The winners and losers of the proposed cap on insulin costs


Approximately 9 million Americans Diabetics rely on insulin to prevent life-threatening complications from high blood sugar. Improving insulin affordability for these patients is a urgent national prioritybecause high costs force some patients to take less insulin than they need. To achieve this goal, the U.S. House of Representatives recently passed legislation it would require Medicare and private plans to limit out-of-pocket costs to $35 per 30-day supply of insulin or 25% of the price negotiated between insurers and manufacturers, whichever is lower. The US Senate is currently considering a similar invoice sponsored by Sen. Raphael Warnock (D-Ga.).

In Part 1 of this two-part series, we discuss the potential winners and losers of the proposed federal insulin cost-sharing cap. We argue that this cap needs to be paired with additional reforms to improve insulin affordability – reforms we will explore in Part 2.


Insured patients who use insulin for diabetes

Our previous work suggests that a federal insulin cost-sharing cap, such as that proposed in the House bill, could greatly improve insulin affordability for a significant number of insured patients with diabetes. For example, using national private insurance claims data from 2018, we evaluated the potential benefits of a federal law that capped insulin cost-sharing at $25 per 30-day supply in privately insured children and young adults with type 1 diabetes – a condition in which access insulin literally means the difference between life and death. In our analysis, patients paid an average of $494 for insulin in 2018; 1 in 8 patients paid more than $1,000. The $25 federal cap would reduce annual out-of-pocket insulin expenses for 60% of patients. In these patients, these expenses would decrease on average by approximately $480, going from $741 to $261.

In another analysis, we used IQVIA’s 2019 national prescription dispensing data to assess the benefits of a federal law that capped insulin cost sharing at $35 per 30-day supply among Medicare patients who use insulin. We estimated that such a cap would reduce annual out-of-pocket insulin expenditure for 39% of patients. Among these patients, out-of-pocket expenses would decrease by an average of $338, from $687 to $349. In the same analysis, we also used Medicare Advantage claim data from 2019 to demonstrate that the $35 cap would benefit a higher proportion of patients with type 1 diabetes than type 2 diabetes.

Insulin manufacturers

The three major insulin makers in the United States — Eli Lilly, Novo Nordisk and Sanofi — could also benefit from a federal insulin cost-sharing cap. These manufacturers set the list prices that dictate how much many patients pay for insulin over the counter at the pharmacy. By improving the affordability of insulin, the cap could reduce political pressure to lower these list prices, which have greatly increased during the last decade. In addition, the cap could increase insulin use among insured patients who were previously insulin rationing due to costs, thereby increasing revenue. Finally, to support sales, all three manufacturers are currently investing heavily in efforts to mitigate insulin cost sharing via the patient. aid programs and discount coupons. A federal insulin cost-sharing cap would reduce the need for these initiatives and therefore the amount of money manufacturers spend on them, further increasing profits.


Insurers, their affiliates and U.S. taxpayers

A federal insulin cost-sharing cap would not solve the underlying problem of high current insulin prices. For privately insured, the cap would instead shift the burden of paying for insulin from patients to private insurers, who could respond by raising premiums for all enrollees. In Medicare, the cap would shift the burden of paying for insulin both to Medicare Part D plans and to the federal government. Because federal spending is subsidized by taxpayers, all Americans would eventually foot that bill.

Uninsured Diabetes Patients and Patients Facing Financial Toxicity for Other Prescription Drugs

Uninsured diabetic patients are fully exposed to current insulin prices. For this reason, national data indicates that they pay on average $1,288 per year for insulin, more than double the corresponding amount for the privately insured. In addition, exposure to current prices encourages uninsured patients to use cheaper and older insulin products, which cause drops in blood sugar more often than newer products. Unfortunately, the uninsured would not benefit from the federal cost-sharing cap proposed by the US House of Representatives, which applies only to insured patients. If implementing a cost-sharing cap reduces the urgency of controlling list insulin prices, uninsured diabetic patients may be indirectly harmed.

More broadly, millions of Americans struggle to afford prescription drugs other than insulin. Outrage over the affordability of insulin has sparked political momentum to reduce prescription drug prices and patient exposure to those prices. By defusing that outrage, an insulin cost-sharing cap could unwittingly inhibit that momentum, hurting patients who face the financial toxicity of other prescription drugs.

Go beyond a palliative measure

In summary, the insulin cost-sharing cap proposed by the U.S. House of Representatives could benefit many Americans who depend on this lifesaving drug to manage diabetes. However, the cap would not solve the underlying problem of high insulin list prices set by drugmakers or improve the affordability of insulin for the uninsured. While the cap is an important stopgap measure, further reforms to improve insulin affordability are urgently needed. We will explore these reforms in Part 2 of our series next week.

Kao-Ping Chua, MD, PhD, is assistant professor of pediatrics at the Susan B. Meister Child Health Evaluation and Research Center at the University of Michigan Medical School. Rena M. Conti, PhD, is an associate professor of markets, public policy and law, and co-director of the Technology and Policy Research Initiative at Boston University’s Questrom School of Business.


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