This article is more than 5 years old. Information may no longer be current.
Manufacturers, PBMs testify to 'broken system' behind high insulin prices
Click Here to Manage Email Alerts
The three manufacturers of insulin and the nation’s three largest pharmacy benefit managers appeared together before Congress Wednesday to respond to the growing outcry over the rising cost of insulin, at times blaming one another for high list prices that are putting a lifesaving drug out of reach for some people with diabetes.
The hearing, convened by the U.S. House of Representatives Committee on Energy & Commerce’s Oversight and Investigations Subcommittee, is part of a larger effort to examine the high costs of prescription drugs, according to Rep. Frank Pallone, D-NJ, chairman of the House committee. It was the second of a two-part hearing devoted specifically to insulin prices; a hearing last week included endocrinologists, diabetes stakeholders and patient advocates who testified to insulin rationing due to unpredictable, high prices.
Wednesday’s meeting included testimony from the three manufacturers of insulin — Eli Lilly, Novo Nordisk and Sanofi — and the pharmacy benefit managers CVS Health, Express Scripts and OptumRX, which administer prescription drug programs for commercial health plans and other entities.
Debate has intensified around who is to blame for insulin prices that have greatly outpaced inflation over the last decade. The American Diabetes Association has previously called on Congress to hold hearings with all entities in the insulin supply chain and asked those same groups to substantially increase transparency in pricing associated with the delivery of insulin to the patient.
“When the manufacturers have been criticized for raising their prices, they point the finger at the PBMs,” Pallone said during opening remarks. “When the PBMs have been questioned about their practices, they often point their finger back at the manufacturer. We’re left with no accountability. For the millions of people who are suffering in this system, these back and forth arguments are frustrating and, frankly, unacceptable. Everybody seems to be coming out ahead here except for the patient.”
In remarks before the committee, Douglas J. Langa, executive vice president of North America operations and president of Novo Nordisk, acknowledged that the pharmaceutical companies set the wholesale acquisition cost — commonly known as the list price — that is charged to wholesalers and distributors who purchase insulin. However, the list price is only part of the story of a complex insulin supply chain that also includes rebates, discounts and fees paid to PBMs, insurance plans and distributors, Langa said. PBMs, Langa said, typically demand rebates that a manufacturer must pay if it wishes to maintain preferred status on the PBM’s formulary.
Representatives for PBMs on Wednesday testified that rebates have no bearing on the list price of insulin.
“Last year, we paid an average of 68 cents for every dollar of sales to PBMs and other payers and supply-side entities in the form of rebates and other discounts and fees — nearly $17.8 billion,” Langa said during testimony. “Despite these ever increasing rebates, patients don’t get the full benefit of those rebates at the pharmacy counter. This needs to change.
“Patients are telling us we need to do more, and we hear them,” Langa said. “The challenge is that the current system is broken.”
Kathleen W. Tregoning, executive vice president of external affairs at Sanofi, noted that while the list price for insulin has risen, the average aggregate net price across all Sanofi insulin products has declined in the past 4 years. Yet those declines, Tregoning said, have not resulted in lower out-of-pocket costs for patients.
“Patients are rightfully angry,” Tregoning said. “We all have a responsibility to address a system that is clearly failing people.”
Lack of generics
In testimony before the committee, Thomas M. Moriarty, executive vice president, chief policy and external affairs officer and general counsel for CVS Health, said that the primary challenge is a lack of generic alternatives available, despite insulins on the market for decades. He cited CVS Health’s recent formulary replacement of insulin glargine with the lower-cost, follow-on biologic Basaglar (Lilly), which resulted in a 9% out-of-pocket cost decline per 30-day prescription for members.
“Among patients who switched to the alternative, their HbA1c improved by 0.43%,” Moriarty said. “To put this in perspective, every 1-point improvement in HbA1c among patients with uncontrolled diabetes is correlated with approximately $1,400 savings per year in medical costs per patient. This is a real-life example of how competition works.”
As Endocrine Today previously reported, Eli Lilly in March announced it will introduce an authorized generic version of insulin lispro injection in the United States, promising a list price that is 50% lower than the current Humalog (insulin lispro, Lilly) list price.
The lower-priced version, which will be available in vials and pens, will be called “insulin lispro” and is the same molecule as Humalog, according to the company. The list price of a single vial will be $137.35, according to Lilly. The list price of a five-pack of KwikPens will be $265.20.
“We are committed to ensuring everyone living with diabetes has reasonable access to insulin, and we appreciate Congressional interest in this topic,” Michael B. Mason, senior vice president of connected care and insulins at Eli Lilly, told Endocrine Today before the hearing. “We remain focused on filling gaps in the system, such as with our lower-priced, authorized generic insulin, until a more sustainable model is achieved.”
In an email interview, Mason said that a comprehensive solution requires commitment from all stakeholders in the health care system.
“Until a comprehensive solution is reached, we will continue our affordability solutions that provide thousands of people each month with access to insulin at significantly reduced cost or for free,” Mason said.
Call for action
Several committee members voiced anger that an explanation for the high list prices of insulin products, and why those prices cannot simply be lowered, was not being provided.
Rep. Diana DeGette, D-Co, chair of the subcommittee, called the current pricing a “smoke and mirrors system” where the list price is increased in an effort to negotiate the price back down.
“The pharmaceutical companies had $323 billion in profits last year,” said DeGette, who has a daughter with type 1 diabetes. “PBMs had $23 billion in profits last year. Everybody is making a profit. The people suffering here are the people who have to pay list price or, even after their deductible, have to pay an unacceptable price.”
DeGette said the committee plans to work with all stakeholders to develop legislation that will address the pricing issue, noting that manufacturer patient assistance programs provide a “Band-Aid” that does not address the root of the problem.
“We are going to get together and we are going to work with all of you ... to figure out how we can provide insulin to diabetics at a cost that they can afford,” DeGette said. “We’re going to do that as quickly as we can. We’re prepared to talk to you now and prepared to bring you all back in July or September to talk about the progress we made.” – by Regina Schaffer
Disclosures: Langa is executive vice president of North America operations and president of Novo Nordisk. Mason is senior vice president of connected care and insulins at Eli Lilly. Moriarty is executive vice president, chief policy and external affairs officer and general counsel for CVS Health. Tregoning is executive vice president of external affairs at Sanofi.