WASHINGTON — Seniors with diabetes could pay less for insulin and the government could save on an increasing number of prescription drugs if a budget reconciliation bill passed by the Senate on Sunday is voted into law in the coming days.
Those provisions are among a host of health-related measures in what’s been dubbed the Inflation Reduction Act, a renegotiated package containing some of President Joe Biden’s economic agenda 18 months in the making.
According to Senate Democrats, the bill would raise $739 billion in revenue, spend a total of $433 billion and reduce the budget deficit by about $300 billion over a decade.
Among other measures, the bill caps insulin costs at $35 for Medicare enrollees — a fraction of what many people pay for the synthetic hormone that helps control blood sugar. But people with employer-provided health insurance would not get the same break.
A measure that would’ve extended the price limit to people with private insurance — some 177 million people or 54.4% of the U.S. population — was jettisoned by Republican lawmakers on Sunday.
The budget reconciliation bill also includes a continuation of the enhanced premium tax credits that boosted enrollment in Affordable Care Act health insurance plans — a measure that could matter to the roughly 400,000 Pennsylvanians who are covered through the state’s health insurance marketplace.
The enhanced premiums, enacted last year under the American Rescue Plan, drove Pennsylvania’s uninsured rate down to 5.4% in 2022, its lowest ever and down from 6.8% in 2020, when the last provisions of the law went into effect. For Allegheny County residents with health insurance through Pennie, the state’s online exchange, the bonus is an average of $1,480 annually.
Also included is the authority for Medicare to negotiate prices for 10 high-cost and biologic Medicare Part D drugs starting in 2026, increasing to 20 drugs in 2029 and later years — savings that would eventually trickle down to consumers at the pharmacy counter.
Medicare beneficiaries would also see a new ceiling of $2,000 in out-of-pocket drug spending starting in 2025; there are no limits today.
Drugmakers that decline to negotiate prices with Medicare would face an excise tax on prior year sales starting at 65% and increasing by 10% every quarter up to 95%.
“We love the insulin caps, but let’s make sure everybody can afford their drugs,” said Robin Stelly, statewide organizer for the Pennsylvania Health Access Network, a Philadelphia-based advocacy group. “We’re all in this together.”
The pharmaceutical industry has been among the most outspoken critics of the budget deal, with a Washington-based trade group calling it a “historic mistake” in a letter to Congress on Thursday.
“This bill will not provide relief for families struggling with inflation or help the average American patient afford their medicines,” directors of the Washington-based Pharmaceutical Research and Manufacturers of America wrote. “It will be remembered as a historic mistake that devastated patients desperate for new cures.”
On Monday, PRMA said it had not taken a position on insulin price caps, but some drug makers favored them.
If the price is right
The cap on insulin prices is part of a larger industry move to tamp down prescription costs that includes a Highmark partnership with nonprofit drugmaker CivicaScript. The Lehi, Utah-based company plans to introduce three insulin biosimilars in 2024 that would cap the consumer cost at $30 per vial — a savings of as much as 83% over the average retail price.
“It’s a very different model,” said Corey L. DeLuca, vice president of clinical and special pharmacy services at Highmark. “We know that the high cost of insulin is a problem that everyone is feeling.”
The cap on insulin prices would only apply to people with Medicare coverage. The House-backed Build Back Better Act included lower insulin prices for people with private insurance, but the Senate parliamentarian ruled that the Democrats’ cap did not comply with the rules that allow them to advance a bill under the process known as reconciliation.
Forty-three Republican senators, including Pennsylvania’s Sen. Pat Toomey, voted Sunday against a Democratic effort to override the budget rule to include the insulin cap for those with private insurance, falling short of the 60-vote threshold the Democrats needed to include the measure. The effort failed during Sunday’s so-called “vote-a-rama” during which Democrats played defense against Republican attempts to stall and change the bill.
For Highmark, diabetes is the costliest chronic ailment to treat among members, Ms. DeLuca said. Cost figures and number of members affected weren’t available.
The average retail price of Novolog, the priciest of the three insulins CivicaScript plans to make in generic form, costs an average of $176.52 and is not covered by Medicare or most insurance plans, according to GoodRx Inc., a Santa Monica, Calif.-based drug discounter. Manufacturer and pharmacy coupons can lower prescription prices for consumers.
Last week, CivicaScript introduced its first product, which is used with a steroid medication to treat prostate cancer that has spread to other parts of the body. CivicaScript is recommending that pharmacies charge consumers no more than $171 for a typical month’s supply. That’s $3,000 less than the average cost for someone with Medicare Part D coverage.
Three states where Highmark does business — West Virginia, Delaware and New York — already cap insulin prices at $100 for fully insured members. Pennsylvania does not limit the price of insulin, but Ms. DeLuca said the federal price ceiling was broader.
“The federal law is very broad and sweeping,” she said. “That’s the key difference.”
Medicare is the government health plan for people who have reached age 65 and the 154,000 Medicare Part D insulin users in Pennsylvania, including 87,000 people with low-income subsidies, pay an average of $575 out of pocket annually for the drug. Nationally, the average out of pocket spending per insulin prescription was $54 in 2020, over 50% more than the proposed $35 monthly copay cap in the bill.
Some under Highmark’s coverage could still begin to see savings on insulin and other medications as they are rolled out; others would not see sweeping federal changes.
“There’s broad bipartisan support for lowering insulin costs, and Washington Republicans have already chosen to kill one proposal that would have helped insulin users save money and stay healthy,” the provision’s main sponsor, Sen. Raphael Warnock, D-Ga., told the Pittsburgh Post-Gazette in a statement Friday. Mr. Warnock also backs the measure to cap prescription drug costs for seniors.
Republican support for a stand-alone insulin proposal from Sens. Susan Collins, R-Maine, and Jeanne Shaheen, D-N.H., has yet to garner broad Republican support.
Mr. Toomey told reporters last month that “it’s a very bad idea.”
“We shouldn’t be regulating prices in any area of our economy. I think it’s also a solution in search of a problem. There’s actually a wide range of insulin products at different price points people can choose from,” he said.
Others have expressed concern about Ms. Collins’ and Ms. Shaheen’s proposal, including economists representing the Brookings Institution and the Committee for a Responsible Federal Budget, which cited a recent Congressional Budget Office report that warns the bill could increase health costs.
The rising number of people diagnosed with diabetes is driving an overall increase in insulin spending. In 2014, 9% of adults in the U.S. had diabetes, a number that was projected to double to 18% by 2060, according to New York-based Statista, a business data platform. Insulin expenditures reflect the rise.
Medicare Part D enrollees spent $1 billion out of pocket for insulin in 2020 — more than four times the amount spent in 2007, according to the Kaiser Family Foundation. One in three Medicare beneficiaries has diabetes, and more than 3.3 million people with Medicare use one or more of the common forms of insulin.
But out-of-pocket prescription drug costs for Medicare enrollees fell to $21.02 in 2021 from $30.80 in 2018, according to an April report by Research Triangle Park, N.C.-based Iqvia Institute, an analytics and research services company.
Research has shown that medication and lifestyle changes can limit the most serious consequences of diabetes, which include vision loss and kidney damage.
Another health component
Another health-related provision tucked into the bill is the Sen. Bob Casey-backed measure to permanently extend an excise tax on domestic coal that funds health benefits and a small living stipend for miners who suffer from Black Lung disease or spouses who are left behind.
Coal miners suffering from the occupational lung disease saw the sole source of funding for their benefits decrease by half last year, when Mr. Biden’s initial Build Back Better economic agenda failed after Sen. Joe Manchin, D-W.Va., refused to support the legislation.
As the fund loses money — millions a week, according to a coalition monitoring the fund — those who use it have to depend on Congress to renew the revenue source.
“It’s just a year extension, a year extension, a year extension — we need a permanent extension,” Jerry Coleman, of the Kanawha County, W.Va., Black Lung Association chapter said during a virtual news conference Friday convened by the advocacy organization Reimagine Appalachia. Mr. Coleman suffers from the disease.
Mr. Casey voted in favor the roughly 700-page Senate bill Sunday and released a lengthy statement praising the “fiscally responsible bill that will bring down our national debt by ensuring profitable corporations start paying their fair share, just as American families have been doing all along.”
“For the first time, Medicare will be able to negotiate for lower prescription drug prices and annual out-of-pocket costs will be capped at $2,000. I’m proud to say this legislation also includes a provision I fought for to ensure low-income seniors and people with disabilities are able to afford their medications. These are commonsense solutions that build on the promise of the Affordable Care Act and ensure families don’t have to choose between their health and their bank accounts,” he continued.
The U.S. House will take up the bill Friday.