Late Friday, Senators Grassley and Wyden announced a bipartisan inquiry into the price of insulin. They sent letters to the three major manufacturers of insulin, LLY, NVO, SNY asking several personal questions related to:
- Net and list price for each product sold
- Formulary placement in Medicare Part D and commercial plans
- Changes in formulation, delivery or dosing size and NDC number associated with those changes
- Manufacturing costs
- Research and development expenses
- Marketing and advertising expenses
- Third party relationships with patient and disease awareness groups
To most of these questions, the Senators already have the answer. Insulin prices have increased between 40 and 72 percent since 2014, according to CMS’s National Average Drug Acquisition Cost survey.
Some of that price appreciation is due to normal inflation. A good bit, the Senators suspect, is also due to the industry’s near endless creativity when it comes to finding new delivery methods, formulations and dosage combinations to justify new patents, new NDC codes and voila! New prices!
Another component of that price appreciation is due to rebate trends as well and to which the Senators address several of their questions. In fact, some of the greatest price appreciation for insulin products occurred during the biggest year-over-year changes in rebates.
To us, however, the most important part of the Senator’s letter can be found in the last question:
“If the proposed rule from the Department of Health and Human Resources and its Inspector General, Removal of Safe Harbor Protection for Rebates Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection for Certain Pharmacy Benefit Manager Service Fees, in implemented, please describe how it will impact the pricing of your company’s insulin products.”
From the Senators’ perspective there is only one right answer. Sen. Wyden, who has pledged to introduce legislation to prevent pharmaceutical companies from realizing a windfall as a result of changes to the rebate safe harbor, is looking for a promise that the manufacturers will lower prices.
Further, we expect the Senators won’t wait until they get a reply to the letter. Look for members of the Senate Finance Committee to try and pin down pharma executives when they testify on Tuesday.
If they are smart, they will make the promises the Senators seek.
Emily Evans
Managing Director – Health Policy
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