As PBMs head to the Hill, keep an ear out for one key buzzword

It’s a big week on Capitol Hill, especially for pharmacy benefit managers. Five of the big guys — CVS, Optum, Cigna, Humana and Prime Therapeutics — head before the Senate Finance Committee this morning to talk drug prices. And that’s not all: tomorrow, the first three on that list are set to go head-to-head with three major drug makers over the rising cost of insulin, specifically.

I’d wager a bet that insulin pricing is going to be top of mind at both hearings. And for good reason: It’s arguably the clearest example of how the U.S. drug supply chain leaves patients in the lurch. But the situation is not as simple as some may have you think. As you’re watching these hearings, here’s some important context:

First, what’s the issue with insulin?

There’s one indisputable fact: the list price of insulin has skyrocketed. Sanofi, the maker of the world’s best selling insulin Lantus, has disclosedthat its list price across its diabetes products has increased by more than 100% since 2012. And that’s just one example among many: Eli Lilly has disclosed that the average per month cost for Humalog, when paying list price, increased from $391 in 2014 to $594 in 2018.

How have list price increases impacted patients?

While only patients without insurance pay the whole list price, a sizeable portion of the population is completely without health insurance (29.3 million Americans in 2017, according to the CDC). And there are very notable cases of patients with diabetes losing health insurance coverage and dying shortly after because they had to ration insulin.

Patients with large deductibles or higher coinsurance also feel the brunt of high insulin prices, because they either pay a significant chunk of the insulin’s list price or they pay the entire list price until they’ve spent a certain amount. Compounding that headache: recent reports from the Kaiser Family Foundation and Avalere indicate the share of patients with high deductibles and coinsurance is rising.

Are PBMs doing their job?

The scant public data on net insulin prices (that is, the price after negotiation) indicate that PBMs are successfully bringing down insulin prices.

Eli Lilly, one of the big three insulin makers, recently disclosed that the net price for its most popular insulin, Humalog, dropped 8.1% over the past five years.

Sanofi, too, has disclosed that the net prices for their insulins have decreased by 25% from 2012 to 2018.

And while PBMs may be accused of pocketing the difference between an insulin’s list price and the negotiated price, PBMs claim that they pass nearly all rebates back to their insurance plan clients.

What have PBMs done to deal with rising insulin costs?

Express Scripts, which is now owned by Cigna, has been the most forward-leaning in this department, announcing just last week that it would offer clients the ability to cap insulin out-of-pocket costs at $25 per month.

CVS Health has pushed patients toward Basaglar — the only so-called follow-on insulin product on the market — instead of Sanofi’s Lantus, because that product is roughly 15% cheaper. The company is also likely to note that it offers insulin for a $0 copay to its own employees.

Optum hasn’t been as vocal about the issue of insulin, specifically, but they’ve taken steps to ease the burden on patients facing high out of pocket costs more generally. Namely, they’ve decided to share the rebates they negotiate directly with patients at the pharmacy counter.