“Now, what we see in our data is that what uninsured people do is that they don't buy them the latest formulations of insulin. They simply don't even use those. They use, more typically the basic, most generic forms of insulin, which are available at relatively low prices, but they don't have many of the benefits of the newer formulations.”
In this episode, Dr. Glied talks to us about all things insulin! We talk about the rising cost of insulin, insulin affordability, insulin cost for people with and without insurance, and the implications of the Build Back Better bill on insulin affordability.
Sherry is a health economist, who is currently the Dean of the Wagner School of Public Service at NYU. She previously served in government in the administrations of Presidents Barack Obama, Bill Clinton, and George H.W. Bush.
Shireen: Dr. Sherry Glied talks to us about all things insulin. We talk about the rising costs of insulin, insulin affordability, insulin costs for people with and without insurance and the implications of the Build Back Better Bill on insulin affordability.
Podcasting from Dallas, Texas, I am Shireen. And this is the Yumlish Podcast.
Yumlish is working to empower you to take charge of your health through diet and exercise and reduce the risk of chronic conditions like type two diabetes and heart disease. We hope to share a unique perspective and a culturally relevant approach to managing these chronic conditions with you each week.
Dr. Sherry Glied is a health economist who is currently the Dean of the Wagner School of Public Service at NYU. She previously served in the government in the administrations of presidents, Barack Obama, Bill Clinton, and George H.W. Bush.
Welcome Dr. Glied.
Sherry: Thank you very much Shireen.
Shireen: So, Dr. Glied, can you talk to us a little bit more about your experience working in Washington, DC., as a health economist, under the presidents, Bush, Clinton, and Obama.
What was your work really focused on?
Sherry: So, it was very different in the three different administrations. Um, when I first went to work in Washington, um, I worked for the Bush administration at a time that, um, there wasn't really a lot of movement on health reform at that moment. Um, so a lot of what I did was looking at how the current healthcare system was functioning and also thinking about how reforms of the healthcare system might address people who have chronic conditions like diabetes going forward. We worked a lot on an issue called risk adjustment, which is about the technical ways that you would reimburse insurance plans to make them more willing, to accept patients who had chronic conditions. So that was my sort of introduction to government and healthcare.
And then bill Clinton was elected and I was fortunate to be able to stay on and work on the development of the Clinton health plan, uh, which was very, very exciting and challenging time, uh, really trying to design a health plan from the bottom up. Um, and thinking through, particularly because of my expertise in economics, the budgetary implications of different kinds of decisions that we might make.
Um, of course, as you know, that plan didn't go anywhere but I’d left long before it, it, it, it ended, um, to go back to my position in academia. And then I was really honored to be invited, to be the assistant secretary for planning and evaluation in the Obama administration. Um, I wound up coming to Washington and joining the Obama administration only after the Affordable Care Act had actually passed, um, because of the slow lengthy process of Senate confirmation, but I had the really exciting task of trying to implement that, um, working with a team, a huge team to try and implement, um, that, that reform to think about how it would actually play out on the ground, um, what the rules would need to be, uh, to actually deliver health insurance to people.
So, it was very, very rewarding to do that, um, and exciting.
Shireen: Well, all the variety of work that you've done. One of the, one of the key things that we want to touch upon in the podcast episode today, um, is really around insulin, right? Uh, we continuously hear about insulin costs are high, they don't need to be high. Help us understand how much does insulin generally cost and why are insulin prices rising instead of going down.
Sherry: That is a wonderful question. And crazily enough, a really, really hard question. Why should that be a hard question? Insulin is a drug that's been around for almost a century right now, right? It should be, it should not be expensive, and it should be easy to answer the question. But neither of those things is true. So let me, let me start off with sort of how much does insulin cost, um, in the data that we look at, uh, a standard dose of insulin, um, a single 1500-unit prescription could vary in price from $0 to $1,500.
Like that's an unbelievable variation in price. Most people pay about, between about 317 and $425 for, uh, in total for, for, uh, a dose of insulin of that size. So that's a lot of variation for a drug that's been around for a long time and, and, um, very, very strange to think about that. So, what is going on behind that?
There are really two phenomenon that are going on, um, that are worth thinking about. The first one is that formulations of insulin have changed over time. The insulin that people are taking now is not exactly the same in its, in a way that it works as the kind that Banting and Best developed way back then.
Um, there is, there are more types that are fast acting and slow acting insulins. Um, they had been formulated to be easier for people to tolerate. Um, so there has been some advance in, um, in insulin and that surely has something to do with higher prices, especially as the newer formulations come along.
But the other thing that is really strange and hard to understand and complicated is that we have a very, um, uh, Byzantine system of paying for drugs in the United States. Um, and the way the system works is that there are manufacturers who produce insulin, the ones who actually produce these drugs, um, their drugs are purchased by intermediaries called pharmacy benefit managers.
And the pharmacy benefit managers work on behalf of the insurance companies who buy the drugs and then, um, reimburse, uh, patients who use them. Now it turns out that a lot of the recent increase in the price of insulin hasn't accrued to the manufacturers. So, the manufacturers have done. I don't want to let the manufacturers off the hook.
They've done a lot of things to keep the price of insulin high among them coming up with new formulations and making it very difficult for generic brands to come in and reproduce those formulations. So, they are definitely not without fault here. But the big challenge in the system has been these pharmacy benefit managers and the insurance companies with whom they interact.
So, what happens on that front? Well, what happens on that front is a pharmacy benefit manager cuts a deal with a manufacturer or a wholesaler to buy one or another of the formulations of insulin. So rather than, you know, companies A's formulation versus company B, right? The way that they make that deal is they took that the manufacturer charges a very high price for the insulin.
Right. It’s a really high list price. And then hands are the pharmacy benefit manager, a rebate for part of that price. That's a little crazy. Right? And then now what does that, what does that do? Well, it needs it on the insurers, um, price list in terms of how they reimburse people or whatever, there's that super high price that there's, that's been negotiated, but the pharmacy benefit manager can go back to the insurance company and say, but by the way, since you made that deal, here's a bunch of cash for you. Then you can use for whatever you like. What does that in effect do? It allows the insurance company to lower premiums for everybody, but it's at the expense of people with diabetes who have to pay those high list prices for insulin. It's a crazy system and it makes it really opaque to try and figure out what's going on and how much things actually cost.
And it leaves some people in a really bad place. Uh, so, so I, I, I don't know if I was clear were there or not, but this is a very elaborate system and so very difficult to intervene here. Um, and that you can actually see that in the policymaking hard to see exactly where you go in to fix the problem on behalf of patients.
Shireen: So, if I understand this correctly, Dr. Glied so that the manufacturer is just driving up the price, the PBM, thus providing the, uh, incentive with this coupon or whatever this passed on to the insurance. Um, at the end of the day, what is doing is anyone under that insurance plan gets the benefit of that coupon to whatever extent.
Um, but anyone outside of that is now stuck with that high price, is that correct?
Sherry: That's partly true. That's partly part of the problem, but even the people who belong to that insurance plan, even the people in that insurance plan could be facing that high price in terms of their co-insurance until they hit their deductible.
Right. Um, so the insurance, they're not, they're not, they're not getting the rebate. The rebate is not going to the patient. The rebate is going to the insurance company. So, it's a really wacky deal. Um, it's, it's a very challenging situation. Um, and that's also why, when we look at the data, the actual prices, people pay for insulin, both the total pipe price that is reimbursed and the price individual people play, pay is so highly varied because this is such a fragmented complicated, crazy honestly, system.
Shireen: So how does being uninsured then affect the quality, accessibility, and then cost of insulin?
Sherry: So, the situation for people who want uninsured is the worst of all, because those high list prices, they exist out there. Right? And nobody is there to protect you. There's no deductible or co-insurance or co-payment you are going to be paying the full cost of the insulin.
Now, what we see in our data is that what uninsured people do is that they don't buy them the latest formulations of insulin. They simply don't even use those. They use, more typically the basic, most generic forms of insulin, which are available at relatively low prices, but they don't have many of the benefits of the newer formulations.
Um, so we not only see that they're paying a lot out of pocket, but they're also not getting sort of the preferred products either. Um, and we do see that a lot of the problem of out-of-pocket spending of really high out-of-pocket spending is among those people who have no health insurance at all.
Shireen: So, let's, let's dig into this a little bit. Why are there such disparity, disparities and affordable access to insulin and insulin costs between privately insured and then uninsured people with diabetes?
Sherry: So, the important thing for privately insured people is that, um, the structure of health insurance usually means that they are paying only, only is not perhaps the right word here, but they are paying their co-insurance or perhaps a copay for their diabetes.
They are not paying the full list price. In most cases. Now some people with high deductible plans might pay the full list price for a while for the beginning of the year, until they need their deductible. And then they wouldn't be paying the list price either. So, for most insured people, at some point during the year, if not immediately, they will be protected against those high prices.
And they will only be paying their co-insurance, which might be 10 or 15% of the price. That's not true for uninsured people, right? From day one, all the way through the end of the year, they pay the full price of whatever it is they buy. So, they don't have that protection at all. The real difference here is, um, when people are, have health insurance, at least a portion of the cost of their insulin is being picked up by the health insurance covered under their premium.
Shireen: Makes sense. Um, help us understand a little bit more Dr. Glied on what that pricing looks like. Are there, is there average pricing numbers that you can share with us? Um, especially over the years, how that has changed?
Sherry: So, um, what has happened over time is, let me just give you the, the one thing that, that I, I have, I don't have all of the numbers is that between 2003 and 2016, the list price of Nova Log, which is a common insulin form increased by 310% after adjusting for economy-wide inflation.
So that's tripled in price over that period. Um, so that's a very big increase. Now, if we look at. Um, today and we look at the distribution of prices, um, about half of prices of the total price, not the amount people pay out of pocket. So, you have to keep those two things straight. But half of the total price of, uh, of insulin prescriptions are between, as I said, $317 and $425.
So that's sort of the range of the total price of insulin. Um, that's the, that's the insulin that privately insured patients are using. But as I said before, uninsured patients are usual using cheaper formulations of insulin. So, about half of the prescriptions that they use are actually reimbursed at a price below $190.
They're using just cheaper forms of insulin.
Shireen: And remember, we're talking about the price tag, the $300, the $400. Um, how often is someone having to buy insulin generally?
Sherry: So, for, for, for all people under 65, we look at what the, how much they spend, um, if they use expensive insulin. So, remember that there are some people who don't use expensive insulin because they can't afford it at all.
But for people who use sort of the more costly formulations of insulin over the course of a year, their average out-of-pocket costs for insulin are about $600. Um, uninsured people who do, when they use those more expensive formulations of insulin. And as I said before, many of them don't, they wind up spending more than twice, that much out of pocket and uninsured people are typically lower income, um, than privately insured people.
So that is really a lot of money, uh, for people.
Shireen: Yep. Makes sense.
Sherry: And I think it's also, sorry. One thing I would add to that Shireen is that people with diabetes often use drugs other than insulin as well. And so, while we focus very much on the price of insulin and, and, and even as we think about uninsured people, this problem is not limited to the price of insulin.
People are buying insulin, but then they also need other drugs also. Um, and for uninsured people, those other drugs are also gonna, you know, hit their pocketbooks. So, we look at the average out of pocket costs for all prescriptions, for people with diabetes, they come closer to about $1,200, um, for privately insured people and $2,400 for uninsured people.
Shireen: So, Dr. Glied, show us the shows a light at the end of the tunnel, right? What, how our health policies like the Affordable Care Act and Medicaid important for supporting individuals with diabetes?
Sherry: Well, so the first thing to know is that having health insurance is just super important in terms of being able to afford coverage.
And we see that really clearly in every income group, people who are uninsured are far more likely to say that they can't afford the care that they need and they, the prescriptions that they need. Um, if they have diabetes, if they don't have health insurance, the differences are astronomical. Um, and we can actually see in our data that passage of the Affordable Care Act or the implementation of the insurance expansions in the affordable care act, which began in 2014, they really made a real difference to the share of the population reporting that they had difficulty affording prescriptions.
And that's because people got on Medicaid, and they got on private insurance plans. And so instead of paying the full cost of their prescriptions, they were only paying those copays and co-insurances. Item number one, like most important thing, make sure you have health insurance. That's really key. Um, that's the first form of protection that you're going to get.
Um, then we could start thinking among people who do have health insurance, what does that health insurance look like? What does it need to do, um, to be providing you with adequate financial protection and that's really the dimension on which I think policy is moving right now?
Shireen: And so, let's talk through some of that. What health policy reforms need to be made to, uh, increase this insulin affordability and access for all patients regardless of their insurance status.
Sherry: So, there were two kinds of policies I think we need there. The first one is really a set of policies that people are thinking about in the Build Back Better Bill and in other places, um, which has to do with changing the out-of-pocket payment structure for insulin. So, what the Build Back Better Bill would do is say that, um, people with diabetes who used insulin would never have to pay more than $35 a month. Um, in co-payments for that insulin, um, that would be their protection.
Now, one of the things that we see in our research is that people who you, who pay copayments, they don't pay a share of the list price. They pay a fixed amount each month. Um, they do much better in terms of out-of-pocket costs. Not only do they do better, but the costs are predictable. And even more than that, you can see how having that $35 rule kind of undoes some of that crazy pricing that we talked about at the beginning, right? There's less of an advantage to do this whole list, price, rebate, nonsense, um, when you're in that copay world. So, for people with private insurance and people with Medicare, um, this kind of limit on the deduct on the co-payment for insulin is really important.
Some states have already gone ahead and done this for some of the plans in their states, and that's great, but actually states have limited authority to regulate private insurance plans. Um, most people who have private insurance are in plans that are not regulated by the states. Only the federal government can do this.
Um, and it's encouraging that they're looking at it. Um, they are in the Build Back Better Bill. Of course, the other that the Build Back Better Bill in this respect is not going to cover the people who are uninsured. Um, it changes the structure of policies for people who, who have insurance. Um, but that just highlights the importance of getting more people health insurance, and actually that's another piece of Build Back Better that I think is worth calling out. Um, many of the people who don't have health insurance are people who are very poor and live in states that did not choose to expand their Medicaid programs.
Medicaid is the program, the health insurance program that provides coverage to low-income Americans. And it actually doesn't require people to pay anything out of pocket for their insulin, because it's meant for very low-income people. Um, but in 12 states, people who are quite poor don't have any eligibility for Medicaid.
And if they're diabetic and they've, and they fall into that category, they're really in very bad shape. So, um, one of the hopes is that the legislation, if it passes, we'll provide, um, new insurance protections, uh, for that. Um, the second piece that's important there is that, um, during the pandemic, uh, Congress passed legislation to make the subsidies for health insurance in the affordable care act, more generous.
And those had two effects. One is they provided people with more protection from out-of-pocket costs, but they also made insurance for a sort of lower middle-income people, much more accessible. So again, this is the second group of people who are uninsured. That's really important to go after. Um, and I would just really encourage your listeners if there's one thing to do, make sure people have their health insurance.
Um, because that is really what is, if you don't have that, it's very hard to provide the other protections on top of it. And also, I think. Um, recognizing that people with diabetes don't only need insulin. They need outpatient visits. They need to be monitored. They need other drugs. And insurance gives you financial protection against that whole gamut of, uh, challenges.
Whereas some intervention that's only targeted at insulin. That's only gonna fix a part of the problem, not the whole problem.
Shireen: Thank you for that uh, so much Dr. Glied. With that we are to the end of the episode. Um, at this point I would love for our listeners to know how they can connect with you and just learn more about your work.
Sherry: Sure. Um, so the paper that I talked about here today is something that we published with the Commonwealth Fund. Um, and you can find it on the Commonwealth Funds website, which is CMWF.org. Um, so I, I encourage you to look for it there, and then you can find me I'm at I'm the Dean at NYU Wagner. So, it's easy to find me on our NYU Wagner website, or you can reach me directly at email@example.com.
Shireen: It was a pleasure Dr. Glied, thank you so very much for your time.
Sherry: Thank you Shireen.
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