New Medicare Plan Helps Make Insulin Affordable at Last

By Kevin Kimble

The Centers for Medicare and Medicaid Services just took a major step towards improving affordability for seniors with diabetes.

Thanks to a newly announced plan, more than 1,750 health plans will soon cap out-of-pocket costs for insulin at just $35 a month.

This action deserves praise — by lowering out-of-pocket costs, the administration can ensure that the most vulnerable Americans have access to the lifesaving drug. Let’s hope this is just the first of many likeminded reforms on the horizon.

In the midst of COVID-19 outbreak, it’s more important than ever for Americans to stay on top of their health. For those suffering from diabetes, this can prove challenging.

At particular risk are the elderly and communities of color. While roughly one in three Medicare beneficiaries has diabetes, rates run higher among African Americans and Hispanics. Compared to non-Hispanic whites, Hispanics are 66 percent more likely to develop Type 2 diabetes. For African Americans, that number is approximately 77 percent.

More than 3 million of these diabetes patients require insulin treatments to manage blood sugar levels. Failure to manage the condition can lead to catastrophic health outcomes.

Unfortunately, patients battling diabetes often face difficulty accessing medication due to cost. More than 25 percent of patients who had been prescribed insulin said they had either not filled their prescriptions, skimped on doses, or stopped use altogether because of cost, according to the Journal of the American Medical Association.

Medicare Part D has evolved over time and unfortunately, more costs have been shifted to beneficiaries. In order to fix it, the drug pricing system will require fundamental change.

Under Medicare’s prescription drug coverage — Part D — patients choose from competing plans that offer different benefits, including coverage for various prescription medications.

In exchange for coverage of their drug on a plan’s formulary, manufacturers typically offer significant discounts and rebates. In 2018 alone, they doled out $166 billion in rebates. These rebates reduce a drug’s list price 30 percent, on average.

But patients often never see a dime of these savings when purchasing medication at the pharmacy. Insurers use these savings to lower monthly plan premiums for all beneficiaries by a few dollars.

Lower premiums are welcome, of course. But they do nothing to reduce the burden of high out-of-pocket costs – especially for patients who rely on multiple medications. Since the discounts are kept secret, insurers still peg patients’ copays or coinsurance fees to the list price of the drug — not the post-rebate price.

These costs add up and net insurers billions that should instead be put towards reducing patients’ direct, out-of-pocket pharmacy costs.

Under the new program, Americans in participating Part D plans will only responsible for a flat co-pay of $35 per month for their insulin needs. That will save each beneficiary an average of $446 a year.

For many, particularly low-income members of America’s communities of color, these savings will represent a massive financial lifeline. But this is still just one step toward broader prescription drug affordability. Reducing patients’ out-of-pocket spending — for insulin and other critical medicines — requires policymakers to shed sunlight on the opaque practices of insurers.

Make no mistake – this a good first step. But it’s important that our leaders build on this momentum, and embrace fundamental changes to the drug supply chain that will lower out-of-pocket costs for all Americans.

Kevin Kimble is a member of the Health Equity Collaborative, a community-based resource center designed to inform, educate, and elevate the voices of America’s most vulnerable and underserved communities