Medicare Insulin Savings Model Cuts Costs, Boosts Access, Report Finds

A 3-year Medicare program to lower insulin costs has succeeded in its core goal of reducing out-of-pocket expenses and improving adherence for beneficiaries with diabetes, according to a new RAND report.¹ Although the initiative cut costs for both patients and the federal government, it also revealed unexpected effects, offering valuable insights for future drug pricing reforms.

“As policymakers look at cost-saving approaches for other drugs, these findings may provide important lessons for such efforts,” said Erin Taylor, the report's lead author and a senior economist at RAND, in a statement. “We found that such efforts can have positive results that are appreciated by Medicare beneficiaries, especially those who take multiple expensive medications.”

The study used a mixed-methods evaluation approach combined with quantitative modeling and qualitative data collection to assess the effects of the Part D Senior Savings (PDSS) Model.² Using secondary data sources—including Medicare prescription drug event records, Part D plan bids, claims data, and publicly available formulary information—the researchers constructed outcome measures and applied difference-in-differences regression analyses at both the plan and beneficiary levels.

Additionally, the researchers included participating and nonparticipating plans, as well as insulin and noninsulin users, on demographics, utilization patterns, and pre-period characteristics for comparability. Analyses were conducted separately for Medicare Advantage Prescription Drug plans (MA-PDs) and standalone Prescription Drug Plans (PDPs). Furthermore, the researchers gathered perspectives through surveys and interviews with participating plan sponsors, insulin users, manufacturers, insurance agents, and state health insurance counselors. Survey results were summarized using descriptive statistics, and interviews were analyzed thematically to provide context for the quantitative outcomes.

The report found the 3 largest US insulin manufacturers joined the PDSS model in 2021, and by 2022 all 5 domestic manufacturers were participating. Plan sponsor involvement also grew over the course of the model, rising from 75 in 2021 to 116 in 2023. MA-PDs steadily expanded their participation, increasing from 1195 in 2021 to 2339 in 2023. Although standalone PDPs declined in 2022 due to consolidations, participation rebounded in 2023, with 324 PDPs offering capped insulin copayments.

The PDSS model revealed that reducing insulin cost sharing achieved many intended outcomes, including higher insulin use and adherence, lower out-of-pocket costs for insulin users, increased enrollment in participating plans, greater manufacturer payments to plans, and reduced Part D costs to CMS. However, results varied by plan type and year. For example, PDSS was linked to higher per-member medical spending for insulin users in PDPs in 2021 and 2022 but lower spending in 2023, with no consistent effect for MA-PDs.

Unexpected outcomes included higher risk scores for insulin users in both plan types, though these did not increase CMS costs. The model also showed mixed effects on health care utilization for diabetes-related complications and produced spillover effects, including higher total Part D costs for noninsulin users and increased enrollment of low-income subsidy–eligible beneficiaries who did not directly benefit from reduced insulin costs.

Impact of the IRA Insulin Provision

Moreover, the researchers found that the effects of the PDSS model in 2023 differed from earlier years, likely due to the Inflation Reduction Act (IRA) provision that extended the $35 monthly insulin copayment to all Part D plans. Although comparison groups were kept consistent to assess lingering differences, the 2023 results showed smaller impacts for outcomes such as total out-of-pocket drug costs, adherence to rapid/short-acting and basal insulins, and Part D risk scores (notably for PDPs). However, for cost-related measures—including total Part D costs to Medicare, manufacturer rebates, and coverage gap discount payments—2023 results were similar to or greater than those in earlier years.

These findings suggest that although the IRA provision reduced differences between participating and nonparticipating plans for some outcomes, it maintained or enhanced certain cost-saving impacts of the PDSS model.

“Future drug models might extend the application of lower cost-sharing to other drugs and drug types to determine whether similar impacts on costs and quality might occur,” said report coauthor Dmitry Khodyakov, a RAND senior social scientist, in a statement.¹ “Our results suggest this approach could have value for both patients and payers.”

References

1. Program to reduce insulin costs for Medicare beneficiaries has cut spending, improved diabetes care. News release. RAND. September 22, 2025. Accessed September 26, 2025. https://www.rand.org/news/press/2025/09/program-to-reduce-insulin-costs-for-medicare-beneficiaries.html

2. Taylor EA, Khodyakov D, Buttorff C, et al. Part D Senior Savings Model Final Evaluation, 2021 to 2023. CMS. September 22, 2025. Accessed September 26, 2025. https://www.cms.gov/priorities/innovation/data-and-reports/2025/pdss-final-eval-rpt