“What’s in your backpack?” is a reference to the psychological load one carries. People with diabetes carry a heavy psychological load — they are 2 to 3 times more likely to have depression and 20% more likely to experience anxiety at some point in their life than people without diabetes. Among people living with diabetes, medical expenditures are more than twice those in people without diabetes, and some patients pick up a sizeable share of those incremental costs. The increasingly hefty cost of insulin is, for some, an additional source of strain.
Effective January 1, 2023, the Inflation Reduction Act capped out-of-pocket (OOP) costs for a one-month supply of each Medicare Part D-covered insulin is capped at $35, and this cap will extend to insulin used in traditional insulin pumps covered under Medicare Part B in July 2023. Deductibles do not apply to these products, and any cost-sharing amounts count toward the deductible. Though Congressional efforts to extend this cap to commercial plans failed, political pressure on manufacturers to lower the OOP cost of their insulins has been building.
Dave Ricks, Eli Lilly’s CEO, made a weighty announcement on March 1, 2023: “Lilly is going to buy down all of our customers’ out-of-pocket costs to $35 at the pharmacy counter automatically.” Costs in excess of $35 are shifted from patients’ backpacks to Lilly’s backpack via savings cards. Setting aside the baggage associated with the high and rising cost of insulin, let’s unpack this savings program.
Lilly’s savings card program
For commercially insured patients who fill a prescription for a Lilly insulin at participating retail pharmacies (including Walgreens, CVS, Target, RiteAid, Safeway, and Kroger), the pharmacy submits a claim to the patient’s third-party payer to determine coverage and the patient’s copayment.
If the product is covered with a copay greater than $35, the pharmacy charges the patient a $35 copay and submits the difference as a secondary claim to Eversana, the “processor” that administers the savings card program on behalf of Lilly. If, however, the Lilly insulin is not covered, the pharmacy still charges the patient a $35 copay but submits a primary claim to Eversana.
The loads not lightened
Lilly’s savings program does not lighten the load for many people.
Let’s start with a list of those who are excluded from this program. People eligible for coverage in whole or part by any governmental program (e.g., Medicaid, Medicare, or military health programs) are excluded, as is anyone who receives a discount or similar offer involving Lilly’s covered insulin products. The savings card also may not be used by:
- Massachusetts residents if an AB-rated generic equivalent is available
- California residents if an FDA-approved therapeutic equivalent is available
- Non-cash-paying patients in California for several Humulin products
- People who are not residents of the 50 U.S. states, the District of Columbia, or Puerto Rico, including residents of other U.S. territories (i.e., U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa)
- People under the age of 18
Further, this program has monthly and annual savings caps. The monthly savings cap is the wholesale acquisition cost plus usual and customary pharmacy charges, and the annual savings cap is $16,000. The patient is responsible for any applicable taxes, fees, or amounts exceeding monthly or annual caps. Lilly clearly wanted to cap the weight it would shoulder for patients with coinsurance and for cash-paying patients.
While most retail pharmacies are apparently participating in Lilly’s savings card program due to contracts with the largest national chains, many regional chains, regional supermarket pharmacies, hospital outpatient pharmacies (including those that do not participate in the 340B Drug Pricing Program), and independent pharmacies may not yet be participating. People filling a prescription at a non-participating pharmacy would not be able to access the savings.
While this savings program may bring welcome and sometimes substantial relief, it is, by definition, not applicable to people with commercial insurance whose monthly OOP cost is already $35 or less. Fortunately, that’s a large group — 81% of those in the large employer market, 69% of those in the small group market, and 74% of those in the individual market pay an average of $35 a month per insulin product or less.
Numerous state mandates cap monthly OOP costs of insulin; several cap the cost at $35 or less. It is important, however, to note that ERISA preempts state laws related to employee benefit plans, meaning that self-insured employers are exempt from state insurance regulations. Several large leading employers voluntarily cap the monthly OOP cost at $35 or less. These employers include, but are not limited to, tech companies, payers, and (surprise, surprise) Lilly, Novo Nordisk, and Sanofi — the manufacturers of insulin products.
Lilly’s savings card program does not cover diabetes-related supplies (e.g., capillary blood glucose meters and test strips, insulin syringes, finger-lancing devices and lancets, insulin pumps and related infusion sets, and continuous glucose monitors and related sensors). The OOP cost of supplies weigh patients down and, on average, are higher than the OOP costs for insulin. The program does not cover the OOP cost of diabetes-related medical visits and, of course, does not cover non-Lilly insulin products and other antidiabetes products (e.g., GLP-1 receptor agonists, SGLT2 inhibitors).
The loads shouldered longer
Support received through Lilly’s savings card program may or may not count toward a patient’s deductible. Take, for example, a patient with a $50 copay who has not yet reached his or her $2,000 deductible. The $35 this patient pays at the pharmacy would count toward the deductible, but the additional $15 reimbursed by Lilly through Eversana might not if the payer uses an accumulator program. For some, these “savings” can delay reaching their deductible and getting coverage for insulin and insulin-related supplies as well as other products and services.
To help lighten the load for employees and their dependents and without delay, a number of large, self-insured employers offering high-deductible health plans provide first-dollar coverage for insulin. It is somewhat ironic that this group includes the soda manufacturers Coca-Cola and PepsiCo which have been criticized for promoting and profiting from the sale of sugary drinks that can increase the risk of developing type 2 diabetes.
Lighter loads in the distance
Following Lilly’s lead, Sanofi announced that it, too, will implement a $35-per-month OOP cost cap on insulin for people with private insurance. Sanofi’s cap doesn’t take effect until Jan. 1, 2024. Maybe its delayed implementation will leverage insights from Lilly’s experience. What is Novo Nordisk waiting for?
Lilly’s weighty announcement instantly lightened the load for many people. That said, Lilly could lighten additional backpacks by extending savings to people who:
- Are under the age of 18
- Reside in U.S. territories other than Puerto Rico
- Incur OOP costs that exceed the current monthly and annual savings caps
- Use any pharmacy
Hopefully, more self-insured employers will voluntarily cap the monthly OOP cost for insulin at $35, and more states will mandate these caps for state-regulated insurers. And hopefully, manufacturers, employers, and states will cap the monthly OOP cost for insulin-related supplies.
Affordable insulin and related supplies should be in the bag.
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