The Centers for Medicare & Medicaid Services (CMS) just took an important step towards addressing one of the worst public health crises of our time. No, not COVID-19, but a disease that chronically affects millions of Americans: diabetes. A new policy will dramatically reduce seniors’ out-of-pocket insulin costs.
Diabetes remains one of the single greatest threats to our country’s health, and has been shown to be a devastating underlying condition that intensifies the impact of the coronavirus. Tragically, Hispanics account for 29 percent of cases nationwide, and patients without well-managed glucose levels could be at a higher risk of developing life-threatening complications from the novel coronavirus.
Before COVID-19, diabetes accounted for 12 percent of all deaths in the United States, according to a study by researchers at the University of Pennsylvania and Boston University. For Hispanic adults, who are 1.7 times more likely than their white counterparts to suffer from the illness, age-adjusted death rates topped 25 percent.
The cost of insulin and supplies plays a significant role in the inability of poor and underserved communities to adequately manage diabetes. Average medical expenditures for patients with diabetes are more than double what they are for patients without the disease. And given that median income among Hispanic Americans trails that of white Americans by more than 25 percent, the challenges in keeping up with the cost of treatment is distressing, particularly for those on a fixed income like seniors.
Indeed, growing insulin expenses have forced an alarming number of patients to deviate from their prescribed drug regimens, jeopardizing their health in the process. A recent study published in JAMA Internal Medicine found that one in four patients underuse insulin as a result of cost.
The new CMS policy represents a life-saving reform that would cap insulin copayments at $35 for a variety of different insulins. And it would apply to more than 1,750 different Medicare drug plans. Roughly one in three Medicare beneficiaries suffers from some form of diabetes. And for those enrolled in Medicare’s drug benefit, out-of-pocket insulin costs have been rising in recent years, growing by 10 percent annually between 2006 and 2013.
These costs have been rising far too quickly thanks mostly to the tactics of middlemen in the drug supply chain. Insurers hire pharmacy benefit managers (PBMs) to help design their prescription drug plans, including which medicines each plan will – or will not – cover. Every year, PBMs use this leverage to secure massive discounts and rebates on brand-name drugs. In 2017 alone, such price concessions totaled $153 billion.
In theory, these discounts should translate into lower patient costs – including lower insulin costs. But PBMs retain a portion of the discounts for themselves and pass the rest along to insurers, who use them to modestly lower premiums. Despite that, patients still face significant co-pays and co-insurance fees at the pharmacy because insurers base their cost-sharing liabilities off of the medicine’s pre-discounted price.
While the newly announced Medicare reform will have real benefits for vulnerable patients, the administration should also crack down on these unfair rebate practices. A now-abandoned proposal from last year would have done just that by requiring PBMs and insurers to pass along rebates to patients at the point of sale. This will be the next logical step of many to adequately address how to effectively battle the diabetes epidemic and ensure that no one has to die over the price of insulin.