Senate Passes Bill that Caps Insulin at $35 for Medicare Beneficiaries

Tucked into the Inflation Reduction Act, approved by the Senate this past weekend, are some provisions that address the price of prescription drugs, including capping insulin at $35 for Medicare beneficiaries. The Senate approved the final bill on Sunday after a weekend of voting on proposed amendments in a 51-50 vote, with Vice President Kamala Harris providing the tie-breaking vote.

As originally presented, the bill contained several measures on drug pricing as part of the fiscal year 2022 reconciliation. These include:

• Allowing Medicare to negotiate directly for price of prescription drug
• Capping Medicare patients’ out-of-pocket costs at $2,000 per year
• Expanding copay assistance for low-income Americans
• Creating a new inflation rebate, providing for Medicare to receive rebates on drug price increases above inflation rate.

That last measure, however, didn’t make it passed the full Senate. The inflation rebate, however, was nixed because the language in the bill didn’t comply with Senate rules. In a statement, Senate Finance Committee Chair Ron Wyden (D-Ore), said the legislation would have put a check on pharmaceutical companies’ ability to price gouge.

Additionally, an effort to put a $35 cap on insulin for patients outside of Medicare failed when the Senate wouldn’t allow a waiver of procedural rule. But the $35 cap will apply for Medicare beneficiaries.

This follows many efforts by many stakeholders to lower the costs of insulins. UnitedHealthcare has ended copays for some drugs, including some insulins, to its members and Optum has teamed up with Sanofi to offer $35 insulin those without insurance.

If insulin copays were capped at $35, Part D enrollees would save 35% on average, according to an updated analysis from the Kaiser Family Foundation. Among Medicare Part D insulin users who do not receive low-income subsidies, average out-of-pocket costs per prescription across all insulin products was $54 in 2020, an increase of 39% since 2007. Among insulin users without Part D low-income subsidies, the average annual out-of-pocket spending on insulin per user increased by 76% between 2007 and 2020, from $324 to $572.

Related: Study: Medicare Part D Enrollees’ Spending for Insulin Increased

In the Senate bill, the drug price negotiation provision only applies to a handful of product: for 10 drugs covered by Medicare in 2026, increasing to 20 drugs in 2029 with the Department of Health and Human selecting the therapies. An analysis by the Kaiser Family Foundation released before the vote indicated that the magnitude of savings would depend on which drugs were chosen and the price reductions achieved.

Rep. Don Beyer (D. Va.)

The $2,000 cap on out-of-pocket costs is the first major change to Medicare Part D in more than a decade. The Kaiser Family Foundation indicated this cap would help beneficiaries who take high-priced drugs for conditions such as cancer or multiple sclerosis. For example, in 2020, among Part D enrollees without low-income subsidies, average annual out-of-pocket spending for the cancer drug Revlimid was $6,200 (used by 33,000 beneficiaries); $5,700 for the cancer drug Imbruvica (used by 21,000 beneficiaries); and $4,100 for the MS drug Avonex (used by 2,000 beneficiaries), according to the KFF.

“Letting Medicare negotiate for the costliest drugs is a common-sense way to lower costs for Medicare beneficiaries and increase access for low-income seniors who might otherwise be unable to afford their medications,” Rep. Don Beyer (D. Va.) of the Joint Economic Committee said in a statement.

The House is expected to review and vote on this bill this week.