The pricing of prescription drugs has come under scrutiny recently by consumers who believe manufacturers set an extremely high price for highly sought-after prescription drugs for consumer use. More than 5 million Medicare beneficiaries struggle to afford prescription drugs[1]. Prescription drug prices are set by each manufacturer known as the list price. The Inflation Reduction Act was implemented in August to help with the cost of prescription drugs in the Medicare program. The new regulation allows the federal government to negotiate lower drug prices supplied through the program, increasing access to care. With no prior federal regulation in place to deter price gouging, §1191 of the Inflation Reduction Act establishes a pathway for negotiating lower prescription drugs supplied in the Medicare program. With this new regulation, drug companies will be fined for price gouging of prescription drugs supplied through the Medicare program. Section 1195 of the Inflation Reduction Act “penalizes any manufacturer of a selected drug that has entered into an agreement under §1193, with respect to a year during the price applicability period with respect to such drug, that does not provide access to a price that is equal to or less than the maximum fair price for such drug for such year.” Recently, a list of prescription drugs supplied through the Medicare program whose list prices increased higher than the rate of inflation was released. The companies that manufactured these drugs will face a penalty in the form of a rebate.

Consumers who rely on insulin have been very vocal about the burdens of gaining access to affordable insulin. An estimated 1.4 million new cases of diabetes were diagnosed among people ages 18 and older in 2019 [2]. The prevalence of diabetes in the United States is estimated to be 11% with 23% undiagnosed and 76% diagnosed with the condition [3]. Diabetics have higher comorbidities rates compared to other chronic conditions because of overlapping risk factors. People with diabetes account for $1 of every $4 spent on health care, paying more than twice as much a year for health care than a person who does not have the disease [4]. Most people who can’t afford this medication either skip doses or stop taking the medication which can result in hospitalization for care, thus placing a burden on the health care system by rendering care that could have been easily prevented. The cost of insulin for consumers rises annually. Depending on your health care coverage, the cost of insulin can vary between $25 to $300 per vial[5] .  As highlighted by the Senate Finance Committee’s report on insulin list prices, the amount of revenue retained by drug manufacturers has risen simultaneously with the out-of-pocket cost of insulin for their consumers.

Recently, Eli Lily and Company and Novo Nordisk, PLLC announced they will reduce the cost of insulin drugs manufactured at their companies. Eli Lily reduced the cost of insulin by % 70, placing a cap of $35 on monthly out-of-pocket costs for people who are not covered by Medicare’s prescription drug program. The drug company also announced that their generic version of insulin would be capped at $25 a vial starting in May. The drug company Novo Nordisk will reduce branded insulin prices by 75% starting in January 2024 as well as lower the prices of generic insulin prices. These initiatives taken by Eli Lilly and Novo Nordisk set a standard for other drug companies to follow.

[1] Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health & Human, Services. Secretary of Health and Human Services’ Report on Prescription Drug Affordability among Medicare Beneficiaries. 2022. Prescription Drug Affordability among Medicare Beneficiaries (hhs.gov).

[2] Centers for Disease Control and Prevention. (2022). National diabetes statistics report: Estimates of diabetes and its burden in the United States. https://nationaldppcsc.cdc.gov/s/article/CDC-2022-National-Diabetes-Statistics-Report¹.

[3] Centers for Disease Control and Prevention. National Diabetes Statistics Report website. https://www.cdc.gov/diabetes/data/statistics-report/index.html. 

[4] American Diabetes Association. (n.d.). Insulin and Drug Affordability. https://www.diabetes.org/advocacy/insulin-and-drug-affordability..

[5] Cohen, J. (2021, January 5). Insulin’s Out-Of-Pocket Cost Burden To Diabetic Patients Continues To Rise Despite Reduced Net Costs To PBMs. Forbes. https://www.forbes.com/sites/joshuacohen/2021/01/05/insulins-out-of-pocket-cost-burden-to-diabetic-patients-continues-to-rise-despite-reduced-net-costs-to-pbms/.