Congress' Diabetes Caucus Seeks Transparency, Value-Based Contracts to Control Insulin Prices

November 2, 2018

The report, more than a year in the making, comes at the start of Diabetes Awareness Month.

Value-based contracts and alternative payment models that remove rebates are just 2 ways that policy makers could rein in skyrocketing insulin prices, according to a new report from the Congressional Diabetes Caucus, a bipartisan group that spent a year asking why prices have soared over the past decade for a hormone some patients need to stay alive.

The report, released Thursday, came on the first day of November, which is Diabetes Awareness Month. With the report came word that Sanofi would expand a program to help reduce out-of-pocket costs for people who use insulin.

Out-of-pocket costs for insulin can exceed $600 a month, and some patients now ration insulin or skip doses. This spring, the CDC reported a rise in hospitalizations from diabetic ketoacidosis, which can occur when patients miss insulin doses.

Insulin manufacturers have been under fire for more than a year over rising costs. All 3 major companies—Sanofi, Novo Nordisk, and Eli Lilly—are involved in federal litigation over pricing practices, which has stalled over whether pharmacy benefit managers (PBMs) should be sued at the same time.

The caucus, led by US Representatives Tom Reed, R-New York, and Diana DeGette, D-Colorado, reached conclusions somewhat similar to the plaintiffs in the lawsuit. In its report, the group found that the current system of rebates paid to PBMs, which critics say distorts prices across a range of therapies, hits especially hard in the insulin market.

The report outlines the complex insulin delivery supply chain and an even more byzantine reimbursement system, which entices various parts of the supply chain to make more money as the cost of insulin rises. Both wholesalers and PBMs make money when insulin is sold at a price greater than its acquisition cost. But then manufacturers pay PBMs rebates to encourage access to formulary, which causes insulin prices to rise to cover that spread.

Confidentiality agreements have kept information on rebates under wraps, but the report said that data show they can amount to as much as 40%. A lawsuit filed last month by the Minnesota attorney general contained redacted information that appeared to discuss a rebate contract.

Caucus members called for capping out-of-pocket costs for prescription drugs that treat chronic conditions, because skipping medication can make the disease worse. “When patients do not adhere to their prescribed chronic condition treatment plans, they often times make unnecessary visits to the hospital, where they receive expensive care,” the report states.

“Capping out-of-pocket costs for life-sustaining drugs like insulin could help patients better manage their diabetes and avoid adverse outcomes leading to unnecessary hospitalizations.”

Other policy recommendations focused on breaking apart these incentives:

  • Value-based contracts between insulin makers and PBMs would reward the supply chain for better outcomes instead of encouraging patients to skip insulin.
  • Alternative payment models that remove rebates could be required in Medicare and Medicaid.
  • Patient out-of-pocket costs should be linked to negotiated prices, not wholesale costs.
  • Policymakers should promote development of follow-on products by taking on patent extensions.
  • Generic manufacturers should be able to make older insulins that the top 3 manufacturers have pulled off the market.
  • More transparency is needed at every step—and manufacturers should be required to disclose list prices.
  • Policy makers should standardize formulary appeals and limit the number of formulary changes per year.

Sanofi’s announcement, which is available to qualifying patients, previously offered 2 insulins at a discounted price. The revised program, available at all US pharmacies, will offer all Sanofi insulins at a set price: $99 for a 10mL vial or $149 for a box of pens. Company officials said some patients will save up to $3000 a year.

When Sanofi launched the program, “Our goal was to support as many uninsured and underinsured people living with diabetes as we could, and we pledged to explore how to increase affordable access in the future,” said Michelle Carnahan, North America Head of Diabetes and Cardiovascular, Sanofi.

“We're making good on that pledge today by expanding this program. While we are off to a good start, we know that many people continue to look for more affordable insulin options. We hope the expansion and increased awareness of this program will allow more people to benefit from it.”