Trump administration model to cap insulin costs on some Medicare plans

Certain Medicare beneficiaries could soon see their insulin costs substantially reduced. The Trump administration and the Centers for Medicare and Medicaid Services this week announced that more than 1,750 standalone Medicare Part D prescription drug plans and Medicare Advantage plans with prescription drug coverage have applied to offer lower insulin costs through the Part D Senior Savings Model for the 2021 plan year.

Participating enhanced Part D prescription drug plans will provide Medicare beneficiaries access to a broad set of insulins at a maximum $35 copay for a month’s supply, from the beginning of the year through the Part D coverage gap. The model follows on the Trump Administration’s previously announced 13.5% decline in the average monthly basic Part D premium since 2017 to the lowest level in seven years.

Currently, Part D sponsors may offer prescription drug plans that provide lower cost-sharing in the coverage gap; however, when they do, the Part D sponsor accrues costs that pharmaceutical manufacturers would normally pay. These costs are then passed on to beneficiaries in the form of higher premiums. The new insulin model allows manufacturers to continue paying their full coverage gap discount for their products, even when a plan offers lower cost-sharing; and by requiring participating Part D sponsors’ plans, in part through applying manufacturer rebates, to lowering cost-sharing to no more than $35 for a month’s supply for a broad set of insulins.

CMS is enabling and encouraging Part D plans to offer fixed, predictable copays for beneficiaries rather than leaving seniors paying 25% of the drug’s cost in the coverage gap. Based on CMS’s estimates, beneficiaries who use insulin and join a plan participating in the model could see average out-of-pocket savings of $446, or 66%, for their insulins, funded in part by manufacturers paying an estimated additional $250 million of discounts over the five years of the model.

CMS anticipates beneficiaries will have Part D plan options in all 50 states, the District of Columbia, and Puerto Rico, through either a standalone prescription drug plan or a Medicare Advantage plan with prescription drug coverage.

Beneficiaries will be able to enroll during Medicare open enrollment, which is from Oct.15-Dec. 7 for Part D coverage that begins on Jan. 1, 2021.

“President Trump has forged partnerships with pharmaceutical manufacturers and plans to deliver lower-priced insulin to our nation’s seniors,” said CMS administrator Seema Verma. “This market-based solution, in which insulin manufacturers and Part D sponsors compete to provide lower costs and higher quality for patients, will allow seniors to choose a Part D plan that covers their insulin at an average 66% lower out-of-pocket cost throughout the year.”

The Part D Senior Savings Model — which was announced on March 11  — is a voluntary model that tests the impact on insulin access and care by participating Part D enhanced alternative plans offering lower out-of-pocket costs, at a maximum $35 copay for a month’s supply, for a broad range of insulins.

Part D sponsors that participate in the model will offer beneficiaries Part D prescription drug plans that provide supplemental benefits for a broad range of insulins, including both pen and vial dosage forms for rapid-acting, short-acting, intermediate-acting, and long-acting insulins. Participating pharmaceutical manufacturers will continue to pay their current 70% discount in the coverage gap for their insulins that are included in the model, and based on the model’s waiver of current regulations, those manufacturer discount payments will be calculated before the application of supplemental benefits under the model — which will reduce the out-of-pocket cost of insulin for Medicare beneficiaries.

The pharmaceutical and pharmacy benefits industries were largely bullish on the move. 

We are pleased to see the administration is focused on lowering out-of-pocket costs at the pharmacy counter for seniors with diabetes," said Stephen Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America. "The model has the potential to meaningfully improve affordability and predictability for patients who rely on insulin, but it must be a shared responsibility between health plans and biopharmaceutical companies. Our industry is committed to doing our part and seeking contributions from all stakeholders to lower patient costs is a better approach than other policies that harm innovation and threaten patient access to new medicines."

Pharmaceutical Care Management Association president and CEO JC Scott also commended the Administration’s initiative, stating, “We commend the Administration for allowing Part D plan sponsors to offer a new, voluntary Medicare Part D plan, starting in 2021, under which a beneficiary’s cost-sharing for insulin would be limited to no more than $35 a month. PBMs understand that for too many consumers, including Medicare beneficiaries, insulin costs are increasingly unaffordable.”