US Senate committee calls for transparency on insulin affordability, pushes for reform
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Insulin affordability took center stage in Washington, D.C., on May 10 as the U.S. Senate Committee on Health, Education, Labor and Pensions conducted a hearing with pharmaceutical and pharmacy benefit manager executives.
During the hearing, senators heard testimony and questioned representatives from the three leading insulin manufacturers — Eli Lilly, Novo Nordisk and Sanofi — and the three leading pharmacy benefit managers (PBMs) — CVS Caremark, Express Scripts and Optum Rx. The meeting included testimony from all six companies followed by nearly 3 hours of questions from senators about why insulin costs rose so sharply over the past decade, which stakeholders benefited from the revenue caused by higher prices and whether the companies would commit to changes that would make insulin more affordable to the public.
Photo by Mayra Zuniga. Printed with permission.
“The bottom line is, we appreciate the work being done on insulin,” Sen. Bernie Sanders, I-Vt., chair of the U.S. Senate Committee on Health, Education, Labor and Pensions, said during the hearing. “We thank all of the advocates out there for fighting, but we’ve got to make sure Americans can afford the price of prescription drugs.”
The hearing featured conflicting statements from the pharmaceutical companies and the PBMs. The three pharmaceutical executives said their companies have worked to cut insulin list prices and blamed the PBMs, along with insurers and other subsidiaries, for the increase in insulin prices.
“Today, there are just three payers in the system that cover 80% of American lives,” Paul Hudson, CEO of Sanofi, said during the hearing. “These consolidated entities encompass PBMs, health insurance, specialty pharmacies and group purchasing organizations. This vertical integration gives these corporations near total control over the products patients can access and the price they have to pay.”
Conversely, the executives from the PBMs said a lack of competition and a desire for the pharmaceutical companies to maximize profitability drove up prices for insulin.
“Drug manufacturers seek the highest price point possible and exploit the patent system and marketing practices to maintain monopoly status for their brands,” Adam Kautzner, PharmD, president of Express Scripts, said during the hearing. “For employers sponsoring high-deductible health plans, restrictions prevent lowering costs for patients before meeting their deductible.”
There were many questions asked during the hearing, but Irl B. Hirsch, MD, professor of medicine at the University of Washington School of Medicine in Seattle, and Susan Cornell, PharmD, CDCES, FAPhA, FADCES, associate director of experiential education and professor in the department of pharmacy practice at Midwestern University College of Pharmacy in Downers Grove, Illinois, and a Healio | Endocrine Today Editorial Board Member, said they felt that the public did not receive detailed answers from the pharmaceutical companies or PBMs.
“If you’re an insulin manufacturer, you point your finger at the PBM, if you’re a PBM, you point your finger at the insulin manufacturer,” Hirsch told Healio | Endocrine Today. “But nobody is accountable for the problem we’re in, and, like most things, everybody thinks it’s OK to point your finger at the other guy. You also need to point your finger at yourself. It’s never as simple as they make it.”
“One of the big comments on this is transparency,” Cornell told Healio | Endocrine Today. “If Eli Lilly, Novo Nordisk, Sanofi sells their insulin to a PBM for $10, how much does the patient really pay for it? How much are they marking it up to get coverage for their fee for services and ... how much does the pharmacy get?”
Pharmaceutical companies, PBMs discuss rebates
During the hearing, the three pharmaceutical executives emphasized efforts to lower insulin list prices in recent years. David A. Ricks, chair and CEO of Eli Lilly, said his company has reduced insulin prices since 2017 and that the typical person with diabetes pays an average of $20.48 per month for Lilly insulin. Hudson said the average net price for Sanofi’s insulin glargine (Lantus) decreased by 55% from 2021 to 2022. Lars Fruergaard Jørgensen, president and CEO of Novo Nordisk, discussed how his company made human insulin available at Walmart and other pharmacies for approximately $25 a vial for all people, regardless of income or insurance status.
The pharmaceutical executives placed much of the blame of the rising cost of insulin on the PBMs. All three companies claimed that 75% to 84% of the gross sales of insulin are sent to payers in the form of rebates and fees.
“Patients often find themselves trapped by a health care system with misaligned economy incentives,” Jørgensen said during the hearing. “It’s a system where more and more dollars flow to insurers, newly created subsidiaries, so-called group purchasing organizations and the PBMs, but not to patients.”
All three PBM representatives countered the claims from the pharmaceutical companies, saying 95% or more of rebates are passed down to their customers. David Joyner, executive vice president and president of pharmacy services of CVS Health, stated his company has made progress on insulin affordability through negotiations, promoting competition and encouraging the pharmaceutical companies to adopt plans to lower out-of-pocket costs.
“Clients and plan members paid one-third less on average for a 30-day supply of insulin in 2022 than they did in 2017,” Joyner said. “At CVS Caremark, the average member cost for a 30-day supply of insulin was less than $25, and for those using the preventive drug list, was $0.”
Despite their claims, Cornell noted, the PBM companies declined to go into details during the hearing. One area where Cornell said she believes that they did not provide clarity was who the PBMs’ customers were that received rebates.
“[The PBM’s] role is to take all of the competition of all these insulins that are out there, look at the data, and analyze which one is the best one that’s a one-size-fits-all for consumers,” Cornell said. “In that case, the intent is good, because if you have a prescriber that doesn’t know the difference between three different basal insulin products, they’re just going to pick the one they’re comfortable with. But is that truly the right one for the patient?
“Then, you have pharmacists, as well as prescribers, who try to milk insurance companies,” Cornell said. “That’s where the PBMs came in, because they were trying to put a stop to it. Unfortunately, they just took over doing it instead. This is where those negotiations come in. They’re trying to save money for the insurance company. So that’s their consumer, not necessarily the patient.”
Cornell said all three of the PBMs at the Senate hearing are part of a company that also owns a health insurance provider: Aetna and CVS Caremark are both owned by CVS Health, Optum Rx serves as a subsidiary of UnitedHealth Group, and Express Scripts is owned by Cigna.
“To me, that’s a conflict of interest,” Cornell said. “If you have Aetna, that means you have to go to a CVS. You can’t go to Walgreens; you can’t go to an independent pharmacy. You’re being told where you can go to buy your medicine and how you can buy it. ... Bottom line is the companies that own the PBMs and insurance companies are restricting patients. They’re taking away freedom of choice.”
Competition, research and development a concern
In response to the claims from the pharmaceutical companies, all three PBM representatives said it was not rebates, but instead a lack of competition in the insulin market that drove higher prices.
“Without the ability to use this negotiating tool to achieve lower drug costs, health care spending would be much higher,” Kautzner said during the hearing. “Drug competition is ultimately what drives rebates, lower list prices and lower net costs.”
Both Hirsch and Cornell disputed this argument, saying a lack of competition was not the primary cause of rising insulin prices.
“There’s plenty of competition,” Cornell said. “What the PBMs are doing is basically saying to all of the pharmaceutical companies, ‘What’s your best offer to me?’ I disagree [that high costs are due to lack of] competition. Let’s [look at] the SGLT2 inhibitors. There are five on the market today. How much competition do we need?”
Outside of competition between the three largest insulin manufacturers in the U.S., Hirsch said, the nonprofit pharmaceutical organization Civica Rx plans to develop three low-cost generic biosimilar insulins, which will only add more options for patients. However, Hirsch said the PBMs may not want to add Civica’s products to their formularies.
“I don’t see the PBMs wanting anything to do with Civica,” Hirsch said. “This is a not-for-profit company that wants people to be able to buy the insulin essentially at cost, and any markup is just to keep the lights on at the factory.”
Getting lower-cost insulins added to formularies was also an issue for the three companies represented at the hearing. Hudson said Sanofi struggled to get a lower-cost option added to formularies 5 years ago.
“It was 2018 when we [introduced] a lower-priced analog, nothing to do with recent policies or announcements, and reduced the price of that three times to no effect,” Hudson said during the hearing. “Then it was last August when we made in the same factory ... an unbranded Lantus at 60% off, long before this year’s debate, so I’m a bit perplexed. [Lower-cost insulins] have been there, we’ve stepped up and done that.”
Representatives from Eli Lilly and Novo Nordisk said they also unveiled lower-cost versions of their insulin, but like Sanofi, struggled to get those options accepted by most formularies.
“After 4 years, [insulin] lispro product, which is the copy and now costs $25, is available on one out of three formularies in America,” Ricks said during the hearing. “It’s clear that the lower price is not preferred.”
In March, Eli Lilly, Novo Nordisk and Sanofi all announced large price cuts on multiple insulins to take effect no later than Jan. 1. Additionally, Eli Lilly and Sanofi also announced a $35 monthly out-of-pocket cap on insulin for people with commercial insurance, a commitment they reiterated at the Senate hearing.
The price reductions and out-of-pocket caps could provide financial relief for people with diabetes, but Hirsch said he believes the changes are happening now due to the popularity of tirzepatide (Mounjaro) for Eli Lilly and semaglutide (Wegovy) for Novo Nordisk.“The reality is that both of these companies are making billions of dollars from their GLP-1s, which is at least partly the same population with diabetes,” Hirsch said.
With the advent of newer drugs, Hirsch said, it is possible the changes could lead to several negative consequences in the research and development of insulin.
“I really do believe, and I hope I’m wrong on this, that true new innovations for insulins [is going to] slow down,” Hirsch said. “It may not stop, but I think it’s going to slow down, because the resources needed to bring a new molecule to market are so vast that somebody doesn’t want to spend the next 30 years trying to recoup those costs, especially when the same company is almost printing money with their GLP-1s or their GLP-1/[gastric inhibitory peptide] combination drugs. That’s where the money is, it’s not with insulin anymore.”
Hirsch said the potential lack of investment in insulin could also hurt smaller companies that may be developing new insulin molecules.
“There are possibilities [for insulin development] from other companies that are outside of the big three right now,” Hirsch said. “Generally, small companies, start-up companies that have molecules that really would potentially make a clinical difference. But the traditional way these small companies think about it is that a big company like Lilly, Novo or Sanofi would eventually buy them with their molecules. And what’s happened in the last couple or 3 years is that these companies made a decision that [they may not acquire smaller companies]. I just don’t see the current companies, especially Novo and Lilly, with their GLP-1s, coming in and buying a small startup company.”
Reforms underway, but more changes needed
Even before the Senate hearing, changes had been implemented to make insulin more affordable for people with diabetes. In August 2022, President Joe Biden signed the Inflation Reduction Act, which included an out-of-pocket cap of $35 per month for Medicare Part D beneficiaries. The cap went into effect at the start of 2023 and was followed by the price reductions announced by Eli Lilly, Novo Nordisk and Sanofi.
Despite these changes, some U.S. senators are proposing further legislation to lower insulin costs and reform the health care system overall. In April, Sen. Jeanne Shaheen, D-N.H., and Sen. Susan Collins, R-Maine, proposed a bill to cap out-of-pocket insulin costs at $35 for all Americans with commercial insurance. Additionally, the bill offers solutions to concerns discussed during the Senate hearing, as it would make several regulatory changes to help promote the development of biosimilar and generic drugs and require PBMs to pass insulin rebates and discounts to health care plan sponsors.
PBM reform has been the center of multiple Senate bills in 2023. In April, legislative framework released by Sen. Ron Wyden, D-Ore., and Sen. Mike Crapo, R-Idaho, centered entirely on PBM reform. The proposed plan included decoupling PBM compensation from drug prices, increasing accountability of the PBMs to their clients, making sure seniors receive savings from PBM discounts, improving pharmacy access through changes in Medicare’s “Any Willing Pharmacy” requirements and increasing transparency for how money moving through the prescription drug supply chain impacts federal health care programs.
Both pharmaceutical and PBM executives acknowledged the need for reform during the Senate hearing but said certain incentives must be preserved.
“We need a system that supports both world-leading innovation and lower out-of-pocket costs for Americans,” Ricks said during the hearing. “Those reforms must help patients at the pharmacy counter while also incentivizing U.S. companies to continue investing in world-leading amounts of research and development, which results in Americans having access to more and newer medications than any other country in the world.”
“Cost-sharing on a monthly supply of insulin is now capped at $35 on Medicare,” Heather Cianfrocco, CEO of Optum Rx, said during the hearing. “A similar approach in the commercial market would close the gap for Americans who still cannot consistently afford insulin, but importantly, such a cap must preserve the ability for PBMs to negotiate for the lowest cost of insulin for their customers. Because even with the welcomed list price reductions by some manufacturers on some insulins, the list price for insulin is still above $35 per prescription.”
Transparency was the key word mentioned by members of the Senate during the insulin hearing as well as by Cornell and Hirsch when they discussed insulin affordability and reforms to the health care system in general. Cornell said any PBM reform needs to improve transparency and include more freedom of choice for all stakeholders in health care.
“I would like for the PBMs not to restrict patients to where they can go in terms of getting their medication,” Cornell said. “The patient should be able to choose their own doctor or prescriber. They should also be able to choose their own pharmacist. They shouldn’t be told where they have to go.”
Hirsch said insulin has been the focus of the public and government officials in recent years due to its status as a life-sustaining medication for people with diabetes. However, he said he believes that the health care system overall needs major reform and that reforms should be implemented to improve access and affordability for all drugs.
“This is a much bigger topic,” Hirsch said. “It’s just that insulin has had so much publicity. If you miss your dose of your medication for your renal cell tumor, nobody’s going to get hurt from that. You can’t miss a week of insulin.”
[Editor’s note: For part 1 of this series on insulin pricing, see “Price cuts, legislation aim to reverse 2 decades of increasing insulin costs” in the May issue.]
- References:
- Congress.gov. S.1269 – Insulin Act of 2023. www.congress.gov/118/bills/s1269/BILLS-118s1269is.pdf. Published April 25, 2023. Accessed June 7, 2023.
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