A recent move by the largest U.S. pharmacy benefit manager (PBM) to exclude a generic insulin from its formulary illustrates just how daunting it may be to bring down the price of insulin through individual moves by pharmaceutical companies and insurance benefit providers.
On April 26th, 2019, Axios healthcare reporter Bob Herman tweeted that Express Scripts has excluded Lilly’s generic form of Humalog, called insulin lispro, from its most recent formulary. Instead, Express Scripts offers Humalog, which has a list price that is more than twice as high ($265.20) as that of insulin lispro ($137.35). Chemically speaking, the two insulins are identical.
Express Scripts, purchased by health insurance behemoth Cigna for $54 billion last year, controls about 24% of the PBM market.
The move likely will prove a financial boon for both Express Scripts and Lilly, although it is impossible to know exactly how much each side will benefit, since deals on discounts between PBMs and pharmaceutical companies are not publicly disclosed. PBMs receive a percentage of the difference between a drug’s list price and its negotiated price. On the pharmaceutical side, Lilly may very well have negotiated an ultimate price point for Humalog’s inclusion on the formulary that is higher than the list price of its insulin lispro.
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PBMs moving to cap some, but not all, of out-of-pocket costs
Adding to the complexity of this recent move is the fact that Express Scripts announced that it would cap out-of-pocket costs for insulin for customers whose employers opt into a program with the PBM. If Express Scripts had pledged to cap costs, it would seemingly be counterproductive to their bottom line to exclude a lower-priced insulin. It’s still unclear, however, how many of Express Scripts customers will ultimately be covered by the $25 pledge.
The move also seems to contradict some of the rhetoric on insulin prices from Express Scripts officials who blame pharmaceutical companies for the insulin pricing crisis. In a 2016 Philly.com feature on insulin prices, Express Scripts chief medical officer Steve Miller said that the yearly price increases for the list price of insulin have been “extravagant” and a symptom of a broken “social contract” between healthcare providers and patients. At the time, Mr. Miller portrayed Express Scripts as part of the solution, not part of the problem.
“If not for Express Scripts using market forces to fight this, it would be worse,” Miller said in the article.
Public testimonials and market goals at odds
Express Scripts’ decision to exclude insulin lispro also runs counter to the company’s rhetoric during recent congressional hearings on rising insulin prices. In an opening written statement before a recent hearing, Express Scripts senior vice president Amy Bricker listed more FDA approvals of low-priced generic insulin as the first solution to the insulin pricing crisis. Her testimony also highlighted two Express Scripts programs that encouraged the substitution of generic drugs for more-expensive brand-name drugs. Generics, Ms. Bricker suggests, represent a big part of the solution to the pricing crisis.
In that statement, Bricker mentions that drug companies do not often offer rebates for generic drugs, and perhaps this is the reason that Express Scripts chose to exclude insulin lispro. Lilly may have chosen not to offer Express Scripts a rebate for insulin lispro. If so, and if Lilly opts not to offer rebates for insulin lispro to the other major PBMs, it could severely limit the impact that the release of the generic could have on overall list prices for insulin. Insulin lispro would then remain largely an insulin for the uninsured or the underinsured.
Ultimately, though, we don’t know what market forces were at play in Express Scripts’ decision to exclude insulin lispro. That’s because, unlike Express Scripts’ announcement of the $25 cap and Lilly’s announcement of the release of insulin lispro, this decision was made with no fanfare and was only mentioned in an Express Scripts PDF.
Such quiet, and complicated, moves to exclude lower-priced insulin add to the argument of healthcare reform advocates that initiatives of individual companies will do little to bring down insulin prices,and that only systematic change can achieve that goal.