Insulin price cap legislation excludes uninsured or those with private health insurance, increases insurance premiums and government spending

Scientists who discovered insulin in 1921 sold the patent for the drug to the University of Toronto for $1 each because they felt it was unethical for a medical professional to profit from a life saving discovery. Today’s pharmaceutical companies, pharmacy benefit managers, retailers, and Republican politicians don’t share this same sentiment. 

The 2022 Inflation Reduction Act signed by Biden in August capped out of pocket costs for insulin at $35 a month for people with Medicare plans. The price cap will go into effect on January 1, 2023. Efforts to include private health insurance in this legislation, such as the Affordable Insulin Now Act proposed by Sen. Raphael Warnock, have failed to pass the Senate since they were introduced in March. As a result, the privately insured and the uninsured have no protection from insulin costs at this time. 

 “I support the legislation, but I just hope that there’s not a loophole that’s going to keep someone like me [with private health insurance] from benefiting,” said Amy Whittall, a Georgia resident who has managed insulin-dependent Type 1 diabetes for 46 years. 

All but seven Republicans in the Senate voted to remove the price cap from the 2022 Inflation Reduction Act. The Republicans who supported the co-pay relief include Sens. Susan Collins of Maine, Josh Hawley of Missouri, Cindy Hyde-Smith of Mississippi, Lisa Murkowski and Dan Sullivan of Alaska, and John Kennedy and Bill Cassidy of Louisiana. Ten Republican votes were needed to keep the price cap in the bill. Sen. Ron Johnson of Wisconsin referred to the measure as a “gotcha” vote in a tweet.

The price of insulin nearly tripled between 2002 and 2013, according to the American Diabetes Association. Rationing insulin due to these high prices, 16.5% of all adults with diabetes who use insulin put themselves at risk of diabetic ketoacidosis in an effort to save money. 

“I believe that the costs come from the pharmaceutical companies,” said Whittall, “While pharmaceutical companies put research into figuring out how to make better insulin, it’s not to the extent that they’re charging the public.” 

Whittall, who has private health insurance, said she pays around $200 out-of-pocket for nine bottles of insulin, which will last her three months. The average list price for a vial of insulin in the U.S. is $98.70, according to researchers at the RAND Corporation. 

“[Insulin plays] not only a physiological role to replace what’s not happening naturally by the body, but as a result, plays a role in keeping all aspects of life in check or managed,” said Jane Dickinson, Program Director and Senior Lecturer for Columbia University’s Diabetes Education and Management Program. 

Research led by Dr. Karen Van Nuys found, in investigating the insulin distribution system, that net expenditures distributed to manufacturers had decreased by 33% between 2014 and 2018. Similarly, net expenditures distributed to insurers decreased by 24.7%. Meanwhile, the amount retained by other entities increased; wholesalers increased by 74.7%, pharmacies increased by 228.8% and pharmacy benefit managers increased by 154.6%. 

The assumption that large pharmaceutical manufacturers for insulin such as Novo Nordisk, Sanofi, or Eli Lilly are profiting the most off of the increase in pricing, is false. The problem lies in the pricing by distributors and middlemen who use an opportunity to profit off of a live-saving drug. 

Critics of insulin price cap legislation believe that these bills aren’t as helpful for consumers as they may seem. Richard Frank, Professor of Health Economics at Harvard University, and Marta Wosińska, Deputy Director at the Duke-Margolis Center for Health Policy, believe the bill will actually raise costs for consumers through higher insurance premiums and higher government payments for Medicare. 

“The bill eliminates price competition for insulin in the insured market,” Frank and Wosińska wrote in an article for The Hill, “This would lock in manufacturer profits at a time when competition is increasing, manufacturer margins are dropping, and more competitors are on the horizon.”

Examination of the consequences of insulin price cap legislation reveals that reforming the price certification process of manufacturers and reducing the profitability of insulin for middle-men retailers and PBMs will help to fix the insulin pricing issue. Legislators must work to compromise on a bipartisan bill that will reduce out of pocket costs for consumers and combat pharmaceutical loopholes.