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Health Affairs This Week places listeners at the center of health policy’s proverbial water cooler. Join editors from Health Affairs, the leading journal of health policy research, and special guests as they discuss this week’s most pressing health policy news. All in 15 minutes or less.
00;00;08;20 - 00;00;17;18
Jessica Bylander
Hello, everyone. You're listening to Health Affairs This Week, the weekly podcast where the editors at Health Affairs talk about the latest in health policy news. I'm Jessica Bylander.
00;00;18;03 - 00;00;42;13
Chris Fleming
And I'm Chris Fleming. As usual, it's been an eventful week in health policy. The fun never stops. The federal government announced plans to overhaul the nation's organ transplant network. And here at Health Affairs, we just published an article, Ahead of Print article, in the Journal by MedPAC chair Mike Chernew and coauthors that addresses the question, “What specific benefits would be lost if Medicare Advantage payment rates were reduced?”
00;00;42;29 - 00;00;49;28
Chris Fleming
And if you want to know the answer to that question, and I'm guessing if you're listening to this podcast, you probably do, be sure and check out the Chernew paper.
00;00;50;17 - 00;01;05;19
Jessica Bylander
Yeah, be sure to check that out. Now to today's topic: The cost of insulin. In the past few weeks, months even, the cost of insulin has been in the news a lot. So first, let's get some context. Why is the cost of insulin such a big deal?
00;01;06;02 - 00;01;27;27
Chris Fleming
Well, Jess, about one in ten Americans, over 37 million, have diabetes, which means they can't break down the sugars from the food they eat into fuel for their bodies. Roughly one and a half million Americans are living with type one diabetes and they require daily insulin to survive because they can't produce the insulin to break down that sugar the way most of us do.
00;01;28;06 - 00;01;52;02
Chris Fleming
Overall, about eight and a half million Americans use insulin. So now on to the question of why the price of insulin has been so high. And that's a good question. We're used to new drugs coming on the market with high prices. But insulin has been around for over a century. Ironically, the original patent holders, and it was not George Santos, sold the patent for a dollar to ensure that insulin would always be affordable.
00;01;52;02 - 00;02;14;17
Chris Fleming
That turned out to be a little more problematic than they thought. And so what happened? Well, one answer is evergreening, a phenomenon that, again, is more familiar to us from more recent drugs. Evergreening is when companies make incremental changes to their products, and that gets them new terms. New years of intellectual property protection. And that happened with insulin.
00;02;15;12 - 00;02;35;29
Chris Fleming
And it doesn't mean there weren't real improvements. I mean, the original forms of insulin that were derived from beef and pork, they were plagued by impurities that created safety hazards. And the more purified forms of that animal-derived insulin were certainly safer and better. The forms of insulin made from recombinant DNA technology that emerged in the seventies were better yet.
00;02;36;23 - 00;02;59;10
Chris Fleming
But the older, cheaper forms of insulin didn't become generics. They just stopped being available. And I should point out, it's harder to make generic versions of insulin, which is a biologic, although it wasn't always legally treated that way, but a biologic, a complex molecule made from living cells, it's harder to do a generic version of that than it is to do a generic version of some of the more familiar small molecule drugs.
00;02;59;23 - 00;03;27;07
Chris Fleming
So whatever the reason, the high prices for insulin have really been devastating for many people. There have been a lot of news stories, I'm sure many of our listeners have seen them, about the dangerous and often deadly effects of insulin rationing. And that can lead to a number of complications. Diabetic ketoacidosis, an emergency condition where there's not enough insulin in the body, that's lethal if untreated.
00;03;27;27 - 00;03;42;19
Chris Fleming
Other consequences can include cardiovascular disease, diabetic neuropathy that can lead to the amputation of your feet, and diabetic retinopathy, which can lead to blindness. And there are other conditions as well.
00;03;43;05 - 00;04;19;11
Jessica Bylander
Yeah, I mean, considering how many people rely on insulin to manage their diabetes, this high cost inability to afford the medication is a big deal to a lot of people. So back in August, the Inflation Reduction Act made waves by capping the out-of-pocket costs for insulin at $35 a month for Medicare beneficiaries. So starting on January 1st of this year for the Medicare Part D program, which is where most people with Medicare get access to insulin, and starting July 1st for the Medicare Part B program. And that includes traditional Medicare as well as Medicare Advantage.
00;04;19;22 - 00;04;49;20
Jessica Bylander
So an estimated 30% of the Medicare population has diabetes. And a recent analysis found that this $35 a month cap would have saved Medicare beneficiaries $761 million in 2020, which is over $500 per beneficiary. So actually, I found that in the last few years, CMS piloted a program that also capped the cost of insulin, the out-of-pocket costs at $35 a month for some Medicare beneficiaries.
00;04;49;27 - 00;05;17;09
Jessica Bylander
So that was a voluntary program. But several drug companies participated, including the major insulin makers Eli Lilly, Novo Nordisk and Sanofi, and more than 2000 prescription drug plans participated. So that pilot’s ending now, it's basically been supplanted by the latest initiative. So the insulin price cap is a big victory for the Biden administration, it could definitely result in more seniors adhering to their medication and keeping their diabetes in check.
00;05;17;25 - 00;05;37;26
Jessica Bylander
But the president didn't stop there in his State of the Union address last month. He went on to say he wants to see the cost of insulin capped at $35 a month for everyone, including children and people with private insurance. And actually, at the time, analysts were saying, well, that wasn't very likely to happen. But fast forward to this month, and that's exactly what we're seeing, right?
00;05;38;03 - 00;06;01;13
Chris Fleming
Indeed. Eli Lilly, they're the three major manufacturers of insulin that you mentioned, I think they have about 90% of the market. So they're basically a monopoly or almost a monopoly. Eli Lilly on March 1st, Novo Nordisk on March 14th and Sanofi on March 16th, they all announced that they were capping the price of insulin, just as you said.
00;06;02;08 - 00;06;25;28
Chris Fleming
Now, Eli Lilly and Sanofi also capped cost sharing at that same $35 a month for large numbers of patients outside of Medicare. And those three companies, there's been speculation as to why they made their moves. The CEO of Eli Lilly, David Ricks for instance, said the decision came after conversations the company had with members of Congress about the cost of medication.
00;06;25;28 - 00;06;51;00
Chris Fleming
And you can imagine that being a fly on the wall, what the members of Congress were saying. Chuck Schumer, who's the Senate majority leader, also sent a letter to the CEO of Sanofi. So others say, you know, the new Medicaid rebate policy and the Inflation Reduction Act that's aimed at keeping the costs of drugs from rising faster than inflation, that may also have contributed.
00;06;51;21 - 00;06;59;15
Chris Fleming
And then there, finally, there have been competition from others who are vowing to sell finally cheaper generic versions of insulin to consumers.
00;07;00;07 - 00;07;26;14
Jessica Bylander
Right. And one of the key players here is Civica, which is a company that aims to procure or themselves make affordable generic drugs. So they say they'll produce three insulins in vial or pen form and sell them at no more than $30 per vial and no more than $55 for a box of pre-filled pens. And on their website, they say that could be starting in 2024, although other reports suggest maybe more like 2025.
00;07;27;05 - 00;07;59;11
Jessica Bylander
And Civica also last week announced it will manufacture insulins for California's biosimilar insulin initiative. And California invested $50 million toward the development of Civica’s insulins. So once approved, these insulins will be available to all Californians regardless of whether they have insurance or what type of insurance they have at those $30 and $55 max price points. And from there, they're also looking into potentially creating an insulin manufacturing facility in California.
00;08;00;14 - 00;08;37;26
Jessica Bylander
So, Chris, as you mentioned, it's been harder to make these generic or biosimilar versions of insulin, which is made from living cells. But in 2021, FDA did approve the first biosimilar insulin product called Semglee. And it's interchangeable with Sanofi's Lantus insulin product. At the time, FDA was saying, you know, biosimilars have great potential to reduce the cost of insulin treatment, but it turned out Semglee ended up being only a little bit less expensive, at least for the version that had the product's kind of brand name on the packaging.
00;08;38;08 - 00;09;03;10
Jessica Bylander
And then in another corner, billionaire Mark Cuban also plans to sell low cost insulin online. And he actually launched a test program earlier this year to sell a non branded insulin from Lilly. And actually, all of the brand name insulins have unbranded versions that are generally less expensive. So still made by those three major makers but don't have the product name on the packaging and are less expensive but otherwise are the same product.
00;09;03;11 - 00;09;25;12
Jessica Bylander
So, you know, there's a lot going on. It's pretty complicated. And with all of these iterations on how to lower the cost of insulin going on, it almost takes the wind out of some of the options. I mean, I'm kind of left wondering whether those moves in California and by Cuban are going to be able to compete with the brand name drug makers slashing their prices or capping out of pocket costs.
00;09;26;05 - 00;09;34;09
Jessica Bylander
But on the other hand, it's a sign that the market is finally operating as markets are supposed to do with competition, driving prices down across the board.
00;09;34;26 - 00;09;57;28
Chris Fleming
I wonder if we'll have somebody making, pitching generic insulin on Shark Tank. But anyway, the recent move, more seriously, it's certainly notable and impressive. But, you know, there are some who are saying that maybe we shouldn't stop now. We should go further. “Don't stop us now,” to paraphrase the great Freddie Mercury and Queen.
00;09;59;03 - 00;10;22;06
Chris Fleming
We have a Forefront piece out this morning, Friday morning, March 24th, by William Walters and Richard Hughes that argues we should treat insulin as a preventive service for insulin dependent individuals who are living with diabetes and therefore, we should eliminate all cost sharing for this group. You know, $35 a month, it's a lot better than what we had before.
00;10;22;12 - 00;10;46;03
Chris Fleming
But it's still a big lift for a lot of people. And the authors of this Forefront article cite evidence that even modest cost sharing can deter compliance with treatment regimes. And the Forefront piece goes through which entities would be able to eliminate cost sharing in different market segments, commercial insurance, Medicare, Medicaid, and how they would do it.
00;10;47;04 - 00;10;52;03
Jessica Bylander
Wow. That's really interesting. I'll check that out as well. And that seems like a great place to wrap up, Chris.
00;10;52;13 - 00;11;09;01
Chris Fleming
Well, sounds good. Thanks to everybody for listening to another episode of Health Affairs This Week. If you like the episode, tell a friend. Make sure you subscribe to Health Affairs This Week wherever you get your podcasts if you haven't already. We'll see you all next week. And thanks, Jess.
00;11;10;01 - 00;11;30;12
Jessica Bylander
Thanks, Chris.