PERS PE C T IV E
Medicare Part D and Insulin Affordability
Medicare Part D and Insulin Affordability — The Devil
Is in the Details
Stacie B. Dusetzina, Ph.D., Haiden A. Huskamp, Ph.D., Laura M. Keohane, Ph.D., and Nancy L. Keating, M.D., M.P.H.​​
A mong the discussions under
way in the U.S. Congress re-
garding drug pricing and access,
those related to insulin are par-
ticularly prominent. It is clear why:
millions of Americans rely on in-
sulin, and reports about cost-
related underuse1 and subsequent
deaths, primarily among unin-
sured or underinsured people, have
proliferated in the popular press.
But affordability of insulin may
also be a concern for Medicare
beneficiaries. Medicare spending
on insulin now exceeds $13 bil-
lion annually before accounting for
manufacturer rebates.2 Experts
have called for reducing out-of-
pocket spending by Medicare bene-
ficiaries who need insulin,3 in-
cluding by requiring plans to
share rebates with patients or al-
lowing the government to nego-
tiate for lower list prices for in-
sulin products. Most recently, the
Trump administration announced
its intention to reduce older adults’
out-of-pocket costs for insulin by
allowing some enhanced alterna-
tive Part D plans to provide insulin
at a $35 copayment for a 30-day
supply under the Center for Medi-
care and Medicaid Innovation’s
Part D Senior Savings Model.4
Concerns about insulin afford-
ability for insured Americans stem
from two interrelated factors:
drug prices and insurance bene-
fit design. Because insulin is a
competitive drug class and mul-
tiple types of products are avail-
able, manufacturers have offered
steep discounts and rebates to
pharmacy benefits managers and
health plans in exchange for their
products being included on for-
mularies and placed on preferred
1878
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Medicare Part D and Insulin Affordability
tiers. List prices for insulin have
risen substantially over the past
decade, and the median list price
per fill for long-acting insulin
products offered under Medicare
Part D was more than $600 in
2019 (see the Supplementary Ap-
pendix, available at NEJM.org).
Net prices have risen more slowly
because of class-level rebates av-
eraging more than 60% for some
products.5 Both list and net pric-
es are arguably too high, but list
prices have a greater effect on con-
sumers’ out-of-pocket spending.
Although the Part D standard
benefit design currently includes
25% coinsurance in the initial
coverage phase, plans can — and
often do — choose to offer flat-
fee copayments for insulin instead.
Benefit designs that use deduct-
ibles or coinsurance for cost shar-
ing often result in affordability
issues for patients. In these cases,
beneficiaries are exposed to the
full list price of the drug (the
pre-rebate price) until a deduct-
ible is met, or they must pay a
percentage of the drug’s pre-rebate
price (e.g., 25%), which results in
high out-of-pocket spending for
high-priced drugs. In contrast,
plans that use a flat-fee copay-
ment effectively decouple patients’
out-of-pocket costs from list pric-
es, which helps shield beneficia-
ries from high and unpredictable
out-of-pocket costs.
When examining strategies for
making insulin more affordable
for older adults, it is important
to consider how Part D plans
currently cover insulin. Of the
3649 outpatient prescription-drug
plans that were available to Medi-
care beneficiaries (Part D plans)
n engl j med 382;20  nejm.org  May 14, 2020
The New England Journal of Medicine
in 2019, we found that nearly
90% offered long-acting insulin
products (the most commonly used
insulin in Part D) with copay-
ments ranging from $45 to $47
per fill in the initial coverage
phase (up to $4,020 in total drug
spending in 2020) of the Part D
benefit. We expect benefit de-
signs to be similar for 2020
plans. Thus, for beneficiaries with
less than $4,020 in total drug
spending in 2020, copayments
would be used for every insulin
fill. For beneficiaries with more
than $4,020 in total drug spend-
ing (average monthly drug costs
of more than $335), nearly all
plans required 25% coinsurance
in the Part D coverage gap, with
median out-of-pocket costs rang-
ing from $72 to $236 per fill in
this benefit phase. Considering
average list prices, patients with
typical Part D plans who use long-
acting insulin and have no other
drug expenditures would spend
$1,140.68 out of pocket on 12
fills of insulin ($46.00 per fill for
about 6.5 fills in the initial cov-
erage phase and $153.75 per fill
for the remaining fills in the
coverage gap).
Recent proposals to modify
Medicare Part D advanced by the
U.S. House and Senate — the
Elijah E. Cummings Lower Drug
Costs Now Act (H.R.3) and the
Prescription Drug Pricing Reduc-
tion Act (S.2543), respectively —
would address some of these af-
fordability challenges. These bills
differ in scope, but both simplify
the benefit from its current three-
phase design (initial phase, cover-
age gap, and catastrophic phase,
with out-of-pocket spending vary-
PE R S PE C T IV E Medicare Part D and Insulin Affordability

offered under Part D at $50 per

Medicare Part D fill after a deductible is met (as
Redesign Benefit
proposed in the Lower Costs,
Coinsurance $1,845 More Cures Act of 2019) or the
administration’s plan to allow a
Copayments $552 subset of enhanced Part D plans
to offer insulin at $35 per month
Current Medicare for each benefit phase.4 Although
Part D Benefit such proposals would reduce
Copayments and spending on insulin for many
$1,141
coinsurance mix beneficiaries, they would not cap
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000
overall drug spending and could
Out-of-Pocket Spending ($) risk upsetting competition in the
Part D marketplace. Savings would
Annual Expected Out-of-Pocket Spending for Long-Acting Insulin under the Current accrue only to beneficiaries who
Medicare Part D Benefit and under a Redesigned Benefit Using Either Copayments use insulin and not to other bene-
or Coinsurance up to an Out-of-Pocket Cap. ficiaries with very high drug
We calculated expected out-of-pocket spending for 12 fills of long-acting insulin using spending who also need the fi-
median point-of-sale prices ($615 per fill) and cost-sharing arrangements used by nancial relief provided by out-of-
Part D plans in 2019 and spending limits in 2020. In 2019, the most common design
was a $0 deductible (77% of plans), a $46 copayment in the initial coverage phase
pocket maximums included in the
(87% of plans), and 25% coinsurance in the coverage gap (90% of plans). Under Part D redesign proposals. In addition,
redesign proposals that use a single coverage phase, we estimate out-of-pocket spend- requiring fixed copayments for
ing for a proposal relying entirely on copayments (12 fills at an estimated $46 per fill) all insulin products could limit
and for a proposal relying entirely on 25% coinsurance (12 fills at 25% of average the ability of health plan admin-
point-of-sale prices from 2019).
istrators and pharmacy benefits
managers to use formulary design
ing by phase) to a single phase for $2,000 out-of-pocket spending to encourage the selection of
which plan administrators could cap), beneficiaries would spend cost-effective products. It might
choose to use either copayments $552.00 on 12 fills of long-acting also increase the prices that health
or coinsurance. The bills would insulin, a savings of $588.68 as plans pay for insulin by limiting
also add an annual out-of-pocket compared with current spending. their ability to use formulary
spending limit for beneficiaries If plans transitioned from flat co- placement as a bargaining tool
($2,000 in H.R.3 and $3,100 in payments to coinsurance under in negotiations with drug makers,
S.2543). These proposed changes the redesigned benefit, however, which could increase premiums
to Part D would clearly help bene- beneficiaries would pay $704.32 for all beneficiaries.
ficiaries with very high drug more than they currently do for As Congress works to modify
spending, but potential savings the same number of fills, assum- Medicare Part D, we believe policy-
for beneficiaries who don’t reach ing 25% coinsurance ($153.75 per makers should be focused on
the out-of-pocket cap, including fill, or $1,845.00). These amounts solutions that provide more pre-
many people who use insulin, would change if plans used larger dictable and consistent cost
are less clear. or smaller copayments or coin- sharing for high-value medications
In fact, the magnitude of ex- surance or if list prices changed. for chronic conditions, such as
pected savings for older adults If redesign proposals move for- insulin. Ensuring that plans offer
who use insulin would depend on ward, the likelihood of savings ac- beneficiaries a subset of insulin
the way in which plans changed cruing to Medicare beneficiaries products (including pens and vials
their benefit designs under the who use insulin could be increased of shorter- and longer-acting insu-
new single-phase benefit (see by requiring Part D plans to offer lins) with low copayments could
graph). If plans extended their at least some insulin products increase affordability while pre-
usual flat copayments until ben- exclusively with copayments. serving the ability of plan ad-
eficiaries reached the new out-of- Alternative proposals for re- ministrators to make choices re-
pocket spending cap (assuming ducing out-of-pocket spending in- garding coverage and tiering of
2019 list prices, median Part D clude capping out-of-pocket pay- nonpreferred products and to ne-
copayment rates, and H.R.3’s ments for all insulin products gotiate for lower insulin prices.

n engl j med 382;20  nejm.org  May 14, 2020 1879

The New England Journal of Medicine
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 PERS PE C T IV E
Implementing these changes in
the context of current Part D re-
design proposals could improve
access to insulin while providing
broader financial protections for
older adults by capping total out-
of-pocket spending. Equally im-
portant, efforts to reduce out-of-
pocket spending on insulin and
other drugs offered under Part D
should be combined with mean-
ingful efforts to lower drug pric-
es directly, including negotiating
drug prices and implementing
limits on price increases.
The Day My Gut Feeling Led Me Astray
The Day My Gut Feeling Led Me Astray
Vanita Noronha, M.D., D.M.​​
I n April 2018, Ms. K., an active
84-year-old, was diagnosed with
metastatic lung cancer that had
spread to her brain. She received
whole-brain radiation and was
started on gefitinib, directed at
the EGFR mutation that her tumor
cells luckily carried. Her tumor
responded beautifully, and she
did well until August 2019, when
she developed a new painful lump
in her left upper back. Her re-
staging CT scan showed un-
equivocally that the lung mass
was progressing.
As per our usual policy, we
did a repeat tumor-tissue biopsy
to check for any change in the
pathology and for the develop-
ment of new resistance mutations.
The whole process of scheduling
a repeat biopsy, then the histopa-
thology reporting, followed by
the molecular testing takes 2 to
4 weeks. Ms. K. received pallia-
tive radiation to the new painful
disease site and continued receiv-
ing gefitinib while waiting for us
to decide on the most appropri-
ate next line of treatment.
Two weeks later, when her
1880
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Copyright © 2020 Massachusetts Medical Society. All rights reserved.
Medicare Part D and Insulin Affordability
Disclosure forms provided by the authors
are available at NEJM.org.
From the Department of Health Policy,
Vanderbilt University School of Medicine,
Nashville (S.B.D., L.M.K.); and the Depart-
ment of Health Care Policy, Harvard Medi-
cal School (H.A.H., N.L.K), and Brigham
and Women’s Hospital (N.L.K.) — both in
Boston.
This article was published on April 1, 2020,
at NEJM.org.
1. Herkert D, Vijayakumar P, Luo J, et al.
Cost-related insulin underuse among patients
with diabetes. JAMA Intern Med 2019;​179:​
112-4.
2. Cubanski J, Neuman T, True S, Damico
family brought her into the clinic,
there was no trace of the lovely,
active Ms. K. whom I had come
to know so well. The new Ms. K.
was delirious and incontinent, had
fallen a few days earlier, and was
now nonambulatory. With a de-
feated look on her face, Ms. K.’s
daughter-in-law wheeled her into
the clinic. Since Ms. K. had ini-
tially presented with brain metas-
tases and now had progressive
disease in the chest, I suspected
that the brain lesions had also
progressed, leading to neurologic
decompensation. She was exceed-
ingly weak; her Eastern Coopera-
tive Oncology Group (ECOG) per-
formance status was 4 of a
possible 5, where 5 means dead.
My gut instinct and all my prior
training shouted the plan to me:
“Best supportive care.” This rec-
ommendation is one of the first
things we learn in medical on-
cology: if a patient has an ECOG
performance status of 4, cancer-
directed treatment should not be
considered. Primum non nocere.
I knew that the patient did
not have much time left and that
n engl j med 382;20  nejm.org  May 14, 2020
The New England Journal of Medicine
A. How much does Medicare spend on insu-
lin? San Francisco:​Kaiser Family Founda-
tion, April 1, 2019 (kff​.org/​medicare/​issue​
-­brief/​how​-­much​-­does​-­medicare​-­spend​-­on​
-­i nsulin/​).
3. Cefalu WT, Dawes DE, Gavlak G, et al.
Insulin Access and Affordability Working
Group: conclusions and recommendations.
Diabetes Care 2018;​41:​1299-311.
4. Centers for Medicare and Medicaid Ser-
vices. Part D Senior Savings Model. March 11,
2020 (https://innovation​.cms​.gov/​initiatives/​
part​-­d​-­savings​-­model).
5. Dusetzina SB, Bach PB. Prescription
drugs — list price, net price, and the rebate
caught in the middle. JAMA 2019;​ 321:​
1563-4.
DOI: 10.1056/NEJMp2001649
Copyright © 2020 Massachusetts Medical Society.
Medicare Part D and Insulin Affordability
she would probably not be able
to tolerate systemic therapy. I
gently discussed this inference
with her family and recommend-
ed that we give her pain medica-
tions to make her comfortable.
Ms. K.’s daughter-in-law agreed
with this plan, but the patient’s
son did not. He insisted that he
wanted to continue treatment,
regardless of whether it would
help his mother. I reiterated that
we would be doing more harm
than good, but he was adamant.
Intravenous chemotherapy was out
of the question, but he requested
that we consider prescribing an
alternative oral medication such
as osimertinib. I explained at
length that apart from the fact
that it would most likely not bene-
fit his mother, I would need to
order various blood tests and an
electrocardiogram before prescrib-
ing any medication, and all this
testing could add to her suffering.
He said, “Do whatever it takes.”
Against my better judgment, I
ordered the basic tests to ensure
that it would be safe to start
osimertinib. The results startled