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Improvements Prompt Rise in Insulin Cost

Medicaid reimbursement for insulin skyrocketed within the last decade.

New improvements in insulin formations have led to increasing costs. This creates a strain on patients who have no insurance or those who have to pay higher out-of-pocket prices. These increases in price also strain the budgets for Medicare and Medicaid.

One big contribution to the increasingly high cost of insulin is the lack of competition. Currently, there are only three manufacturers (Eli Lilly, Sanofi Aventis, and Novo Nordisk) that are producing 90% of the global insulin market.

Jing Luo, MD, Jerry Avorn, MD, and Aaron S. Kesselheim, MD, analyze the trend in insulin cost from 1991 to 2014. They chose to analyze data from Medicaid because the cost information is available and their programs are sensitive to changes in costs. The researchers adjusted for inflation when doing these analysis. They also plotted reimbursements per NDC unit of insulin versus time on a graph to see the trend throughout the years.

Results showed that “since 1991, quarterly Medicaid reimbursements for insulin products on a per-unit basis have steadily increased.” Medicaid reimbursements to pharmacies have increased from $2.36-$4.43 per NDC unit (1mL) of insulin in the 1990s to “$9.64 per unit for short-acting and $9.24 per unit for intermediate insulins,” to $14.79 per unit for premixed insulins in 2014.

The rate of increase of reimbursements has always been higher for patented insulin products, such as insulin analogs, than for nonpatent-protected insulin, such as human insulin (p < 0.001).

They provided an example that for a patient with diabetes using 40 units of insulin per day, “the annual inflation-adjusted cost to Medicaid for medication and dispensing fees was $370 for an average priced premixed insulin in 1991 and $2,852 for an average priced rapid-acting insulin in 2014.”

The researchers concluded that between 1991 and 2014, there has been “a near-exponential upward trend in Medicaid payments for a wide variety of insulin products regardless of formulation, duration of action, and whether or not the product was patented.” This is important because this increase in cost might lead to the government developing new ways to manage their budget. Medicaid prescription management strategies might reduce the amount of alternative treatments that are available to choose from for both the physicians and the patients.

Although there have been several attempts to lower insulin cost, there have not been much progress when it comes to the rising cost of insulin. Generic insulin products have been proposed to help reduce the cost, but there are still many factors that can discourage manufacturers to enter the market, such as high costs associated with manufacturing, storing, and distributing insulin.

So the outcome could be more people switching to NPH and Regular Insulin which is much less expensive at about 1/10 the price of the newer insulins.

Practice Pearls:

  • Medicaid reimbursement for insulin has increased exponentially.
  • Lack of price competition contributes to the high rise in insulin cost to consumers.
  • Manufacturers might not be too forthcoming with producing generics for insulin products due to high costs associated with manufacturing, storing, and distributing insulin.

Luo J, Avorn J, and Kesselheim AS. “Trends in Medicaid Reimbursements for Insulin From 1991 Through 2014.” JAMA Internal Medicine. 2015;175(10):1681-1686. Web. 20 Oct 2015.