January 25, 2019

Insulin costs per patient nearly doubled over 5 years, study reveals

Daily Briefing

    Per-person spending on insulin for patients with Type 1 diabetes nearly doubled from 2012 to 2016, according to a report released Tuesday by the Health Care Cost Institute (HCCI), Reuters reports.

    Learn 5 ways to control the flow of drug expenditures

    Report details

    For the report, HCCI researchers analyzed employer-sponsored health insurance claims to examine the trends in total per-person health care spending on patients with Type 1 diabetes between 2012 and 2016.

    Findings

    Overall, the report found total per-person Type 1 diabetes spending rose $6,027 from $12,467 in 2012 to $18,494 in 2016. The researchers noted that the figures represent the amount paid by both the patient and their insurer, and do not factor in rebates, which means actual costs were likely lower than reported, Axios' "Vitals" reports.

    According to the report, per-person spending for a person with Type 1 diabetes in 2016 included:

    • $8,670 on medical expenditures for inpatient, outpatient, and professional procedures, representing 47% of total per-person spending;
    • $5,705 on insulin products, representing 31% of total per-person spending; and
    • $4,119 on non-insulin pharmaceutical products, representing 22% of total per-person spending.

    The researchers found the increase in Type 1 diabetes spending between 2012 and 2016 was driven in large part by spending on insulin products, which rose by $2,841 during the study period and represented 47% of the $6,027 increase in total per-person spending.

    The increase in gross spending on insulin was driven largely by increases in prices, the researchers determined, as average daily insulin use per patient with Type 1 diabetes rose by only 3% over the five-year period.

    The researchers found that all insulin product prices rose during the study period, with the average sales price increasing from 13 cents per unit in 2012 to 25 cents per unit in 2016. In addition, the report identified a shift toward more costly insulin products.

    Jeannie Fuglesten Biniek, a senior researcher at HCCI who co-authored the report, said, "It's not that individuals are using more insulin or that new products are particularly innovative or provide immense benefits." She added, "Use is pretty flat, and the price changes are occurring in both older and newer products. That surprised me. The exact same products are costing double."

    What price increases mean for Type 1 diabetes patients

    Recently, media outlets have reported that some patients are rationing their insulin due to high out-of-pocket costs, Reuters reports. 

    HCCI CEO Niall Brennan said, "You literally have a captive, near helpless customer base when it comes to Type 1 diabetics and insulin." He added, "There are few if any segments of the American economy where a manufacturer could raise prices by 92% and have people consume the same quantity of that product."

    While pharmaceutical companies often argue price increases are needed to support research and development costs, Modern Healthcare reports that most recent innovative breakthrough in insulin was 20 years ago.

    According to Fuglesten Biniek, "These aren't increases in prices for innovative products; these are increase in price for the exact same thing and for things that have been around for decades." She added, "And to the extent that there has been innovation, we're talking about minor tweaks."

    The price increases have caught federal lawmakers' and state officials' attention, Reuters reports. Earlier this month, congressional Democrats introduced a bill designed to lower prescription drug costs and sent letters to a dozen pharmaceutical companies requesting information on recent drug hikes.

    In Minnesota, the attorney general is suing three insulin makers over their price increases, and a similar suit is pending in New Jersey federal court, Reuters reports (Respaut/Terhune, Reuters, 1/22; Hellman, The Hill, 1/22; Baker, "Vitals," Axios, 1/23; Ross Johnson, Modern Healthcare, 1/22; Health Care Cost Institute report, 1/21).

    Five ways to control the flow of drug expenditures

    Prescription drug expenditures are the fastest growing component of health care spending. And while reducing unwarranted prescribing variation is the single biggest improvement opportunity, there are several other near-term chances to reduce spending and grow revenues.

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