Optum Rx, the pharmacy benefits manager operated by healthcare behemoth UnitedHealth, is moving eight popular insulin products to preferred status on its standard formulary for commercially insured Americans.
The move, which Optum Rx says will improve access to low-cost insulin, comes as PBMs face hefty congressional scrutiny over their role in raising U.S. drug costs.
Medications on the preferred tier one have the lowest out-of-pocket costs for consumers. Now, all short- and rapid-acting insulins — and the majority of highly prescribed long-acting insulins — will be on that tier, including products from major insulin manufacturers Eli Lilly, Novo Nordisk and Sanofi, Optum Rx said Thursday.
The move is effective January 2024, at which time 98% of all Optum Rx consumers will have access to insulin for $35 or less a month, according to the company. That’s a significant number of people — Optum Rx administers the drug benefit for tens of millions of consumers, according to UnitedHealth.
However, it’s unclear how much this will improve insulin access given separate actions from drugmakers to lower insulin list prices and enact out-of-pocket cost caps that also kick in at the start of next year.
Insulin’s fluctuating price tag
Members of the pharmaceutical supply chain have faced intense public pressure to lower the cost of insulin, following steep list price increases before the pandemic. As a result, more than a million Americans with diabetes reported rationing their insulin in 2021, risking serious medical problems or even death because they couldn’t afford the drug.
In August 2022, President Joe Biden signed the Inflation Reduction Act into law, capping insulin’s out-of-pocket cost at $35 for seniors on Medicare. Democrats have called for those caps to apply to all patients, including those on commercial insurance.
Following the push, Eli Lilly in March this year announced it would cut the list price of its insulins and cap out-of-pocket costs at $35 for people covered by private plans. Rival drugmakers Novo Nordisk and Sanofi quickly followed suit, slashing list prices for insulin products. Sanofi also set a $35 cap in out-of-pocket costs for its most-prescribed insulin product for commercially insured people.
But drugmakers alone aren’t accountable for the cost of insulin. The cost of drugs at the pharmacy counter is due in part to how drug prices are negotiated between drugmakers and PBMs. The three largest PBMs — CVS’ Caremark, Cigna’s Express Scripts and Optum Rx — handle 80% of all prescriptions in the U.S.
PBMs maintain formularies, or lists of covered drugs for patients in health plans. Often, a drug’s position on that formulary depends on the rebate a drugmaker pays to a PBM, otherwise a medication might be excluded from a formulary and subsequently not be covered by a patient’s drug benefit.
Despite the availability of lower-priced insulins, including generics and biosimilars, PBMs have often excluded the drugs from their formularies in favor of medications with higher list prices and subsequent rebates.
In 2016, Optum Rx excluded only four types of insulin from its standard formulary. By 2022, Optum Rx excluded 13 insulins, according to an analysis by life sciences consultancy Xcenda.
The eight drugs Optum Rx is newly moving to preferred status were previously on tier three or excluded altogether from the PBM’s formulary lists, a spokesperson told Healthcare Dive.
Those insulin medications are Eli Lilly’s lispro, Basaglar and Rezvoglar; Novo Nordisk’s Novolog, Fiasp and Novolin; and Sanofi’s Admelog and Apidra.
UnitedHealth has taken past actions to improve insulin affordability. The health insurer started offering some medicines, including insulin, at zero cost share to members of standard insured group plans this year.
But “drug manufacturers have the sole discretion over setting and raising prescription drug prices,” Optum Rx argued in its Thursday press release, calling PBMs a “counterweight to the manufacturers.”
Drugmakers and PBMs are hammering each other as the main culprit behind rising drug costs in the U.S. in congressional hearings and advertising blitzes as lawmakers debate legislation to lower the high price of medications.
It’s looking increasingly likely that legislation will target PBMs, after earlier this week the powerful Senate Finance Committee voted to pass a bill to the full Senate that would impose new rules on the drug middlemen. That includes basing patients’ out-of-pocket costs on a drug’s net price rather than its list price for certain medicines with high rebates in Medicare’s prescription drug benefit.