- More than 1,750 Medicare Part D and Medicare Advantage plans have applied for a voluntary CMS savings model wherein seniors won't have to pay more than $35 a month for insulin, the Trump administration announced Tuesday.
- Seniors in plans participating in the Part D Senior Savings Model will get access to a broad set of insulin from the beginning of the 2021 plan year through the Part D coverage gap, including both pen and vial dosage delivery methods for rapid-acting, short-acting, intermediate-acting and long-acting insulin.
- CMS estimates beneficiaries in the model will see average out-of-pocket costs decrease by 66%, and the federal government will save roughly $250 million in manufacturer discounts over the model's five years. If the model is successful, CMS will consider expanding it to other high-cost drugs, Administrator Seema Verma said on a call with reporters Tuesday.
Thirty million people in the U.S. and one in three Medicare beneficiaries have diabetes. Insulin, a nearly century-old drug, is critical for managing the condition, but its cost has sharply increased in the past few years, threatening patient access to the medication. Medicare's Part D prescription drug benefit spends $13 billion a year on insulin alone.
Beneficiaries' out-of-pocket costs in Part D can fluctuate widely from month to month due in part to different rules depending on the phase of the Part D benefit, making it hard for people with diabetes to budget drug costs.
The Trump administration announced the voluntary model in mid-March in an attempt to tamp down on snowballing diabetes spending, estimated at $300 billion annually, and to make out-of-pocket costs more predictable and manageable.
Currently, insurers in Part D can sell prescription drug plans that include lower cost-sharing in the coverage gap, a period where consumers are on the hook for a higher amount of prescription costs. Those plans cause insurers to rack up higher costs for themselves that would usually be covered by pharmaceutical manufacturers — costs that eventually trickle down to patients in the form of higher premiums and co-pays.
The new insulin model, however, requires manufacturers to continue paying the 70% coverage gap discount for their insulin products and insurers to lower cost-sharing in their plans to no more than $35 for a month's supply of insulin, in part through applying manufacturer rebates.
CMS estimates average annual out-of-pocket costs will go down to $229 in the model, compared to the current $675, for enhanced Part D plans: pricier but more generous coverage than basic benefit plans. Roughly 80% of prescription drug plans are enhanced coverage, enrolling more than half of all Medicare beneficiaries.
The model will result in slight premium increases across enhanced plans: as little as $1 to $2 higher, CMS said.Eighty-eight commercial insurers participating in the Part D program applied to offer more than 1,750 enhanced plans.
Powerful payer lobby America's Health Insurance Plans cheered the news, saying in a Tuesday statement it's an "excellent example of public-private partnerships where everyone wins, but especially patients."
However, the pharmaceutical sector was more leery of the model, blaming health insurers for high out-of-pocket insulin costs.
"Companies already provide deep discounts and rebates on insulin — often in excess of the net revenues retained by the manufacturer — but Part D plans and [pharmacy benefit managers] are not sharing those savings directly with patients, whose out-of-pocket costs continue to soar," PhRMA CEO Stephen Ubl said in a Tuesday statement.
But almost half of the increase in the cost of covering a person with diabetes between 2012 and 2016 was due to higher insulin list prices alone, according to a 2019 report from the Health Care Cost Institute, a research group founded by major payers.
All three major insulin manufacturers — Eli Lilly, Novo Nordisk and Sanofi — have said they plan to participate in the model. The White House will have a presentation on the initiative at the Rose Garden on Tuesday with the companies, along with AHIP, PhRMA and major commercial payers UnitedHealthcare and Cigna, among others.
CMS plans to release premiums and costs for Medicare plans, including those in the model, by September. Beneficiaries will be able to shop the programs during Medicare open enrollment from Oct. 15 through Dec. 7 this year, for Part D coverage beginning Jan. 1.