WASHINGTON, D. C. – The U.S. Department of Health and Human Services announced Tuesday that a new law that caps monthly out-of-pocket insulin costs for Medicare beneficiaries at $35 will likely save more than $36 million in yearly costs for more than 72,000 Medicare beneficiaries in Ohio.
Using statistics from 2020, a new report from HHS says the $35 monthly cap on out-of-pocket insulin costs, which went into effect on Jan. 1 as part of the Inflation Reduction Act, would have saved 1.5 million Americans who use Medicare an average of $500 in their insulin costs that year. HHS representatives said they relied on 2020 Medicare insulin use statistics to make their projections because it was the most recent data available when they began the study
“These are the kinds of savings that will give people a little bit of breathing room to cover household costs or splurge on their grandkids,” HHS Secretary Xavier Becerra told reporters. “That way, people don’t have to make those gut-wrenching decisions like forgoing medicine that they need to keep food on the table.”
The report estimates that more than 7 million Americans must use insulin to manage their diabetes. List prices of the drug nearly doubled between 2012 and 2016, creating affordability problems for some of its users.
The report said nearly 30% of people with Medicare have diabetes, compared with 11% in the general population. The monthly price cap starts Jan. 1 for people who use Medicare Part D for prescription drug coverage and on July 1 for those whose insulin is covered by Medicare Part B.
The report estimated that 72,854 Ohioans will save more than $36.5 million from the change – an average of $502 per user. Becerra said residents of North Dakota will see the nation’s largest average savings – $804 – because of cost variations between states.
Nancy De Lew of HHS’ health policy office said the number of people who will benefit from the program in 2023 is likely larger than the 2020 statistics would indicate because the Medicare population has been increasing as more members of the baby boom generation enroll. The new policy will also enable people who didn’t fill their insulin prescriptions in the past because of affordability issues to get the medication they need, added Ben Sommers of the HHS health policy office.
In addition to lowering insulin prices for people who use Medicare, Becerra said the Inflation Reduction Act empowers HHS to use its bulk purchasing power to start negotiating for lower prices for other prescription drugs. He said his agency will decide this year which 10 drugs will be the first it will target for lower prices.
“There was no ability to negotiate before the passage of the Inflation Reduction Act, so that partially explains why Americans pay upwards of two or three times what other people around the world pay for the same drugs, oftentimes manufactured here in America,” said Becerra.