Updated: Feb 12, 2021
There was a lot of press surrounding the new Colorado law that caps insulin cost to consumers at $100 for each fill/refill. The idea of a cap sounds good from the consumer point of view since insulin prices nearly tripled between 2002 and 2013, and doubled from 2012 to 2016. Still, $100 per refill seems like a lot of money for a maintenance drug that millions of diabetics cannot do without. How does the cap work and why did lawmakers find it necessary to set the cap?
How Does the Colorado Law Work?
A lot has been written about the implications of Colorado’s Insulin law, but the law itself is quite simple: An insurance company offering health coverage plans in Colorado may not require a member to pay more than $100 for a 30-day supply of insulin. This is a finger in the dyke, holding back what has been major increases in the price of insulin
Why Does Insulin Cost So Much?
There is a mountain of information on insulin costs and distribution channels relevant to the rising cost of insulin. All this seems to boil down to three root causes:
1. Only three companies manufacturer insulin for the US market-- Eli Lilly, Novo Nordisk, and Sanofi. This limits competitive pressure on insulin prices.
2. Patents on older versions of insulin have expired, but new, additional patents on approved products have added costs for the newer forms of insulin. Experts say prices for these newer formulations are out of step with how much they improve treatment for patients, and most of the benefit of the new drugs is for people with Type-1 diabetes.
3. A complex and mostly-secret chain of distribution supports discounts paid to companies in the distribution chain. As these discounts increase, there is pressure to increase prices to generate desired revenue in spite of increasing discounts.
What Else is Being Done?
Some companies have responded proactively to the issue. Express Scripts recently announced it is launching a "patient assurance program" that will place a $25 per month cap on insulin for patients "no matter what." Insulin manufacturer Eli Lilly said it will soon offer a generic version of Humalog, called Insulin Lispro, at half the cost.
Placing a cap on what consumers pay will have an immediate benefit for those affected. The factors driving rapid increases in price are not, however, addressed by the law.