benefit managers, and health insurers to disclose the value and volume of rebates that they receive and share with other entities in the insulin supply chain. One way this could be accomplished: Congress could require drug plans that participate in federal health insurance programs to disclose their use of rebates throughout the supply chain.

  • Link patient out-of-pocket costs to negotiated prices instead of list prices. Again, this could be accomplished through legislation that requires health plans and pharmacy benefit managers to base out-of-pocket expenses on negotiated prices.

  • Encourage the development of follow-on insulin drugs by addressing patent extensions. Generics (or so-called biosimilars) have been stymied by companies slightly altering their formulations and then seeking and getting patent extensions. Congress could require insulin manufacturers to show that new insulin formulations result in improved disease management. A November 2018 report by the Initiative for Medicines, Access and Knowledge (I-MAK), for instance, found that Sanofi filed 74 patent applications for its Lantus product in the United States with the goal of blocking generic competitors.

  • Allow generic manufacturers to produce older, off-patent insulins.

  • Require manufacturers to disclose their insulin's list pricing process.

  • Standardize the process for requesting exemptions or filing appeals from formulary changes.

  • Standardize drug formulary disclosure of patient cost-sharing information.

  • Limit the number of changes to a formulary each year.

  • Cap out-of-pocket expenses for prescription drugs that are needed for chronic conditions.

Of the manufacturers, only Sanofi responded to requests for comment by press time. In a statement issued to Medscape Medical News, a spokesman for Sanofi US said that the company "shares the concerns of the Congressional Diabetes Caucus regarding people living with diabetes having access to the medicines they need, and we thank them for allowing us to provide feedback and perspective for their report."

The spokesman said that over the last 5 years, "net prices for Lantus and Apidra have actually decreased as part of our ongoing efforts to remain included on insurance formularies at favorable tiers."

He added, "It is our belief that declining net prices resulting from these rebates should lower prescription out-of-pocket drug costs for patients," but, Sanofi acknowledges, this has not happened.

The I-MAK report found that even Medicare and Medicaid have been paying exorbitantly for Lantus. Total spending on Lantus by the Centers for Medicare and Medicaid Services (CMS) increased 132% between 2012 and 2016, largely because of higher prices, said I-MAK.

Value-Based Pricing?

Advocates were less embracing of the report's recommendation that pharmacy benefit managers and other purchasers used value-based contracts with insulin manufacturers.

The report notes that value-based contracts, which pay more for whatever perceived value a pharmaceutical delivers, have the potential to lower costs. 

With insulin, payments could be tied to successful patient outcomes; for instance, "manufacturers might only be reimbursed if their insulin formula helps patients better manage their diabetes," according to the report, adding that if an insulin did not meet a minimum efficacy standard under the contract, manufacturers would have to refund patients the cost of their insulin.

The policymakers say they envisioned a pilot by CMS or the possibility that Congress could also allow private insurers to test it out through managed care contracts with CMS or on the Affordable Care Act marketplaces.

The ADA and JDRF did not respond to questions about their thoughts on value-based purchasing, but the Endocrine Society has endorsed testing the model. The current regulatory environment has created barriers to the contracts, which means not enough is known about them, notes the Society in its insulin pricing report.

"Further research is needed to understand whether value-based purchasing agreements will reduce patient costs," the Society says.

Rowley, of T1International, said the value-based proposition is concerning when it comes to insulin. "It is not a solution to the insulin affordability crisis," she says.

Value-based pricing could restrict insulin affordability for those who do not have good control, and it might also overlook people who are now having bad outcomes because they can't afford insulin.

It is already known that the currently used insulins "work and have life-saving value," Rowley notes. "With value-pricing, manufactures could justify any price they want because of insulin's 'essential value,'" she added.

McCook also says he has reservations about the notion of "value" around insulin. If HbA1c is used as a measure of a good outcome that might not tell the whole story, he stressed. Some individuals can have a low HbA1c , but also have wild swings in blood glucose levels and many hypoglycemic episodes.

"What's the value of insulin to me? It's whatever it takes to keep my daughter alive."

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