Insurers face wave of state legislation capping members’ insulin costs

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Trine K. Tsouderos HRI Regulatory Center Leader, PwC US February 21, 2020

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Concern over the high price of insulin has sparked a flurry of state action to cap some residents’ monthly out-of-pocket spending on the medication.

On Jan. 24, Illinois Gov. J.B. Pritzker signed legislation limiting out-of-pocket spending to $100 for a 30-day supply of insulin, regardless of the quantity or type of drug, starting next year. On Jan. 1 of each year, the monthly limit will be pegged to the consumer price index-medical care. Illinois’ law applies to group or individual health policies that provide coverage for insulin drugs. That makes the state the second to pass such a law, after Colorado, which in May 2019 enacted a similar measure.

“Healthcare is a right for all, not a privilege, and that’s why I am so proud that we created an insulin price cap that successfully puts patients above profit,” Pritzker said in a statement. One of the measure’s sponsors, state Rep. Will Guzzardi, called the cost of insulin “outrageous.”

In all, lawmakers in at least two dozen states have introduced bills that would limit patient out-of-pocket spending on insulin, according to information from the National Conference of State Legislatures. These measures do not address the price of insulin but instead typically focus on the cost to members with state-regulated private insurance.

Most of the bills cap patients’ insulin cost sharing at $100 a month. State Rep. Dylan Roberts of Colorado, who sponsored that state’s law, said he chose $100 for the monthly cap after speaking with insurance industry representatives and determining that at that level, patients on insulin could save money without health plans shifting their losses onto other plan members.

Proposed legislation in a few states set lower limits. The Virginia House of Delegates passed legislation on Feb. 3 that would institute a $30 cap for a 30-day insulin supply. The lowest proposed limit is $25 for a 30-day supply, found in bills introduced in Massachusetts and West Virginia. Legislation in at least two states—Missouri and Pennsylvania—would allow for annual increases in the cap tied to the consumer price index.

HRI impact analysis

The rising price of insulin has become a concern nationwide. In 2016, people with Type 1 diabetes spent an average of $5,705 per person on insulin, double the $2,864 they spent in 2012, according to a 2019 Health Care Cost Institute report.

A new report by the institute on employer-sponsored insurance found that of the average $5,892 spent per person in 2018, $1,118 was for outpatient drugs. Spending on insulin spread across all people with employer-sponsored insurance accounted for $62.57, or 5.6% of that $1,118, according to data the institute provided to HRI.

Some insurers are acting by lowering patient cost-sharing requirements. One large health insurer serving several states has partnered with a pharmacy benefits manager to offer a program that holds eligible members’ insulin costs to no more than $25 for a 30-day supply.

State bills capping members’ out-of-pocket costs likely will lead to higher premiums overall, although some savings could result as members with diabetes better control their disease.

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

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