Report: OOP Insulin Caps Could Save Money, but Other Factors Bear Watching

Capping out-of-pocket (OOP) costs for insulin at $35 for all US patients could generate $837 million annually in OOP savings, according to a new IQVIA report. “However, these savings may not result in overall savings to patients if they simply result in per prescription caps but take patients longer to reach their deductible, out-of-pocket maximum, or other plan thresholds,” the authors wrote.

The $837 million total breaks down to $233 million in commercial insurance cost savings, $279 million less in Medicare spending, and $326 million less OOP for uninsured patients who pay in cash.

Although an insulin prescription cost an average of $31 OOP per month in 2019, 24% of diabetes medications cost more OOP than the $35 cap that will be implemented in 2021 as part of the Medicare Part D “Senior Savings Model” developed by the Trump administration, said IQVIA

IQVIA is an American multinational company that uses analytics and science to provide technology information, clinical research, and contract research services to help health care stakeholders.

Ten states have said that they plan to adopt similar prescription caps; however, only 3 have plans that include caps at or below $35.

Concern regarding the cost of insulin has been growing, and some drug producers have offered lower cost products, such as Biocon Biologics and Mylan, which in late August 2020 launched Semglee (insulin glargine) at what they described as a deep discount to the reference product, Lantus, upon which Semglee is based.

Diabetes drugs, including insulin, account for 1 in 5 high-cost prescription claims (>$125) filled in 2019, followed by obesity, asthma, chronic obstructive pulmonary disease, stroke, and HIV medicines, which together account for 42% of total high-cost prescriptions, according to IQVIA.

However, the authors of the report noted that cost caps may not lead to savings for patients if they apply to the prescription itself but do not incorporate other expenses such as deductibles, OOP maximums, and other plan thresholds.

“Without also having caps on other medicine costs or changes in benefit designs, there is little to prevent costs from shifting to later in the year or to other medicines for the same patient,” said the authors.

Prevent Treatment Abandonment

IQVIA said patients abandon, or do not pick up, prescription treatments at retail pharmacies due to high costs, and they identified this as a key public health concern because it is important for patients to take the medicine their physicians have recommended.

In 2019, 9% of all prescriptions were abandoned and abandonment rates were less than 5% when there were no OOP costs associated with the drug. Rates rose to 45% when the cost was over $125 and to 60% when the cost was over $500.

The report also revealed that patient income levels correlate to whether patients desert their prescription therapy.

“For prescriptions of diabetes, anticoagulants, and cancer medicines costing between $125 and $250, abandonment is 40% for patients with household income of more than $100,000, and nearly 50% for those with household income less than $25,000,” the authors noted.

COVID-19 Coverage Changes

The coronavirus disease 2019 (COVID-19) pandemic has led to unemployment rates not seen since at least the Great Depression and increased risks of health insurance loss for millions of Americans.

However, the report’s authors found that fewer patients have lost commercial coverage so far in 2020 compared with 2019, suggesting that employers retained insurance coverage for furloughed employees through June at least.

“The extent to which this largesse continues, and employees can retain the ability to purchase [ongoing health] coverage if they lose employment, will depend heavily on the provision of unemployment payments from state governments and potentially additional rounds of federal stimulus payments,” said the authors.

If governmental funds cannot be provided, the risk that millions of Americans could lose coverage and be faced with unaffordable medicine costs remains.

New Policies Impacting Medicare

Since 2019, the Trump administration has announced 6 policies relating to Medicare and private insurance. The policies, which address OOP costs for insulins, are intended to take effect in 2021, including the Senior Savings Model and a new Internal Revenue Service (IRS) rule that allows a broader range of chronic conditions under the preventive care classification that high deductible health care plans may provide.

The new IRS rule reclassifies some services and medications used by patients with chronic conditions who are enrolled in high-deductible health plans from regular benefits to preventive care measures. Generally, chronic condition management services are not covered under Medicare until the minimum deductible for the year is met; however, preventive care measures are not subject to deductibles.

In late July, President Trump signed 4 executive orders with the aim of lowering prices for prescription drugs. Authors of the report said they are expected to be implemented over the course of 2021 or longer.

The orders included provisions to benchmark US drug prices to lower prices in other markets, change policies to force drug rebates to be given to patients at the point of sale, allow the importation of drugs from lower-cost markets, and ensure low purchase prices for insulins and epinephrine are offered to consumers at federally qualified health centers.

The report noted that states have been pushing to enact policies regarding greater financial transparency, copay caps, and anti-price gouging policies. Since 2015, 36 states have either implemented or advanced legislation addressing 1 or more of these categories.

However, the authors said that it is unclear whether policies will have any material impact on prices due to existing state and federal regulations that limit what state legislators can do.

“The continuing fragmentation of pricing policy by insurance type, and under federal and state jurisdictions, will perpetuate the dynamic where drug pricing depends considerably on who is paying,” IQVIA said.

Reference

Aitken M, Kleinrock M, Campanelli G, Tawil C, Vokey M. Medicare Spending and Affordability in the United States. IQVIA. August 2020.