WRITTEN BY: Todd Boudreaux
Express Scripts, the largest pharmacy benefit manager (PBM) in the U.S., recently released a list of formulary exclusions that included ‘Insulin Lispro’ as an excluded medication. Insulin Lispro — the generic version of Humalog recently released by Eli Lilly — has a list price of $137.50, half that of brandname Humalog, which remains on Express Scripts’ formulary. The exclusion does not necessarily apply to Medicare Plans.
Formularies are lists of approved drugs that PBMs/Insurance companies agree to cover on their plans. Exclusion from a formulary means that the new Insulin Lispro will not be covered for those with insurance plans associated with Express Scripts, most notably Cigna (which acquired Express Scripts in 2018).
Express Scripts has not released a statement regarding the decision, but many point to the nature of the complex rebate system behind drug pricing in America as the most likely explanation. When PBMs add prescription drugs to their formularies, they receive a negotiated “rebate” often based on a percentage of the drug’s list price from the pharmaceutical manufacturer.
Additionally PBMs will often only cover one version of a particular insulin (ie. Novolog or Humalog but not both) leaving some patients victims of non-medical switching. If a PBM is only choosing to cover one type of insulin, their financial incentive is to cover the insulin that gives them the best rebates.
In short, the higher the list price of a drug, the more money a PBM stands to gain by including that drug on their formulary.
It should be noted that although insurance companies may not cover the generic ‘Insulin Lispro’, the half-price option will still benefit those without insurance who are paying 100% out of pocket for their supplies. People with diabetes on high-deductible health insurance plans will also have the generic as an option (paying list price) to reduce monthly out-of-pocket expenses before they’ve met their deductible.
This news is the latest in an ongoing debate about who is to blame for the skyrocketing price of insulin in the U.S. Just this month, both PBMs and insulin manufacturers testified before a House of Representatives subcommittee. In what was a contentious hearing, neither party was willing to take responsibility and both seemingly blamed the other for the high list prices.
Indeed, the scrutiny on insulin pricing has been coming from all levels of government. The Senate Finance Committee held a hearing with PBM repson 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.