In March 2023, Lilly, Sanofi, and Novo Nordisk all announced that they will be lowering prices for several of their key insulin products.  To accomplish these price reductions, the three manufacturers have announced list price cuts ranging anywhere from 65% to 78%.  This news comes on the heels of the January 2023 introduction of the Inflation Reduction Act, which capped insulin out-of-pocket costs at $35 for Medicare beneficiaries.  This news also comes two years before the Medicare drug price negotiation program, which is slated to begin in 2026 and where insulins have the potential to be a drug included in negotiations. Another driving force for this change could be the American Rescue Plan Act of 2021, which removed the cap on rebates that manufacturers pay to Medicaid.  By proactively lowering prices now, insulin manufacturers may eliminate the risk of paying greater than 100% of AMP for Medicaid patients.

What Insulins are Included in the Price Cuts?

Based on a Novo Nordisk press release, “cutting the list price” seems to be equated with lowering the products’ Wholesale Acquisition Cost (WAC).  Using the publicly released price reduction percentages from each of the three manufacturers, PHSL predicts that the new WAC prices for key insulins will be as illustrated in the following table; however, PHSL notes that these newly anticipated WAC values are based on the current WAC values, and do not take into account any manufacturer price changes that could occur prior to the implementation.

Who Decides Which Insulin Prices to Cut?

While there have been various legislative and policy changes driving this concept, as with all drugs, it is ultimately up to the individual manufacturer to decide how to price their products. The insulin products noted in PHSL’s table are those that have been publicly stated as having price reductions applied. The manufacturers included in this list may or may not choose to reduce prices of their other insulin products. Other manufacturers may choose to reduce prices of their insulin products in the future.

Out-Of-Pocket Costs

The Inflation Reduction Act had already capped insulin out-of-pocket costs at $35 for patients with Medicare.  However, in addition to reducing the list price of their insulin products, Lilly has also announced that they will cap insulin out-of-pocket costs for commercially insured patients at $35, when prescriptions are filled at participating retail pharmacies.  Sanofi has pledged to do the same for Lantus.  Since manufacturers cannot dictate how payers set their patient copay amounts, how this will be operationally implemented for commercially insured patients has not yet been determined.  PHSL suspects that manufacturers may use e-vouchers to accomplish this.

The Improving Needed Safeguards for Users of Lifesaving Insulin Now (INSULIN) Act of 2023 was recently introduced in the U.S. Senate on April 20, 2023.  If passed, the bill would require health plans to cap out-of-pocket insulin costs at $35 for commercially insured patients in 2024.  In 2025, out-of-pocket costs would be calculated as the lesser of $35 or 25% of the list price for a 30-day supply.  With the newly lowered list prices from Lilly, Sanofi, and Novo Nordisk, 25% of the list price would often fall below the $35 threshold.  The bill indicates that pricing would need to apply “for at least one insulin of each type,” but how an insulin type is defined (i.e., long acting vs. short acting, unique active ingredient, etc.) is unknown.

Price Cut Implications

With most of the price cuts going into effect in 2024, PHSL would expect that manufacturers reduce or eliminate rebates for these insulin products.  For payers who have a large population of patients with diabetes and who rely heavily on rebates, a decrease in rebate dollars should be planned for and expected in the 2024 plan year (although the decrease in rebates is likely to be at least partially offset by lower plan paid costs upfront).

From a patient perspective, those with high prescription deductibles will benefit the most.  Once deductibles are met, commercially insured patients likely have copays at or below $35 today, and copay cards are prevalent for the above-mentioned insulin products.  For uninsured patients, Lilly, Novo Nordisk, and Sanofi all offer patient assistance programs or savings programs.  Thus, PHSL does not expect that the new price changes will have a significant impact on patient costs, except for those with high deductibles.  What are your thoughts on the newly announced insulin price reductions?  How will the price decreases impact industry stakeholders?

Posted May 16, 2023

Spring 2023 Newsletter:

Cutting Through the Online Noise – Social Listening: What Is It and How Can Pharma Benefit?