Insurance costs: You shouldn't pay full price for insulin

It’s a new year, and Americans are starting over on their health insurance deductibles. That means many people with diabetes and other chronic conditions once again face unaffordable out-of-pocket costs for the medicines they need.

But they shouldn’t have to. Employers can now take advantage of new rules for high-deductible health plans, as well as new programs from pharmaceutical and insurance companies, to make sure no one who needs insulin pays full price.

It’s time for employers—who cover more than half of all Americans, according to the Census Bureau—to lead the insurance marketplace to do a better job caring for people with chronic diseases.

It’s true that Eli Lilly, which David leads, has a financial interest in seeing employers reduce costs for the medicines it sells. But since people with chronic diseases drive 90% of all U.S. medical spending, it makes sense for all employers with high-deductible plans to ensure people who need drugs like insulin can afford them.

Take Doug Liebman, a 62-year-old in Arizona. He has Type 1 diabetes and a $3,500 deductible. His typical bill each January for insulin is more than $1,000. That’s a lot, given that two out of every five Americans don’t have $400 available to handle an emergency, per the Federal Reserve.

But no longer do high-deductible plans need to expose people with chronic diseases to unaffordable out-of-pocket costs for medicines. New rules from the Internal Revenue Service now clearly allow high-deductible health plans to cover certain preventive medicines, like insulin, before patients meet their deductible.

The need for action is urgent. Enrollment in high-deductible health plans has surged to nearly half of all Americans with private health insurance, according to the Centers for Disease Control and Prevention.

When low-income individuals with diabetes shift to high-deductible health plans, a Diabetes Care study shows they end up in the hospital more, with more serious conditions.

The cost of this pre-deductible coverage is minimal—about a 2% rise in premiums, according to a recent VBID Health analysis. For insulin alone, it’s even less, per a Milliman study commissioned by Eli Lilly.

It’s even possible for employers to offer this pre-deductible coverage without increasing premiums. One way of accomplishing that is to stop paying for care that has been proven to be of little to no value—and which wastes as much as $100 billion a year, according to a study in the Journal of the American Medical Association. The Task Force on Low-Value Care, which Mark co-leads, has identified the top five low-value items to cut: widespread vitamin D screening, prostate cancer screening for men 75 and over, diagnostic testing for low-risk patients before low-risk surgeries, imaging for acute low-back pain without other warning signs, and using brand-name drugs when identical generics are available. (Mark has a financial interest in the Milliman MedInsight Health Waste Calculator, a software tool designed to help health care organizations leverage value-based principles by identifying wasteful services.)

In addition, a recent Health Affairs study (which Mark co-authored) demonstrated that selectively lowering cost-sharing for high-value chronic disease management medications can meaningfully increase the number of patients taking medication as prescribed, reduce the risk of adverse health outcomes, and, in some cases, reduce expenditures. If more employers—especially large employers—reduce cost-sharing for high-value therapies, they can change the insurance market in ways that improve health and productivity while constraining costs.

Pharmaceutical companies can also help reduce costs. For instance, the three biggest makers of insulin—Eli Lilly, Sanofi, and Novo Nordisk—all took steps recently to lower out-of-pocket costs. Lilly capped out-of-pocket costs for its insulins at the pharmacy at $95 per month—regardless of how much a patient needs. And Sanofi and Novo both introduced programs that make insulin available for $99 a month. Doug Liebman benefited from one of these discounts—and saved over $900 just in January.

Health insurers and pharmacy benefit managers are also acting to lower the cost of insulin. Express Scripts launched a Patient Assurance Program that caps out-of-pocket costs for insulin at $25 a month. Three insurance plans in Minnesota are doing the same. We think more plans should join them.

Also, UnitedHealthcare, Aetna, and Lilly are now sharing the rebates they receive from pharmaceutical companies directly with patients, giving them the same negotiated discounts they already receive for hospital stays, doctor visits, and lab tests. Patients should receive these discounts for drugs too—especially seniors in Medicare Part D, who are ineligible for assistance programs from pharmaceutical companies.

To further help seniors, Congress should make it a priority in 2020 to cap copays in Part D plans, which often have high out-of-pocket costs, especially in the donut hole phase. Legislators should also allow seniors to smooth out their costs into reasonable monthly payments, which would particularly help those managing chronic diseases. Both policy proposals are in a Senate Finance Committee bill.

If employers, insurers, and lawmakers all adopt these commonsense policies, no one with insurance will continue to pay full price for insulin.

Mark Fendrick is director of the Center for Value-Based Insurance Design at the University of Michigan and founding partner of VBID Health.

David A. Ricks is chairman and CEO of Eli Lilly.