Phia GroupPhia Group Mediahttps://www.phiagroup.com/Media/PostsConfusion Over Recent Insulin Cost Capping Discussionshttps://www.phiagroup.com/Media/Posts/PostId/1229/confusion-over-recent-insulin-cost-capping-discussionsBlog,Health Insurance,Healthcare CostsMon, 06 Mar 2023 15:00:17 GMT<p style="text-align:justify; margin:0in 0in 8pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:"Calibri",sans-serif">By: Ron Peck, Esq.</span></span></span></p> <p style="text-align:justify; margin:0in 0in 8pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:"Calibri",sans-serif">I recently drafted an article regarding legislative proposals to “cap” patient out of pocket costs for insulin.  In it, I explained that – while the individual patient’s out of pocket cost may be reduced at the time of purchase – the total cost of the medication is not reduced.  Instead, a greater share is shifted onto the health benefit plan or insurance.  That payer would then – likely – increase the cost of coverage (premiums, contributions, etc.), resulting in the patient ultimately paying the cost of the drug… simply in a different way.  Shifting who pays a designated portion of a price doesn’t reduce the price itself.  The only way to reduce the price of something is to reduce the price.</span></span></span></p> <p style="text-align:justify; margin:0in 0in 8pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:"Calibri",sans-serif">Ultimately, the proposed law about which I wrote was limited to Medicare.  Recently, however, every news outlet I’ve looked at is featuring headlines akin to: “Drugmaker Eli Lilly caps the cost of insulin at $35 a month, bringing relief for millions” (<a href="https://www.nbcnews.com/health/health-news/eli-lilly-caps-cost-insulin-35-month-rcna72713" style="color:#0563c1; text-decoration:underline">https://www.nbcnews.com/health/health-news/eli-lilly-caps-cost-insulin-35-month-rcna72713</a>), “Lilly to cut insulin prices by 70%, cap prices at $35 per month for people with private insurance” (<a href="https://www.cnbc.com/2023/03/01/lilly-cuts-insulin-prices-70percent-cap-prices-at-35-per-month-for-private-insurance.html" style="color:#0563c1; text-decoration:underline">https://www.cnbc.com/2023/03/01/lilly-cuts-insulin-prices-70percent-cap-prices-at-35-per-month-for-private-insurance.html</a>) and “Eli Lilly to cut insulin prices, cap costs at $35 for many people with diabetes” (<a href="https://www.cnn.com/2023/03/01/health/eli-lilly-insulin-prices-diabetes/index.html" style="color:#0563c1; text-decoration:underline">https://www.cnn.com/2023/03/01/health/eli-lilly-insulin-prices-diabetes/index.html</a>). </span></span></span></p> <p style="text-align:justify; margin:0in 0in 8pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:"Calibri",sans-serif">Look at the Eli Lilly news release, however, and you’ll see “Lilly Cuts Insulin Prices by 70% and Caps Patient Insulin Out-of-Pocket Costs at $35 Per Month” (<a href="https://investor.lilly.com/news-releases/news-release-details/lilly-cuts-insulin-prices-70-and-caps-patient-insulin-out-pocket" style="color:#0563c1; text-decoration:underline">https://investor.lilly.com/news-releases/news-release-details/lilly-cuts-insulin-prices-70-and-caps-patient-insulin-out-pocket</a>).  Note the all-important reference to “Patient … Out-of-Pocket Costs”, and the all-important “and” – separating the 70% price drop (applicable to the total price) from the $35 cap (applicable only to patient out of pocket costs).</span></span></span></p> <p style="text-align:justify; margin:0in 0in 8pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:"Calibri",sans-serif">The bottom line?  No; NBC, CNBC, and CNN … Eli Lilly is not capping the cost of insulin at $35.  They are reducing the price of “some” types of insulin by 70%, and “some” patients will pay up to $35 of that total price.  </span></span></span></p> <p style="text-align:justify; margin:0in 0in 8pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:"Calibri",sans-serif">Herein lies the issue.  People do not understand how health insurance works.  They (apparently – if these media headlines are evidence) believe that their co-pay pays for the full cost of the medication, and that health insurance (apparently) pays nothing.  How else can we explain a headline such as: “Drugmaker Eli Lilly caps the cost of insulin at $35 a month”?  If Eli Lilly were indeed reducing the TOTAL COST of insulin to $35, then – if my co-pay is $20 – I pay $20, and my health plan pays the other $15.  Right?  Yet, as we know, the proposal is to cap the patient’s out of pocket at $35 only.  The cost of the insulin is NOT $35.  The cost of the insulin is, at worst (for some types of insulin) unchanged, and at best (for certain types of medication listed by Eli Lilly) reduced by 70%.  </span></span></span></p> <p style="text-align:justify; margin:0in 0in 8pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:"Calibri",sans-serif">Unpacking this further … If the current retail cost for a box of five insulin pens is – hypothetically – $400 … and the patient’s current co-pay is $50 … then, in that example, the patient pays $50 and the insurance pays $350 for a grand total of $400 (the total cost of the medication).  If the patient’s co-pay is subsequently capped at $35, but the total cost of $400 remains unchanged, then the patient pays $35 and the insurance pays $365 for a grand total of $400 (the total cost of the medication).  If the total cost of the insulin is reduced by 70% and the patient’s out of pocket expense is limited to $35, then the new total cost of the drug is $120 ($400 reduced by 70% is $120).  Now, the patient pays their $35 and the insurance pays the remaining $85.  Is this better than $400?  Absolutely.  Is it “capping the cost of insulin” at $35?  Not a chance!  </span></span></span></p> <p style="text-align:justify; margin:0in 0in 8pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:"Calibri",sans-serif">Further complicating matters … and confusing your author … is the fact that this recent headline grabber came to us courtesy of Eli Lilly.  The law that would cap Medicare recipients’ insulin cost applies to Medicare; the payer.  That is because it is the payer (the health insurance or health plan administrator) that decides how high or low to set the co-pay or co-insurance.  How, then, can the manufacturer of the drug decide how much the patient will pay?  If the plan says the co-pay is $40, what right or authority does Eli Lilly have to reduce that co-pay to $35?  Does Eli Lilly now pass laws applicable to benefit plans and insurance carriers?  Does the “E” in ERISA stand for Eli?  Perhaps they plan to reimburse patients for co-payments in excess of the $35 at the point of sale?  Will the retail pharmacy be on notice to charge patients up to $35, and submit the remaining co-pay to Eli Lilly to credit to itself?  Furthermore, how will this decision impact said retail pharmacies’ own revenue?  </span></span></span></p> <p><span style="font-size:11.0pt"><span style="line-height:107%"><span style="font-family:"Calibri",sans-serif">These recent headlines have both disappointed me (by reminding me how little people understand about how health insurance and drug pricing works), and confused me (regarding how – exactly – a drug manufacturer can dictate how a plan and plan member decide to split the overall cost of a drug, absent any law or contract obligating the plan to so cap the patient’s share).  I watch with anticipation to see how, exactly, this will work.  Stay tuned!</span></span></span></p> 1229Congress’ Proposals to Limit Insulin Costs | The Phia Grouphttps://www.phiagroup.com/Media/Posts/PostId/1145/empowering-plans-p133-will-congress-proposals-to-limit-insulin-costs-make-a-differencePodcastsFri, 15 Apr 2022 13:08:20 GMT<p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/VQWQeFSXblw" title="YouTube video player" width="560"></iframe></p> <p style="text-align: justify;"><span style="font-size:16px;"><span style="font-family:Arial,Helvetica,sans-serif;"><span new="" roman="" times="">Congress has proposed a $35 cap on patient cost-sharing for a month supply of insulin. Join Attorneys Cindy Merrell and Micah Iberosi-Parnell, as they discuss the insulin cost crisis, Congress’ band-aid on insulin prices, and what’s really needed to lower costs for employers and patients.<br /> <br /> <a href="https://youtu.be/VQWQeFSXblw">Click here to check out the podcast!</a>  (Make sure you subscribe to our <span style="color:#0071ce;"><a href="https://youtu.be/VQWQeFSXblw">YouTube</a> </span>and <a href="https://itunes.apple.com/us/podcast/the-phia-groups-podcast/id1246462552?mt=2" style="color:blue; text-decoration:underline"><span style="color:#0071ce;">Apple Podcasts </span></a>Channels!)</span></span></span></p> 1145