Eli Lilly’s Insulin Cost Cut Bolsters Supporters of Price Cap

Bloomberg Law
Alex Ruoff
Eli Lilly’s decision to cut the price of its insulin products has emboldened supporters who want to create a federal cap on prices of the diabetes medicine.

Senators on both sides of the aisle this week said the move by Eli Lilly and Co. to reduce the price of its most commonly prescribed insulins by 70% and cap what patients pay at $35 per month only reiterates the need for a federal law capping all insulin at $35 per month.

“This was an affirmation that this is the right way to go,” said Ron Wyden (D-Ore.), chairman of the Senate Finance Committee. Senators are working to “redraft” legislation to cap insulin prices that fell just three votes shy of getting through the Senate last year, in the hopes of putting it to a floor vote this year.

More than 37 million Americans have diabetes, and many of them manage the condition with insulin. The cost of insulin in the US varies depending on a person’s insurance coverage and the product the individual buys. More than half of people with employer-sponsored insurance spent over $35 out-of-pocket on average for a 30-day supply of insulin in 2019 and 2020, according to data from the Health Care Cost Institute; about 5% spent more than $200. That so many people need the medicine has made capping costs a big campaign issue, especially for Democrats.

The three major manufacturers of insulin—Eli Lilly, France’s Sanofi, and Danish Novo Nordisk A/S—have long pointed to pressure from insurers and pharmaceutical middlemen as the cause of rising list prices for their products.

Lawmakers for years have said insulin prices don’t reflect innovation by companies or the cost of manufacturing the product, prompting interest in laws that fix what people pay at a certain price.

Senate Legislation
Eli Lilly’s CEO announced last week it would cut the price of Humalog, its most commonly prescribed insulin, by 70% effective the last quarter of this year. It would also reduce the list price of Lispro, another insulin product, to $25 per vial.

The company advertised its action as making its medicines more affordable. Some analysts, though, say the move will actually net Eli Lilly more than $500 million by avoiding hefty rebates it would have otherwise owed to states in Medicaid rebates, due to the fact that the company raised the price of its drugs faster than inflation

But Sen. Susan Collins (R-Maine) said Eli Lilly’s decision “shows that the market has reacted to the prospect of legislation.” Collins said she and Sen. Jeanne Shaheen (D-N.H.) are “redrafting” their insulin legislation, which seeks to cap insulin costs for people with private insurance at $35 per month and change rules for drug rebates aimed at lowering the list price of the medicine. They hope to bring to the Senate floor this year, she said, without offering specifics.

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