CMS Launches Model That Caps Insulin Co-pays at $35

As regulators work to open up the biosimilar market to spur competition and lower drug prices for patients, especially insulin products, CMS has announced a new model that will lower Medicare beneficiaries’ out-of-pocket (OOP) co-pays for insulin to a maximum of $35 per 30-day supply.

The Part D Senior Savings Model is designed to enhance Part D plans that offer more generous prescription drug coverage than Part D basic benefit designs. The model “provides an innovative market-driven approach that removes barriers to lower insulin costs,” CMS Administrator Seema Verma said.

Those who take insulin and are enrolled in a participating plan are expected to save an average of $446 in annual OOP costs for insulin. That is a savings of over 66% compared with average cost sharing for insulin currently. The model projects savings from this for the federal government over the next 5 years to be over $250 million, largely due to pharmaceutical manufacturers paying additional coverage gap discounts.

“As beneficiaries have more consistent, predictable access to the prescription drugs they need, the model projects that health will improve and total cost of care will decline for our nation’s seniors,” CMS stated.

OOP costs for insulin in Medicare’s Part D can fluctuate from month to month, which can make prescription drug budgeting challenging, as well as affect access to needed medication. Without the ability to afford insulin, many patients may resort to medication rationing or stop insulin therapy altogether.

“Medication nonadherence, due to cost or otherwise, could have devastating health consequences for seniors, ranging from nerve and vision damage to kidney and cardiovascular disease and even amputations,” CMS noted.

The model will test a plan design for enhanced Part D plans to make sure co-pays are predictable for a broad range of formulary insulins, including rapid-acting, short-acting, intermediate-acting, and long-acting insulins.

Under the model, enhanced Medicare plans will be able to reduce cost sharing by having fixed dollar co-pays instead of making OOP co-pays a percentage of a drug’s price.

Enhanced plans have slightly higher premiums, which are paid for by beneficiaries or through a Medicare Advantage plan. Current Part D average monthly premiums are $32.09 for basic plans and $49.32 for enhanced plans. About 80% of prescription drug plans are enhanced plans, with enrollment of about 25 million patients.

CMS views the new model as an opportunity for Part D sponsors and manufacturers to come together and put the needs of patients before profits, as well as lower the out-of-pocket costs for insulin.

While CMS works to make insulins more affordable for Medicare beneficiaries, the FDA is working to pave the way for more competition in the insulin market through the biosimilar pathway. A provision in the Biologics Price Competition and Innovation Act will go into effect on March 23 that allows insulins and other protein-based drugs to be approved as biologics, a move that affects many products originally classified as small molecule drugs.

The FDA finalized its definition of biological products by removing the parenthetical “except any chemically synthesized polypeptide” from the protein category, permitting all insulin products to be approved under the new pathway regardless of development processes.