In April of this year Medscape Diabetes and Endocrinology published an article by Mark Harmel, MPH, CDE and Irl B. Hirsh, MD. Dr. Hirsh is an endocrinologist who also happens to have Type 1 diabetes. He raises questions about insulin pricing whenever he has the opportunity.
Dr. Hirsh states that his patients are yelling at him, because they cannot afford their insulin. Patients on Medicare who have not been on insulin long, find that due to the cost of insulin they quickly fall into the doughnut-hole and have to pay for their insulin out of pocket. The newly insured who did not understand the high deductible are now forced to pay full price for their insulin, and co-pays for insulin have increased so dramatically that individuals with insurance can no longer pay for their insulin. As we stated in the July newsletter, the cost of insulin has risen almost 200 percent between 2002 and 2013 and the burden is now too great.
In order to make insulin last longer many individuals will cut back their dose or skip doses. This is a big problem considering those with diabetes need insulin to stay healthy. For those with Type 1 diabetes it becomes much more serious, as they can’t live without taking insulin.
So how is insulin priced?
The picture has changed dramatically in recent years. Insulin prices are set by the three big insulin companies – Novo Nordisk, Eli Lilly, and Sanofi. However, the new players are the PBMs – Pharmacy Benefit Managers. PBMs are a third-party administrator of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program, and state government employee plans. As of 2016, PBMs manage pharmacy benefits for 266 million Americans. They operate inside of integrated healthcare systems (e.g., Kaiser or VA), as part of retail pharmacies (e.g.,CVS Pharmacy or Rite-Aid), and as part of insurance companies (e.g.,UnitedHealth Group). There are fewer than 30 major companies in this category in the US. The three major PBMs comprise 78 percent of the market, and cover 180 million enrollees.
PBMs make money by charging health plans fees for processing the payments of the prescription benefits, in addition they make large profits by “marking up” prescription drug benefit claims and billing your health plan more than your local pharmacist charges. These companies also receive payments from the pharmaceutical companies based on their ability to promise to increase the sales of a costly brand-name medication. These savings do not get passed on to the health plans.
These companies are now the middleman and are direct competitors to community pharmacists. They are the main reason why prescription medications have increased so dramatically in recent years.
Because of rebates given to healthcare plans, the pharmaceutical companies are then forced to increase the amount of money they charge—further causing prices to rise. DRWF is interested in hearing about your experiences with trying to afford your medications. Email us your story at email@example.com, or call the helpline at 800-941-4635.