Insulin Manufacturers and PBMs Testify Before Congress

4/11/19
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On Wednesday, April 10, the Oversight and Investigations Subcommittee of the Energy and Commerce Committee of the US House of Representatives held the second of two hearings on insulin pricing. After hearing from patients, doctors, and patient advocates last week, the subcommittee called on representatives from insulin manufacturers as well as Pharmacy Benefit Managers (PBMs) to answer questions about the high and rising price of insulin in the United States.

Subcommittee chairwoman Diana DeGette (D-Co), who is also the co-chair of the Congressional Diabetes Caucus, set the stage in her opening statements, saying “despite the fact that insulin has been around for 100 years, it has become outrageously expensive” and characterizing the insulin market in America as “a system with perverse payment incentives, and a complete lack of transparency in pricing.”

The witnesses representing Eli Lilly, Sanofi, Novo Nordisk, CVS Health, Express Scripts, and OptumRx were sworn in and each given five minutes to present an opening statement. Eli Lilly, Sanofi, and Novo Nordisk are often referred to as the “Big 3” insulin manufacturers. CVS Health, Express Scripts, and OptumRX are all pharmacy benefit managers (PBMs) responsible for negotiating prices, formularies, and more between manufacturers and insurance providers.

Most of the executives testifying pointed to a personal connection to someone with diabetes, and offered steps their companies have taken recently to address the issue of insulin pricing. Lilly pointed to their announcement of a half-priced generic version of Humalog, Novo pointed to their human insulin available at Walmart, and Sanofi touted a program announced the same morning as the hearing to limit monthly insulin costs to $99 for some patients.

PBM reps similarly tried to deflect responsibility and point to recent offerings, like Express Scripts announcement of a monthly $25 cost of insulin for some patients. Legislators were unimpressed with what appeared to some as PR stunts prior to testimony. Indeed, Senator Chuck Grassley (R-Iowa) said that these recent moves “raise a lot of questions” in a written statement. He went on to say it “shouldn’t take months of bad press, persistent public outcry and increasing congressional scrutiny to get a company to charge a fair price.”

The hearing was contentious throughout, with House members grilling both the manufacturers and the PBM representatives about the reasons for high costs. In general, manufacturers pointed to the rebate system as the underlying issue, while PBMs pointed to increasing list prices as the main culprit. This provided for an interesting scene, with neither party willing to take responsibility and both seemingly blaming the other.

At one point Representative Kennedy (D-Mass) voiced his frustration at the finger-pointing going on by literally pointing his fingers in each direction to describe what he was witnessing. Kennedy went on to scoff at the motivations of Lilly’s offering of a half-priced generic insulin, telling Mike Mason of Lilly Diabetes that “it took 15 years and global outcry” to get lower insulin prices.

Committee Chairman Frank Pallone (D-NJ) told the witnesses that his constituents frequently ask his team why the government doesn’t just set the list prices themselves. He also hinted at getting rid of PBMs altogether, though neither are likely to be pursued, as Pallone himself said that he believes in a market-based system.

The bipartisan scrutiny on insulin pricing is not coming just from this committee, but from all levels of government. The Senate Finance Committee held a hearing with PBM reps on April 9, the FDA is looking at ways to increase competition in the insulin market, and the Trump administration recently proposed targeting the PBM rebate system and instead passing rebates on directly to consumers.

It is hard to know what next steps will come out of this hearing, but one thing was made clear by all parties today — the current system is untenable.

 


To learn more about insulin access issues in the United States, check out Beyond Type 1’s Focus on Access.

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