Eli Lilly, Novo Nordisk and Sanofi have all said they will bring down the price of insulin significantly. Since nine in 10 Americans in need of insulin rely on these companies for their insulin, this appears to be a huge win. Everyone on insulin should benefit, but Americans cannot rely on pharmaceutical companies to sell their drugs at fair prices.
Eli Lilly led the way to lower insulin prices when it announced it would cut the price of its insulin by as much as 75 percent. Novo Nordisk is lowering insulin prices 75 percent, beginning in 2024, bringing down the cost of its lowest-priced insulin to $48.20. Sanofi says it is cutting its insulin prices as much as 78 percent beginning in 2024.
Some say the companies offering these lower insulin prices will profit more, not less, from the lower prices. They will save money on Medicaid rebates. Beginning in 2024, a federal law mandates much higher drug rebates in Medicaid.
To be clear, even a price reduction of 75 percent leaves the cost of insulin higher than it should be. Kaiser Health News reports California has just cut a deal with Civica Rx to manufacture insulin for its residents at a cost of $30 a vial or $55 for five injectable pens. Novo Nordisk’s price is projected to come down to $48 and Sanofi’s to $64 a vial, 60 percent and more than 100 percent higher than Civica’s price, respectively. Eli Lilly’s reduced price, however, will be $25 a month.
The Inflation Reduction Act capped the out-of-pocket cost of insulin for people with Medicare at $35 a month, for each insulin product people use. It also imposed penalties on pharmaceutical companies that raised their drug prices faster than inflation. But, it did nothing to lower the price of insulin for the uninsured or working people.
The insulin crisis in the US: Nearly 40 million Americans need insulin to treat their diabetes. One million of them say they ration their insulin because the cost is too high.
What pressured pharmaceutical companies to lower their prices further? The companies suggest that they were already offering their drugs at lower prices to pharmaceutical benefits managers, as well as through drug discount programs. Consequently, they might not be losing money by officially lowering insulin prices.
But, the biggest push for lowering the price of insulin is likely a change in the way Medicaid rebates are calculated beginning in 2024. These rebates had been capped. But, the cap will be lifted in 2024. Axios reports that by lowering the price of insulin, “Eli Lily is avoiding paying around $430 million per year in new Medicaid rebates and Novo Nordisk would save $350 million.” So, it appears these companies no longer have a financial incentive to keep the price of their insulin high.
Who will benefit from these prices cuts? Both insured Americans and the uninsured should benefit from these price cuts. But, insured Americans already have their insulin copays set for this year, so they are not likely to see lower out-of-pocket costs until next year. The price cuts should not affect people with Medicare directly as their out-of-pocket insulin costs are already capped. But, lower prices for insulin should mean lower Part D prescription drug premiums.
How long will Americans see lower insulin prices? Who knows. The pharmaceutical companies have the right to raise prices as much as they’d like whenever they’d like.
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