Medicare patients’ out-of-pocket costs for insulin decrease under mandated caps
Large study shows substantial price decline following government cost-cap initiatives
A new analysis led by researchers at the Johns Hopkins Bloomberg School of Public Health finds that out-of-pockets caps on insulin for Medicare Part D beneficiaries have reined in insulin prices.
The Inflation Reduction Act of 2022 mandated an out-of-pocket cap of $35 for a 30-day insulin supply for Medicare Part D beneficiaries starting January 1, 2023. This is the first time the federal government has imposed caps on insulin prices for all Medicare beneficiaries.
For their study, the researchers analyzed Medicare claims data covering nearly 3.8 million patients who had at least one claim for insulin during the five-year period from 2019 to 2023.
The percentage of these patients who paid $35 or less out of pocket for a 30-day equivalent supply increased from 48% in 2019 to 75% in 2023.
The findings were published online in a peer-reviewed research letter March 19 in JAMA.
The study also showed that the mean out-of-pocket cost for that quantity of insulin dropped from $50.87 in 2019 to $21.98 in 2023. Cost decreases during 2019–2023 were seen in every U.S. state. The study is thought to be the first to analyze the Inflation Reduction Act’s insulin-cap impacts.
“This is compelling evidence that Medicare policies in recent years have done what they were meant to do—improve insulin access and affordability,” says study lead author Michael Fang, PhD, MHS, assistant professor in the Bloomberg School’s Department of Epidemiology. “Insulin costs are now at historically low levels for people on Medicare.”
The researchers note that the finding that about one-quarter of Medicare beneficiaries paid more than $35 for a 30-day supply of insulin in 2023 was unexpected. Their analysis found that these beneficiaries had at least one prescription that was not prorated to the Inflation Reduction Act limit.
Approximately 3.8 million Medicare beneficiaries use insulin as a treatment for type 1 or type 2 diabetes. Insulin replaces the natural metabolic hormone of the same name, whose production is virtually nonexistent in type 1 diabetes, and is also compromised in many cases of type 2 diabetes.
To help rein in insulin costs for beneficiaries, the Centers for Medicare & Medicaid Services (CMS) capped out-of-pocket cost at $35 for a 30-day supply in 2021 as a limited, voluntary initiative. The Inflation Reduction Act of 2022’s mandated $35 cap for out-of-pocket cost for a 30-day supply for Medicare Part D beneficiaries took effect January 1, 2023.
The study covered all Medicare Part D patients who had at least one claim for insulin during the study window and were not receiving Medicare low-income subsidies. The researchers grouped the claims data into five calendar years from 2019 to 2023 for their analysis.
As for the insulin-using Medicare Part D beneficiaries still paying more than $35 for a 30-day supply in 2023, Fang notes that CMS’s formal guidance is for the $35 rule to be applied only for full multiples of 30 days. “If the prescription falls in between, the patient can be charged up to the next full multiple of a month,” Fang says. “For example, health plans can treat a 45-day supply the same as a 60-day supply and charge up to $70.”
He adds that variations in average 30-day insulin costs by state—from $10.36 in Washington, D.C., to $31.09 in Minnesota in 2023—may partly reflect state-level differences in how pro-rating is handled by Medicare insurance plans.
The researchers are now exploring the issue of prorating prescriptions that fall outside the current 60- and 90-day supply window to see in more detail how average costs vary across plans, and whether policy changes are needed to close the gap.
“Trends in Insulin Out-of-Pocket Costs Among U.S. Medicare Beneficiaries” was co-authored by Michael Fang, Chen Dun, Dan Wang, Caitlin Hicks, Elizabeth Selvin, Jung-Im Shin, and Mariana Socal.
Support for the research was provided by the National Institute of Diabetes and Digestive and Kidney Diseases (K01DK138273, R01DK139324).
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The Inflation Reduction Act of 2022 mandated an out-of-pocket cap of $35 for a 30-day insulin supply for Medicare Part D beneficiaries starting January 1, 2023. This is the first time the federal government has imposed caps on insulin prices for all Medicare beneficiaries.
For their study, the researchers analyzed Medicare claims data covering nearly 3.8 million patients who had at least one claim for insulin during the five-year period from 2019 to 2023.
The percentage of these patients who paid $35 or less out of pocket for a 30-day equivalent supply increased from 48% in 2019 to 75% in 2023.
The findings were published online in a peer-reviewed research letter March 19 in JAMA.
The study also showed that the mean out-of-pocket cost for that quantity of insulin dropped from $50.87 in 2019 to $21.98 in 2023. Cost decreases during 2019–2023 were seen in every U.S. state. The study is thought to be the first to analyze the Inflation Reduction Act’s insulin-cap impacts.
“This is compelling evidence that Medicare policies in recent years have done what they were meant to do—improve insulin access and affordability,” says study lead author Michael Fang, PhD, MHS, assistant professor in the Bloomberg School’s Department of Epidemiology. “Insulin costs are now at historically low levels for people on Medicare.”
The researchers note that the finding that about one-quarter of Medicare beneficiaries paid more than $35 for a 30-day supply of insulin in 2023 was unexpected. Their analysis found that these beneficiaries had at least one prescription that was not prorated to the Inflation Reduction Act limit.
Approximately 3.8 million Medicare beneficiaries use insulin as a treatment for type 1 or type 2 diabetes. Insulin replaces the natural metabolic hormone of the same name, whose production is virtually nonexistent in type 1 diabetes, and is also compromised in many cases of type 2 diabetes.
To help rein in insulin costs for beneficiaries, the Centers for Medicare & Medicaid Services (CMS) capped out-of-pocket cost at $35 for a 30-day supply in 2021 as a limited, voluntary initiative. The Inflation Reduction Act of 2022’s mandated $35 cap for out-of-pocket cost for a 30-day supply for Medicare Part D beneficiaries took effect January 1, 2023.
The study covered all Medicare Part D patients who had at least one claim for insulin during the study window and were not receiving Medicare low-income subsidies. The researchers grouped the claims data into five calendar years from 2019 to 2023 for their analysis.
As for the insulin-using Medicare Part D beneficiaries still paying more than $35 for a 30-day supply in 2023, Fang notes that CMS’s formal guidance is for the $35 rule to be applied only for full multiples of 30 days. “If the prescription falls in between, the patient can be charged up to the next full multiple of a month,” Fang says. “For example, health plans can treat a 45-day supply the same as a 60-day supply and charge up to $70.”
He adds that variations in average 30-day insulin costs by state—from $10.36 in Washington, D.C., to $31.09 in Minnesota in 2023—may partly reflect state-level differences in how pro-rating is handled by Medicare insurance plans.
The researchers are now exploring the issue of prorating prescriptions that fall outside the current 60- and 90-day supply window to see in more detail how average costs vary across plans, and whether policy changes are needed to close the gap.
“Trends in Insulin Out-of-Pocket Costs Among U.S. Medicare Beneficiaries” was co-authored by Michael Fang, Chen Dun, Dan Wang, Caitlin Hicks, Elizabeth Selvin, Jung-Im Shin, and Mariana Socal.
Support for the research was provided by the National Institute of Diabetes and Digestive and Kidney Diseases (K01DK138273, R01DK139324).
# # #
END