January 30, 2024
One in six people who use insulin ration the drug because of the cost. This practice can lead to an increase in complications and even death. So, how much does insulin actually cost? Typical production costs are less than $10 per vial, but for the consumer it is common to find vials priced well over $300. In some cases, insulin prices increased by 1,200% over the last two decades. In this environment, public and legislative pressure is mounting to drive down costs. In 2023, major manufacturers have responded. Here is what you need to know about insulin pricing changes.
Price Changes from Major Manufacturers
While pharmaceutical companies have cut insulin prices over the past few years, recent pressure led to significant insulin pricing changes in March 2023 from the three major insulin manufacturers.
- Unbranded Humalog price decreased to $25 effective May 1, 2023
- Humalog and Humulin will have a 70% decrease in list price effective Q4 2023
- Rezvoglar (insulin glargine-aglr), an interchangeable biosimilar to Sanofi’s Lantus, launched at $92 for a 5-pack of pens on April 1, 2023
- Lilly will cap the monthly price of all its insulin products at $35 at participating pharmacies for those with or without insurance
- Novolin, Novolog, and Novolog 70/30 price cuts of 75% effective January 1, 2024
- Levemir price cut of 75% effective January 1, 2024
- Further Levemir discounts announced for 2024
- Lantus and Apridra will have price cuts of 78% and 70%, respectively, effective January 1, 2024
- Sanofi will cap the monthly price of Lantus to $35 for those with commercial insurance
While these announcements give providers and patients more cost-effective insulin options, there are other insulins that have not received price cuts.
This includes concentrated insulins for those on higher doses as well as newer, “ultra” long-acting insulins that can be beneficial in achieving ideal blood glucose. Note: an unbranded option is available at a 66% price cut to the brand name products in this category.
The Insulin Pricing Debate
While patients have been feeling price increases at the pharmacy counter, a major manufacturer announced that their net price of insulin has fallen for eight consecutive years. For the insulin in question, the manufacturer saw a net price decrease of 58% since 2012. Simultaneously, the average price for patients rose by 45%. How can both be true? Rebates.
The insulin class of drugs has seen a high number of rebates. The list price, paid by patients and payers at the point of sale, has increased over time. Simultaneously, rebates given after the fact have increased, resulting in a lower net cost — the number cited by the manufacturer.
While the lowest net cost is important, insulin has made up a substantial portion of rebate contracts with PBMs. Despite all the pricing announcements this year, the manufacturers’ bottom lines will hold steady due to the unchanged net price of insulin.
Understanding Wholesale Acquisition Cost
Manufacturer price-cut announcements have led to the introduction of low Wholesale Acquisition Cost (WAC) insulins. Insulin is now classified as either low WAC (reduced list cost) or high WAC (higher list cost). But what does this mean for those who are responsible for pharmacy benefits?
Simply put, these classifications will force organizations to ask questions and make decisions on their pharmacy coverage for insulin.
Primary Approaches by PBMs
PBMs are sharing how they plan to address these pricing changes with clients. Some will give employers the choice to have an insulin strategy that includes high WAC insulin with continued rebates or low WAC insulin with decreased rebates or no rebates at all. Others have decided that their standard will be low WAC insulin products on the formulary.
While the net cost of insulin on a low WAC or high WAC strategy will be similar after considering rebates, there are still considerations to weigh when making this decision.
Member Cost and Accessibility
- Low WAC insulin: A strategy with low-cost insulin on the formulary benefits your members up front. They pay less out of pocket, especially when in the deductible phase of pharmacy benefits.
- High WAC insulin: This strategy will not impact member’s out of pocket responsibilities. This can lead to decrease medication adherence which can in turn lead to worsening diabetes control. Poor medication adherence has the potential for costly acute emergency visits, hospitalizations and long-term complications.
- Low WAC insulin: With decreased acquisition cost, rebates will decrease.
- High WAC insulin: This approach preserves current rebate strategies.
- Low WAC insulin: As most insulins available on the market utilize a low WAC approach, more insulins will be available on a formulary with a low WAC strategy. This strategy preserves members insulin options.
- High WAC insulin: As there are often less insulins available on a high WAC focused formulary, there is increased risk of member disruption.
One final aspect to consider is how PBMs are meeting guarantees. Because insulin rebates make up a sizable portion of rebate contracts, some PBMs are giving employers a choice — either adjust the guarantee or get creative with how they receive credit for rebates. These changes are new, but organizations will need to plan for the long-term impacts of this new approach to rebate guarantees.
The Bottom Line
Your current pharmacy benefits consultant should be discussing the nuances of insulin pricing changes with you. Are you confident that they understand how changes will impact your bottom line and your plan members? Ensuring that your pharmacy benefit consultant is assessing your situation is vital. Contact us at Innovative Rx Strategies to learn how our team of clinical pharmacists and pharmacy benefit experts can support you through this change — and those that are on the way.