AARP Eye Center
Diabetes—a chronic condition that affects how the body makes or uses insulin—is common among US adults. According to the Centers for Medicare & Medicaid Services (CMS), nearly 30 percent of Medicare beneficiaries have diabetes, and millions rely on manufactured insulin as part of their treatment regimen. However, high insulin prices and related out-of-pocket costs are preventing some beneficiaries from accessing the insulin they need. Research indicates that more than one in 10 older adults either skip, delay, or use less insulin than needed to save money. Such behavior can lead to serious health complications and even death.
Fortunately, a new law that addresses high prescription drug prices and out-of-pocket costs will help improve the affordability of insulin for millions of Medicare beneficiaries, and new research sheds light on its potential impact.
Building on Prior Successes
Starting January 1, 2023, Medicare prescription drug plans must limit copayments to $35 per month for the insulins that they cover. A similar copay cap will take effect under Medicare Part B—which covers insulin for beneficiaries who use an insulin pump—starting July 1, 2023. Starting in 2026, the maximum copay will be the lesser of $35 or 25 percent of the Medicare negotiated price, if available.
The new monthly copay limit builds on an existing CMS demonstration program called the Part D Senior Savings Model, which launched January 1, 2021 and will end December 31, 2023. The Model requires participating Medicare prescription drug plans to limit copays for certain covered insulins to $35 per month. In 2022, more than half of eligible Medicare prescription drug plans participated.
Because the Senior Savings Model is still operational, it can be difficult to assess the impact of the new $35 insulin copay limit. In an effort to help answer this question, AARP recently commissioned Avalere Health to perform a state-based analysis to identify the number and proportion of Medicare prescription drug plan enrollees who are not enrolled in a plan that participates in the Senior Savings Model and would benefit from the new law.
Substantial Variation by Prescription Drug Plan Type and State
The Avalere analysis found that overall, 47 percent of people enrolled in Medicare prescription drug plans that were not participating in the Senior Savings Model, or more than 600,000 Medicare beneficiaries, paid more than $35 per month for insulin and would benefit from the copay cap in the new law.
The analysis also found that Medicare beneficiaries enrolled in stand-alone prescription drug plans (PDPs) will see a greater impact than beneficiaries enrolled in Medicare Advantage plans with prescription drug coverage (MA-PDs). More specifically, 58 percent of insulin users enrolled in a PDP are estimated to benefit from the new $35 copay cap, compared with 37 percent of insulin users enrolled in a MA-PD.
At the state level, the share of Medicare prescription drug plan enrollees who would benefit from the new $35 insulin copay cap ranges from 28 percent (Florida) to 73 percent (Iowa).
Once again, there were substantial differences by prescription drug plan type. In 43 states, at least 50 percent of PDP enrollees who use insulin are estimated to benefit from the new $35 copay cap. The share of PDP enrollees who would benefit ranges from 45 percent (Maine) to 80 percent (Minnesota).
In contrast, only 12 states plus the District of Columbia are estimated see a benefit for 50 percent or more of MA-PD enrollees who use insulin. The share of MA-PD enrollees who would benefit varies dramatically, ranging from 7 percent in Rhode Island to 78 percent in Massachusetts.
Notably, all insulin users in Medicare prescription drug plans will benefit from the insulin copay protections in the new law after the Part D Senior Savings Model sunsets at the end of 2023.
Important First Step
There is no question the insulin provisions in the new law represent meaningful progress. Prior to its passage, many Medicare prescription drug plan enrollees faced substantial out-of-pocket costs for their insulin. These new protections will help improve access to insulin for millions of Medicare beneficiaries, and there are ongoing efforts to extend similar insulin copay caps to other forms of health coverage.
However, these improvements only address one aspect of prescription drug affordability. While insulin users will benefit from the new $35 copay cap, this approach does not address the underlying problem of high and growing insulin prices. Over time, this will lead to higher health care premiums that could make health coverage unaffordable.
That dynamic holds true not just for insulin but for prescription drugs more broadly, underscoring the need for a more holistic approach. Efforts to limit out-of-pocket costs should be implemented in conjunction with policy changes to reduce drug prices—like the provisions in the new law allowing Medicare to negotiate drug prices and penalize drug companies that increase their prices faster than inflation. Addressing both sides of the prescription drug affordability coin will help ensure patients have the financial protections they need at a price they can afford.
Avalere identified Medicare Part D enrollees who use insulin from the 2020 Part D Prescription Drug Event data using the Calendar Year (CY) 2022 Model National Drug Code list published on the CMS website for the Part D Senior Savings Model (Model). In addition, Avalere identified the list of CY 2022 plans participating in the Model and were available as of 2020 in the PDE data.
Avalere excluded scripts from the catastrophic phase of Medicare Part D for analytic purposes as the Senior Savings Model does not change cost sharing in the catastrophic phase. The analysis does not include insulin-using beneficiaries enrolled in Employer Group Waiver plans (EGWPs) as of the prescription fill date or beneficiaries who receive Medicare Part D low-income subsidy benefits as they typically pay nominal cost sharing.
All Medicare Part D enrollees using insulin who are subject to copays above $35 and not enrolled in plans participating in the Senior Savings Model are identified as those that would benefit from the new drug law (i.e., Inflation Reduction Act). These numbers do not include Medicare Part D enrollees using insulin who were already experiencing copays of $35 or less.
This analysis does not include interactions with other Inflation Reduction Act provisions or consider stakeholder behaviors such as utilization or pricing changes.