Yesterday the Centers for Medicare & Medicaid Services (CMS) released the list of drugs that they have selected as part of the initial year of Medicare drug price negotiation under the Inflation Reduction Act (IRA). These drugs will be negotiated over the next year with implementation of the prices to begin in 2026.
And there were what I’d call surprises on the list both in terms of what was there and what wasn’t. Then again, none of us had the information that CMS had so transparency? Meh, overrated?
What was on there that gave me pause was the insulins (Novolog and Fiasp) from Novo Nordisk (Novo). I want to dive into a little bit of background about insulins and then ultimately where all of this could go.
Insulins are a political lightening rod. The cost of insulins has gone up over the years and, understandably, patients are frustrated when their out-of-pocket costs go up. This can happen whether the out-of-pocket becomes truly unaffordable for the patient or is perceived as being too costly. But there is a distinction between price and cost. And would make a great article for another time. What I will say for today is that insurance in the United States determines the cost (out-of-pocket) for patients. Most patients are not paying the price of the drug. Then again, neither are insurers who get discounts and rebates in Medicare Part D and don’t use these to determine price but – ANOTHER DAY.
The point is patients are upset and it makes a great political talking point.
We have $35 insulin for Medicare patients. The IRA reduced the copay for insulin to $35 for Medicare patients starting in 2023. So would spending the time and resources negotiating the price of Novolog really do that much for patients? I mean you could say that this copay cap only reduced the cost to patients and not the price. But….
Prices for Novolog already slated to drop. In March Novo Nordisk announced that, as of January 2024, they were reducing the price of Novolog by 75%. Will CMS use these new prices to negotiate off of? Will they use the prices as of June 2023 and just use it as a political talking point that they got 75% off? It should be noted that Fiasp was not on the list of insulins that Novo said they would reduce the price of.
Paying for value isn’t a thing. If we were paying for value, would there be so much posturing about the price of insulin? It is a necessity. It keeps patients alive. That is value. I don’t have an answer here for what it should be priced at and whether $35 is the right price or whether $1000 is but why is value never mentioned? It is just about the lowest price. I understand why it isn’t in terms of out-of-pocket but in terms of price, I feel like it should be.
What is next? Well Novo would has the next month to enter into an agreement to start negotiations with CMS. The word negotiation is used loosely. As Merck said in its complaint, “It is tantamount to extortion.” Yes, Novo could refuse to negotiate but then it would have to pull all of its products out of Medicare and Medicaid and that would be bad for patients and the company. And, if they don’t agree to the prices that CMS sets (which we don’t really know how they will set them), they pay an enormous excise tax.
In all, it seems like a show. CMS got to demonstrate that they will pull in other drugs with the same active moiety – even if approved later under a different New Drug Application. And Democrats will be able to claim a $ amount savings in campaigning for the 2024 elections. Patients? Not likely to see much of a difference on this negotiation.
For what it is worth, I have seen a lot of press coverage about how patients will see lower costs because of negotiation. And they likely will but, for most, I think the huge win is the out-of-pocket cap and, for some, the ability to smooth their monthly spending.