20.7 C
New York
Thursday, July 29, 2021

‘Vicious Cycle’ Sent Insulin Costs Through Roof: Senate Committee | Nutrition Fit


US insulin manufacturers and the pharmaceutical benefits management (PBM) industry are refuting a report by a prominent Senate committee finding that the two sectors acted synergistically to increase the cost of insulin for patients with diabetes.

The Senate Committee on Finance issued findings from a 2-year investigation on January 14, releasing a 90-page report and more than 1700 pages of documents containing internal emails, contracts, and presentations.

“We found that the business practices of and the competitive relationships between manufacturers and middlemen have created a vicious cycle of price increases that have sent costs for patients and taxpayers through the roof,” said Committee Chairman Chuck Grassley (R-Iowa) in a statement.

“This industry is anything but a free market when PBMs spur drug makers to hike list prices in order to secure prime formulary placement and greater rebates and fees,” Grassley said.

Insulin Makers Lit the Fuse…PBMs Fanned the Flames

“Insulin manufacturers lit the fuse on skyrocketing prices by matching each other’s price increases step for step rather than competing to lower them, while PBMs, acting as middlemen for insurers, fanned the flames to take a bigger cut of the secret rebates and hidden fees they negotiate,” added Sen. Ron Wyden, the Committee’s highest-ranking Democrat, from Oregon.

The three US insulin makers deny working with each other or PBMs.

Eli Lilly spokesman Greg Andrew Kueterman told Medscape Medical News that the company “makes independent decisions about list price increases.”

Similarly, a Sanofi spokesman said the company “makes all of its pricing decisions independently.”

And Michael Bachner, Novo Nordisk’s director of media relations, told Medscape Medical News that the company’s “pricing decisions are made independently and are based on a number of market dynamics, some of which include our competitors’ activities, current formulary access, and discussions with payers.”

Insulin Makers Say They Are Held Captive by PBMs

The insulin makers maintain they have done the best they could in response to the dominance of the PBM industry.

The committee report “underscores how the health care system has evolved in recent years, exposing some people to higher prices at the pharmacy,” said Lilly’s Kueterman.

“Despite Sanofi paying billions in rebates that lower insulin costs for middlemen, people’s costs at the pharmacy counter have continued to rise,” said the Sanofi spokesman.

See also  Paving the Way for Diversity in Clinical Trials | Nutrition Fit

And Novo Nordisk’s Bachner maintains, “The information in the committee’s report and its accompanying documentation reflect a limited picture of the efforts put forth by our company and other companies to manage formulary access.”

See also  Breast Enlargement Massage - Get a Firmer, Fuller and Bigger Breast

“This glimpse into the complexity of pricing, formularies, and the healthcare system demonstrates why Novo Nordisk continues to advocate for comprehensive solutions,” he added.

The report details how drug companies set a list price and then use rebates to compete for positions on health plans’ formularies.

The PBMs — which negotiate with drug companies on behalf of the health plans — have become all powerful, with the three largest, CVS Caremark, Express Scripts, and OptumRx, managing drug benefits for some 250 million Americans, the committee reported.

PBMs play a key role in whether and how drugs are added to a formulary. They generally pass most of a rebate on to health plans, but also retain a portion and charge additional fees based on a percentage of a drug’s list price.

Rebates for insulin products started ramping up in 2013, according to the Committee. Sanofi offered rebates of 2%-4% for preferred placement on a CVS Caremark client’s formulary in 2013, but by 2018, those rebates had climbed to as high as 56%. Novo Nordisk increased its rebate for Levemir from 25% in 2014 to 47% in 2017 in a bid to gain preferred status on the Express Scripts formulary.

Committee Found Companies Raised Prices to Balance Out Rebates

To balance out rising rebates, insulin manufacturers in turn “aggressively” raised the list price of their insulin, the committee found. 

“The investigation found that Novo Nordisk and Sanofi not only closely monitored the others’ price increases, they actually increased prices in lockstep — sometimes within hours or days of each other — a practice known as ‘shadow pricing,'” said the committee.

Internal emails also show that in 2014 Lilly executives decided to enact a list price increase for Humalog earlier than expected when the company heard Novo Nordisk had decided to increase list prices for its Novolog and Levemir products.

The committee documented list price increases of 50%-70% for insulins, sometimes over just a 3-year period.

The investigation also found — after reviewing internal documents — that drug makers often set prices based on whether it might harm a PBM’s or health plan’s bottom line. The goal was to keep those clients happy and to preserve market share, said the committee.

See also  AstraZeneca Vaccine 79% Efficacious in Phase 3 Interim Results | Nutrition Fit

Novo Nordisk’s board of directors at one point even voted against a proposed insulin price decrease due to, in part, the risk of a backlash from PBMs and payers.  

PBMs did not do anything to discourage the increases in list prices, said the committee. Instead, “PBMs used their size and aggressive negotiating tactics, like the threat of excluding drugs from formularies, to extract more generous rebates, discounts, and fees from insulin manufacturers.”

See also  Lelo’s Soraya 2 Rabbit Vibrator Is on Sale for Cyber Monday

The PBM industry’s lobbying group, the Pharmacy Management Care Association (PCMA), said it shared the committee’s “urgency in addressing affordability and access for insulin-dependent patients,” in a statement.

But, said PCMA President and CEO J.C. Scott, “it’s important to understand that PBMs have stepped up efforts to help patients living with diabetes afford their medications and improve health outcomes,” adding that some have capped or eliminated out-of-pocket costs for insulin.

Revenues Also Kept Rising

Despite complaints about increasing rebates, drug makers managed to take in rising revenues from insulin even as net price declined, the report found.

Lilly, for instance, reported that the average net price for Humalog KwikPen had declined slightly from $28 per pen in 2015 to $24 per pen in 2018, even though the list price nearly doubled during the same period. Humalog revenue meanwhile increased from $1.5 billion in 2007 to $3 billion in 2018.

The committee said that internal Sanofi documents show the average Lantus net price was $87.48 in 2016 — $32 lower than the net price in 2014 — but still almost double the net price of $46.93 in 2005.

The companies have also spent huge sums on sales and marketing, while investing less in research and development related to insulins.

Between 2014 and 2018, Lilly spent $979 million on sales and $497 million on marketing for insulin products. Meanwhile, global R&D spending was $244 million related to Humalog, $66 million for Humulin, and $85 million for Basaglar. The company reported $22.4 billion in revenue for these therapies during the same period.

Sanofi told the committee that between 2012 and 2018 it had invested about $4.5 billion in diabetes, which includes insulin and noninsulin products. In 2014-2018, Sanofi’s diabetes franchise generated nearly $37 billion in net sales, whereas R&D spending for five insulin products was $902 million.

Novo Nordisk did not give the committee a detailed accounting of its R&D expenditures.

See also  Breast Enlargement Massage - Get a Firmer, Fuller and Bigger Breast

Lilly and Sanofi pointed to programs they offer to help manage the cost of insulin. Lilly “remains deeply committed to providing affordability solutions to people who need them,” said Kueterman.

“We would commit to lowering the list price of all Sanofi insulins if doing so would directly result in lower out-of-pocket costs for patients, including if health plans were required to include medicines with a lowered list price on a low, fixed copay tier to ensure the benefit of the reduced list price accrues directly to patients,” said the Sanofi spokesman, who also noted the company’s programs to help offset the cost of its insulins.

Advocates Say Senate Report Is Infuriating

When asked to comment on the report, the American Diabetes Association told Medscape Medical News that “the Grassley–Wyden report provides important insights into how many business stakeholders have an economic interest in insulin.”

See also  AstraZeneca Vaccine 79% Efficacious in Phase 3 Interim Results | Nutrition Fit

“An array of policy interventions will be needed to create more transparency and to lower costs to patients at the pharmacy counter,” said the ADA’s spokesperson. The ADA is committed to working with Congress and the new administration to ensure these interventions are put in place, the spokesperson said.

On January 12, the Endocrine Society issued a call to action to reduce insulin costs.

Elizabeth Pfiester, executive director of T1International, was much more animated:  “For me and T1International’s #insulin4all patient advocate community, the Senate Finance Committee’s report is infuriating because we live the reality of what it means for these companies to put profit over people every hour of our lives,” she said in a statement provided to Medscape Medical News.

Fiona Mason, National Director USA for T1International, told Medscape Medical News that drug makers blaming PBMs for price increases does “not hold up to the scrutiny of the committee’s report.”

T1International is calling on the new Congress to pass — and incoming President Joe Biden to sign — legislation to immediately lower the list price of insulin.

Mason noted an email on page 54 of the committee’s report, in which a Novo Nordisk executive proposes instituting another price increase and writes, “Although this will generate some pushback from customers, it is believed that this can be managed to mitigate negative impact.”

Mason said, “We will not be managed. We will not stop ‘pushing back.’ We will win #insulin4all.”

For more diabetes and endocrinology news, follow us on Twitter and Facebook.





Source link

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

22,036FansLike
2,876FollowersFollow
SubscribersSubscribe
- Advertisement -spot_img

Latest Articles

Read previous post:
Black Race Noted More Prominently in PHI Than White Race | Nutrition Fit

Black patients treated at an academic medical center were more likely to have their race documented in the first line...

Close