March 13, 2020

CMS on Wednesday announced a new voluntary model that aims to encourage health plans and drug manufacturers to cap out-of-pocket costs for beneficiaries enrolled in Medicare Part D enhanced plans at $35 per month.

Advisory Board's take: Why some pharma companies are offering fixed-price insulin

Insulin prices skyrocket in the U.S.

According to a report from the Health Care Cost Institute, per-person spending on insulin for patients with Type 1 diabetes doubled between 2012 and 2016. Even for patients with health insurance, out-of-pocket insulin costs can reach $1,000 per month.

The sudden cost increase has sparked concerns among patients and Congress about patients' access to the life-saving drug. In response, federal lawmakers have launched investigations into rising insulin prices and have called for measures to expedite FDA approval of new insulin products.

Some U.S. health insurers and states also have taken action to curb patients' insulin costs.

Program details

Currently, Medicare Part D enrollees' out-of-pocket costs vary depending on which coverage phase they are in. But under the new model, beneficiaries enrolled in a participating Part D plan will pay a fixed $35 copayment regardless of whether they are in the deductible, initial coverage, coverage gap, or catastrophic phase, Inside Health Policy reports.

The model will only be open to enhanced Part D plans, which Kaiser Family Foundation's Juliette Cubanski noted accounted for about 78% of Part D plans and 62% of beneficiaries in 2019. CMS said it will encourage insurers to participate in the model by offering them additional risk corridor protection from 2021 through 2022 if they enroll an above-average number of members who depend on insulin.

CMS estimates that beneficiaries who enroll in participating enhanced Part D plans could save an average of $446 in annual out-of-pocket costs for insulin under the model. The agency projects the model could generate over $250 million in savings for the federal government over five years.

Drugmakers and private insurers who manage Medicare drug benefits and volunteer to participate in the plan must apply for the program by March 18 and May 1, respectively. So far, Eli Lilly, Sanofi, and Novo Nordisk announced plans to participate in the program, according to Inside Health Policy. America's Health Insurance Plans (AHIP) is still reviewing the model.

The pilot will begin on Jan. 1, 2021. CMS administrator Seema Verma said the administration plans to expand the model to other drugs if it is successful.

Reaction

CMS said the new program could improve the overall health of Medicare Part D beneficiaries. "By ensuring beneficiaries have a predictable and affordable co-pay for insulin they will have greater access and adherence, leading to improved health outcomes," the agency said.

However, while the model would reduce out-of-pocket spending for qualifying Part D beneficiaries, Cubanski noted that it will do nothing to address the rising cost of insulin for the general population.

"That's a real problem for people who don't have health insurance and for people in high-deductible plans," Cubanski said. "What they pay is basically the list price of the drug until they meet their deductible."

Cubanski added that private insurance plans may not volunteer to participate in the model. "One point I would drive home is that this is a voluntary demonstration project, so the number of people who will benefit depends entirely on the number of plans who chose to participate," she said.

AHIP did not return Modern Healthcare's request for comment (CMS release, 3/11; CMS fact sheet, 3/11; Humer, Reuters, 3/11; Brady, Modern Healthcare, 3/11; Wilkerson, Inside Health Policy, 3/11; Thomas, New York Times, 3/11).

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