Seniors in Certain Part D Plans, Medicare Advantage to See Insulin Costs Capped in 2021

CMS said Tuesday that senior citizens who use insulin for diabetes and are enrolled in Medicare Advantage and certain Part D pharmaceutical plans will see co-pays drop by 66% in 2021 and capped at $35.

President Donald Trump announced the plan at the White House, accompanied by insulin manufacturers Eli Lilly, Novo Nordisk, and Sanofi, as well as America’s Health Insurance Plans (AHIP) and major health plans.

Sachin H. Jain, MD, MBA, the just-departed leader of CareMore Health who took steps to deal with insurance affordability among low-income seniors, called the move "disruptive" and said it would force conversations about the use of copays for essential medicines.

In a call with the media, CMS Administrator Seema Verma and Kellyanne Conway, assistant to the president and senior counselor, said 88 Part D sponsors applied to the Part D Senior Savings Model to offer “enhanced” plans with a maximum $35 co-pay for a 1-month supply of insulin from the beginning of the year through the Part D coverage gap.

Currently, Part D drug plans might offer lower cost sharing in the coverage gap, but as they absorb the costs that drug makers would pay, they pass on the cost in the form of higher premiums, Verma said.

The new insulin model would allow manufacturers to continue paying their full coverage gap discount for their products even when a plan offers lower cost sharing. In addition, it would require participating Part D sponsors’ plans, in part through applying manufacturer rebates, to lower cost sharing to no more than $35 for a month’s supply.

The Part D Senior Savings Model is a voluntary model that tests the impact on insulin access and care; it was announced in March. So far, 88 health insurers, comprising more than 1750 plans, have applied to offer this in 2021.

In a statement, Matt Eyles, president and CEO of AHIP, praised the initiative. “Innovative voluntary programs like this Part D Senior Savings Model are an excellent example of public-private partnerships where everyone wins, but especially patients,” he said.

Conway, the president’s most senior adviser, said the administration’s actions over the past 3 years have saved $1.9 billion in premiums for Medicare Part D “over time.”

Both Conway and Verma said that the administration was open to the possibility of looking to see if similar arrangements to cap co-pays could be made with other widely used prescription medicines used by seniors, as well as possibly making permanent some of the waivers, such as expanded use of telehealth, CMS has allowed in order to cope with the coronavirus disease 2019 (COVID-19) pandemic.

Asked about the timing of the announcement, coming during the COVID-19 crisis and amid various polls showing senior citizens increasingly disapproving of Trump, Conway rebuffed the notion that the deal was crafted in order to boost Trump”s support with this population. The plan had been in the works for some time, she said, and $50 was pinpointed as when seniors would stop using or curtail their use of insulin.

“We’re talking precription drugs here today and not politics, thank you,” she said.

One in every 3 Medicare beneficiaries has diabetes, which is a known risk factor for having more severe COVID-19 complications.

Changing a "Disincentive"

Lindsay Bealor Greenleaf, vice presdient of policy for ADVI Health, said the change addresses what has been a "disincentive" in Part D plans to offer lower cost-sharing in the coverage gap. When plans try to do this, she said, "the Part D plan accrues costs that manufacturers would normally pay in the form of coverage gap discounts. These costs are then passed on to beneficiaries in the form of higher premiums.

"The Part D Senior Savings Model addresses this disincentive for insulin by allowing manufacturers to continue paying their full coverage gap discount for their products, even when a plan offers lower cost-sharing, in exchange for requiring the participating Part D plan to lower cost-sharing to no more than $35 for a month’s supply of insulin."

Insulin deserves special focus, Greenleaf said, "because beneficiaries that receive insulin often face high out-of-pocket costs. Insulins are typically heavily rebated products, and Part D beneficiaries' out-of-pocket costs are based on a pre-rebated list price."

Tracey D. Brown, CEO of the American Diabetes Association, said in a statement that the move comes after years of pressing federal and state lawmakers to help lower the cost of insulin and other drugs for people living with diabetes, 7 million of whom are insulin dependent. “Together, we are helping 3.3 million seniors access insulin more affordably through significant caps on out-of-pocket co-pays,” she said.

A "Disruptive Event"

Jain, who recently completed 5 years as president and CEO of CareMore Health, co-authored a study on switching Medicare beneficiaries from analogue to human insulin to address affordability issues. In an interview with The American Journal of Managed Care®, Jain said today’s announcement is a “disruptive event,” that would force both payers and pharmaceutical manufacturers to think about how they deal with affordability.

“This is a huge step in the right direction,” Jain said. “People are tremendously price sensitive to the cost of medication. I think the managed care industry needs to take a broader look at how and where we use copays.”

Jain, a member of the editorial board at AJMC®, is among those who argue that essential medicines should not have copays; it is simply not cost-effective to charge people prices they cannot pay for medicines they need to live, only to see them end up with long-term, costly complications. This concept is known as value-based insurance design.

What’s more, he said, today’s announcement will create research opportunities for a “massive natural experiment to see what happens when costs go down.”