CMS savings model caps insulin copays at $35 for Part D beneficiaries
CMS on Wednesday announced a new voluntary savings model for participating Medicare Part D enhanced plans that will cap Medicare beneficiaries’ out-of-pocket insulin costs at $35 for a 30-day supply, according to an agency press release.
According to the CMS release, beneficiaries who take insulin and enroll in a plan participating in the model should save an average of $446 in annual out-of-pocket costs for insulin, or more than 66%, relative to their average cost-sharing for insulin today.
“This model will test a plan design for enhanced Part D plans that ensures that beneficiaries in participating plans will have predictable copays for a broad set of formulary insulins, including rapid-acting, short-acting, intermediate-acting and long-acting insulins, marketed by participating manufacturers from the beginning of the plan year and through the coverage gap phase,” the agency stated in the release. “By ensuring beneficiaries have a predictable and affordable co-pay for insulin, they will have greater access and adherence, leading to improved health outcomes.”
As Healio previously reported, older adults with diabetes who reach the temporary spending limit for their Medicare Part D drug plan — commonly known as the “donut hole” — often have no choice but to pay the high list prices for insulin. According to CMS, pharmaceutical manufacturer patient assistance programs can provide assistance to Part D enrollees and interface with Part D plans only by operating "outside the Part D benefit" to ensure separateness of Part D benefits and patient assistance programs.
“The patient assistance program’s assistance on behalf of the patient assistance program enrollee does not count towards a Part D beneficiary's true-out-of-pocket cost,” the agency states on its website.
Savings model details
The new savings model is targeted to enhanced Part D plans that offer more generous prescription drug coverage than Part D basic benefit designs, according to the agency. The enhanced plans can reduce cost sharing beyond basic Part D plan types, such as fixed-dollar copays instead of coinsurance, and as a result have slightly higher premiums paid for by beneficiaries or through other means, such as a Medicare Advantage plan.
In 2020, average monthly premiums in Part D are $32.09 for a basic plan and $49.32 for an enhanced plan. Today, about 80% of prescription drug plans are enhanced plans, with 54% of beneficiaries enrolled, according to the agency.
Participating manufacturers will continue to contribute their 70% discount on the negotiated price for insulin if marketed by a participating manufacturer, throughout the year starting on January 1, 2021.
CMS has also released a Request for Application (RFA) for Part D sponsors and an RFA for manufacturers.
“Both are invited to apply,” the agency stated.
Pharmaceutical manufacturers may apply by March 18 to indicate participation in the Model. Part D sponsors must submit their application for participation by May 1. CMS will provide information on which plans are participating in the Model as part of Medicare Open Enrollment.
In a separate statement, Eli Lilly announced Wednesday that it will participate in the new Part D Senior Savings Model by offering to include all formulations of Lilly's insulins.
"Lilly is committed to finding solutions for people who need help affording their insulin, and we continue to look for ways to help fill gaps in the system,” David A. Ricks, chairman and CEO of Eli Lilly, said in the release. “This is a great example of collaboration between the government and private companies to address a problem faced by many seniors taking insulin. We are pleased with the significant, positive impact this model is expected to have on insulin affordability for seniors, and we encourage our industry counterparts — both manufacturers and insurance plans — to participate in order to ensure all seniors taking insulin are able to see lower costs at the pharmacy counter."
Ricks called the Part D Senior Savings Model an “especially important addition” to the company’s available options for people with diabetes to reduce out-of-pocket expenses for insulin.
In a study published in JAMA Internal Medicine last month and reported by Healio, researchers wrote that, in 2017, Medicare Part D could have saved $4.4 billion of the $7.3 billion in post-rebate spending on insulin that year if it had used Veterans Affairs-negotiated prices. According to researchers, Medicare Part D spent $13.3 billion before rebates and $7.8 billion after rebates on 31 insulin products in six classes in 2017.
Using VA-negotiated prices, Feldman and colleagues estimated that Medicare Part D would have spent $5 billion after rebates, saving approximately $2.9 billion.
In a statement, CMS Administrator Seema Verma said the savings plan provides an “innovative, market-driven approach” that removes barriers to lower insulin costs.
“We call on health insurance plans and prescription drug manufacturers to take action and provide relief for America’s seniors who take insulin,” Verma said in the release.
The announcement comes after several states have introduced or passed legislation capping monthly insulin copays. Earlier this month, New Mexico Gov. Michelle Lujan Grisham signed legislation capping monthly copayments for insulin at $25, the lowest copay cap introduced at the state level. In January, Illinois capped copay costs at $100 for a 30-day supply, and Gov. Jared Polis of Colorado signed similar legislation in May.
Today, one-quarter of American adults with diabetes said price has affected their insulin use, according to the American Diabetes Association.
More information on the Part D Senior Savings Model, including requests for applications, can be viewed at: https://innovation.cms.gov/initiatives/part-d-savings-model. – by Regina Schaffer
CMS. Pharmaceutical manufacturer patient assistance program information. Available at: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/PAPData. Accessed: March 11, 2020.
Disclosures: Ricks is chairman and CEO of Eli Lilly. Verma is CMS administrator.