Insulin has been on the market for a hundred years and for millions of Americans with diabetes, it is literally the difference between life and death.
But insulin in the U.S. costs about eight times more than it does in peer countries, according to a 2020 study. About one in four people who need it can’t afford it, surveys have suggested, which is why many end up rationing their own medication — sometimes with severe, even fatal consequences.
Politicians across the ideological spectrum have been promising a government response for years. Now Democrats hope to provide one as part of the Build Back Better legislation, which includes reforms to prescription drug pricing, with provisions that single out insulin for special treatment. Chief among them is a proposed rule that would limit the cost of insulin to $35 a month out-of-pocket for anyone with insurance.
That would represent a potentially massive improvement, although not everybody would feel it. Because the cap applies to insurance, it wouldn’t directly help the uninsured, who are frequently the ones with the least money to spare.
Nor is it clear that the cost restriction will become the law. Republicans may ask the Senate parliamentarian to rule that restrictions on what private insurers can charge for insulin falls outside the rules of budget reconciliation, the special legislative procedure Democrats are using to pass Build Back Better.
Even if that appeal fails, the legislation still needs to get all the way through Congress, which is no sure thing.
In these respects, the insulin provisions of Build Back Better are emblematic of so many features of the legislation: cumbersome, flawed and still dependent on uncertain political success. And yet, it could save a lot of money for some people ― and the lives of some others.
Why Insulin Costs So Much
Insulin is the hormone that the body uses to break down sugar. People with diabetes either don’t manufacture insulin, don’t manufacture enough, or have become less sensitive to it, depending on the type of diabetes they have and how severe it is.
Without treatment, diabetes can lead to death, which happened a lot more frequently before 1923, when Canadian researchers came up with a way to manufacture insulin artificially. They sold their patent to the University of Toronto for just $1, in the hopes that their discovery would be made available to everybody at no cost.
That’s not how it worked out in the U.S., where drug manufacturers obtained patents on their versions of the medication, and then got new patents as they developed new versions. Some represented clear, significant upgrades, and are why insulin now is purer and comes in many more varieties, giving people with diabetes more control over how they administer it.
But analysts are in wide agreement that, especially in recent years, the trio of companies that control the market (Eli Lilly, Novo Nordisk and Sanofi) have been raising prices well beyond what innovation would justify, largely because they have learned to exploit the patent and regulatory system. Today, the list prices for many popular insulin forms are well into the hundreds of dollars for a month’s supply.
Private insurers should be able to negotiate down the price of insulin, at least in theory, by playing the manufacturers off one another. In practice, insurers delegate that responsibility to a group of middle-men companies called pharmacy benefit managers ― who, in turn, operate through a complex, interlocking set of rebates and givebacks that favor drug makers, insurers and benefit managers, but do not actually lower the list price of insulin.
Sometimes, in fact, the relationships provide incentives for manufacturers to raise prices. Meanwhile, many Americans are stuck paying the full charges, whether it’s because they are insured and have a big deductible or because they are uninsured and have no coverage at all. Some find their way to privately run discount programs, or targeted government initiatives that provide assistance. But many don’t.
Among those sometimes paying a high amount are seniors on Medicare, because their prescription drug coverage leaves them with substantial out-of-pocket expenses.
What Build Back Better Would Mean For Insulin Costs
Not all seniors face this situation. Many have already enrolled in a pilot program in Medicare that limits insulin copays to $35. (Some states have introduced similar reforms.) Build Back Better’s proposal would basically make that provision a standard, permanent part of Medicare, while requiring that private insurers covering the non-elderly population offer the same thing to their beneficiaries.
It’s hard to find reliable estimates of the savings consumers would see. But researchers at the Henry J. Kaiser Family Foundation found that the average annual out-of-pocket costs for one popular type of insulin fell by 28% for seniors who enrolled in the experimental Medicare program.
The price cap isn’t the only feature of Build Back Better that would affect insulin prices. The legislation would also give Medicare the power to negotiate drug prices directly with manufacturers, which it has never had. And although the legislation limits negotiation to certain types of drugs, it specifies that insulin would be one of them.
The legislation would also limit how much manufacturers could raise prices year after year. And those limits would apply to what private insurers pay as well as what Medicare pays.
They wouldn’t apply to the uninsured, just like the $35 out-of-pocket cap wouldn’t. But this is where other health-related provisions of the legislation could make a difference.
The bill would extend improvements to the Affordable Care Act that make its private insurance subsidies more generous, reducing the cost of coverage. In addition, it would offer a private version of Medicaid to people living in a dozen states where Republican officials have refused to expand the program’s eligibility, even though the Affordable Care Act provides money for it.
Together these provisions could help several million people get insurance, with a heavy concentration in a few large Southern states ― Florida, Georgia, North Carolina and Texas ― where there are also a lot of people with diabetes.
“For people who need insulin who are in a state that didn’t expand, they will now have the opportunity to get health insurance and have prescription drug coverage as part of that,” Stacie Dusetzina, a health policy professor at Vanderbilt University, told HuffPost. “That’s a few million people, that’s pretty huge.”
Here, too, there is an important caveat: Funding for both the Affordable Care Act improvements and new Medicaid expansion is temporary, set to run out in 2025, unless lawmakers decide to extend the funding in the future.
The insulin provisions, by contrast, would require no such extension. If they become law, they would likely remain on the books until somebody comes along with an even better set of reforms. In the meantime, a lot of people would be better off ― which, given the current political environment and structural obstacles to legislation, is no minor thing.