President Joe Biden signed the Inflation Reduction Act into law this afternoon, which includes sweeping climate and tax initiatives and the biggest change to health care policy since the Affordable Care Act was passed in 2010. The law attempts to address one of the most difficult issues facing the US healthcare system—exploding prescription prices. Medicare will be able to negotiate certain prescription prices thanks to it. It will allow Medicare to negotiate some drug prices and place a $2,000 yearly out-of-pocket maximum for beneficiaries’ medicine costs. Insulin, in particular, became the subject of heated discussion in Congress. The 3.3 million Medicare beneficiaries who use some form of insulin will benefit from the Act’s $35 monthly cap on insulin pricing.
Lisa Murdock, chief advocacy officer for the American Diabetes Association, says 25% of insulin users have rationed or skipped doses due to costs, leaving them with impossible choices. The original proposal would have capped the price of insulin for Americans with private health insurance, but Republicans stripped the initiative after the Senate parliamentarian ruled it wouldn’t comply with the budget reconciliation process. What you need to know about the new law and high insulin pricing is provided below.
Insulin has become increasingly expensive in the US, with the average price nearly tripling between 2002 and 2013. This is due to multiple stakeholders and a lack of transparency, making it difficult to trace the source of price increases. Insulin prices have increased due to evergreening, but demand for the latest formulations and middlemen also drive up prices. Pharmacy benefit managers negotiate rebates but don’t share them with payers (Shah, 2023).