Article

Insulin legislative changes: Current proposals and road map

13 July 2022

Patient costs for drug therapies have become a focal point for politicians and media outlets alike. With parts of Build Back Better being potentially resurrected and the recent introduction of the INSULIN Act, Congress is actively considering proposals that would affect drug pricing.^1,2

This article is the first in a series examining various legislative proposals that would affect insulin specifically. We focus on the scope of each proposal, the mechanisms and tools used, and potential impacts on different stakeholders. A more in-depth review of stakeholder impacts and health equity considerations will be addressed in future articles.

Insulin cost reform proposals

Congress has considered several proposals intended to reduce patient costs for insulins (and other drugs). These legislative proposals have generally included either or both of the following provisions:

Insulin copay cap: Would cap patient cost sharing at $35 per one month supply of insulin in the private health insurance and Medicare Part D markets.
Reduce POS prices: Would reduce point-of-sale (POS) prices by either passing manufacturer rebates through to patients or reducing list prices to the weighted average net price.

Figure 1 compares the insulin cost reform proposals, indicating which proposals include the provisions noted above and whether each proposal is insulin-specific. Whether the bill is specific to insulin or tied to other issues could affect its likelihood of passing, as reducing insulin patient costs has gained some bipartisan support. We expand on each provision in this article, and briefly discuss the strategic implications by stakeholder.

Figure 1: Comparison of insulin cost reform proposals

Insulin copay cap

Two pieces of legislation that recently passed the U.S. House of Representatives included a $35 insulin copay cap: the Build Back Better (BBB) Act and the Affordable Insulin Now Act. ^3,4 Neither bill was adopted by the Senate. On June 22, 2022, Jeanne Shaheen (D-NH) and Susan Collins (R-ME) proposed a bipartisan bill that also includes this provision.^5,6 The insulin provisions appear similar in each of the aforementioned bills and, if passed, would bring the following changes to each market:

Private health insurance: For selected insulins, patient cost sharing would be the lesser of (a) $35 copay per 30-day supply, or (b) 25% of the insulin negotiated price, net of all price concessions. This would apply to both the fully insured and self-funded private health insurance markets. Plan sponsors would be required to offer this cost-sharing level for at least one dosage form (e.g., vial, pump) for each insulin type (e.g., rapid-acting, long-acting).
Medicare Part D: For covered insulins, patient cost sharing would be capped at no more than $35 per 30-day supply. This provision would apply to beneficiaries both eligible for and not eligible for the low-income subsidy (LIS).

The Medicare Part D Senior Savings Model (SSM) may provide a blueprint of what to expect in terms of beneficiary impact and how the U.S. Department of Health and Human Services (HHS) might implement this legislation.⁷ The SSM is a voluntary demonstration program allowing Part D plans to reduce insulin copays for non-LIS beneficiaries to $35 per 30-day supply. With 2021 as the first full year of the SSM, it is not yet clear how access to insulin at a lower cost has affected the health and outcomes of patients. Initial data from insulin-taking patients enrolled in plans participating in the SSM may provide insight into potential refinements needed to expand the insulin copay cap legislation to a wider population.

Reduce prices

Another insulin proposal is to reduce insulin prices at the pharmacy. This general approach has taken multiple forms, such as passing through manufacturer rebates at POS or setting insulin equal to the weighted average price, net of rebates, based on historical data.

On November 30, 2020, HHS finalized a rule that would effectively require rebates to be passed through at the pharmacy.⁸ The Infrastructure Investment and Jobs Act (IIJA), passed in the fall of 2021, delayed implementation of this POS rebate rule to 2026.⁹ As currently written, the Affordable Insulin Now Act would delay the POS rebate rule by one year (to 2027) to cover the cost of the new provisions (as the POS rebate rule is budgeted to increase federal spending). It is unclear whether the POS rebate rule will be implemented in the future based on these efforts to delay the rule and the government cost associated with the legislation (which could free up government funds for use elsewhere if the bill is further delayed or not implemented).

Senators Collins and Shaheen released a new bill, titled the Improving Needed Safeguards for Users of Lifesaving Insulin Now (INSULIN) Act on June 22, 2022. This bill allows manufacturers to pursue a “certified insulin” status from HHS, which, if granted, provides beneficiaries access to the $35 maximum copays previously described. Certified insulins would also require a price change, with net prices being posted publicly by the HHS Secretary based on 2021 negotiated prices, less all manufacturer rebates in the Medicare Part D market. This bill would also prohibit plan sponsors and pharmacy benefit managers (PBMs) from receiving rebates from manufacturers, and would also prohibit plan sponsors from applying any prior authorization or medical management to certified insulins. Certified insulin status appears to be optional, and manufacturers would need to weigh the opportunities (e.g., no longer negotiating rebate rates, potential increase in utilization) with the drawbacks (e.g., publicly sharing prices across the market, uniformity of revenue across lines of business).

Legislative process considerations

Each proposal follows a slightly different legislative and approval process. Figure 2 illustrates the current state of each proposal to provide context on where they fit into the process.

Figure 2: U.S. Congress legislative process overview

Strategic considerations

These insulin cost reform proposals create new strategic considerations for key industry stakeholders. We briefly introduce some of these considerations in Figure 3. These considerations are not intended to be exhaustive, and we will expand on this further in future articles through the lens of individual stakeholders.

Figure 3: Strategic considerations by stakeholder

Stakeholder	Considerations
Patients	Proposed legislation could reduce patient financial burden and improve cost predictability, helping improve adherence, which should lead to better health. Improved health outcomes should reduce overall health system costs. There could be a disproportionate benefit to specific disadvantaged or marginalized populations, particularly those not eligible for Medicaid or Medicare’s low-income subsidies.
Insurance Carriers and PBMs	With uncertainty on implementation, plan sponsors and PBMs will need to know how lower cost sharing will be funded. The dynamics among POS prices, manufacturer rebates, member premiums, and consumer behaviors are very complex and must be fully evaluated to understand and mitigate unintended consequences. Formulary strategies may vary between proposals and markets, depending on the coverage requirements and potential for contract negotiation. In the Part D market, plans will need to know how this will affect the SSM, if the program is maintained.
Employers	These proposals could affect benefit design strategy, as different plan types will see different impacts. For example, traditional copay-based benefit designs may experience minimal changes, while high-deductible health plans (HDHPs) could see significant changes in consumer behavior. Health, wellness, and chronic condition management programs could shift focus, depending on the effectiveness of cost reform in driving improved outcomes for patients. Employers will need to know how the cost-sharing reduction may be funded. It could increase costs without a decrease in medical claims, depending on current benefit offerings.
Federal Government	Reducing patient insulin costs could result in lower medical costs through Medicare Parts A and B if health outcomes improve. If fewer patients reach catastrophic coverage, federal reinsurance may decrease, while premiums and the direct subsidy could increase. Including LIS beneficiaries could lower federal low-income cost-sharing subsidies (LICS) and shift more cost for plans to be at-risk. This could in turn increase premiums and premium subsidies. Insulin proposals could create a replicable model for other therapeutic classes with high-cost preventive medications (e.g., HIV/AIDS).
Pharmaceutical Manufacturers	Demand for insulin may increase with lower cost and increased adherence. The gross-to-net impacts (i.e., difference in list prices, before rebates to net prices, after rebates) of these types of proposed changes are unclear and need to be explored. Rebate contracting and copay assistance programs may need to be reevaluated.

Next steps

The insulin cost reform proposals under consideration by Congress have the potential to drive material changes to insulin costs for patients. We plan to explore stakeholder perspectives in more detail, along with the health equity implications of these proposals in future articles. We will also consider potential methods of measuring success of potential reforms, if implemented. If you have any questions or would like to discuss ideas related to these reform proposals, please contact your local Milliman consultant.

¹ See Prescription Drug Pricing bill text here: https://www.finance.senate.gov/imo/media/doc/070622 Prescription Drug Pricing Reform Leg Text.pdf.

² See INSULIN Act bill text here: https://www.shaheen.senate.gov/imo/media/doc/Shaheen-Collins INSULIN Act.pdf.

³ See Build Back Better Act version passed by U.S. House of Representatives here: https://www.congress.gov/bill/117th-congress/house-bill/5376/text.

⁴ See Affordable Insulin Now Act version passed by U.S. House of Representatives here: https://www.congress.gov/bill/117th-congress/house-bill/6833/text.

⁵ See INSULIN Act summary here: https://www.shaheen.senate.gov/imo/media/doc/6.21.22%20Insulin%20One%20Pager%20Final%20PDF.pdf.

⁶ See INSULIN Act bill text here: https://www.shaheen.senate.gov/imo/media/doc/Shaheen-Collins%20INSULIN%20Act.pdf.

⁷ For more detail on the Senior Savings model, current participation, and other observations, refer to this article: https://us.milliman.com/en/insight/to-participate-or-not-to-participate-considerations-and-landscape-for-the-part-d-ssm.

⁸ See final rule here: https://www.federalregister.gov/documents/2020/11/30/2020-25841/fraud-and-abuse-removal-of-safe-harbor-protection-for-rebates-involving-prescription-pharmaceuticals.

⁹ See final version of Infrastructure Investment and Jobs Act here: https://www.congress.gov/bill/117th-congress/house-bill/3684/text.