A pharmacy business model that’s bad for pharmacy and bad for some patients

We’ve all heard about and experienced the impact of high medication costs in recent years (http://www.endocrinologyadvisor.com/diabetes/insulin-prices-rising/article/640087/). While the ACA has increased the number of people who can obtain insurance, it has done nothing to help patients actually afford their medications. While there is no one person to blame, there is one piece of the puzzle that has a domino effect on medication costs.  The Pharmacy Benefit Manager (PBM) is a 4thparty in the mix of insurance that directly manages the prescription benefit for insurance companies.  It is the PBM who negotiates with manufacturers, insurance companies, and pharmacies. It is the PBM that offers different ‘formularies’ to health plans, in many cases disenfranchising patients who may need medications not on the ‘formulary’. A perfect example is the insulin marketplace.  (http://www.nbcnews.com/business/consumer/desperate-families-driven-black-market-insulin-n730026)  Here is a good visual and explanation of how PBM’s work: )  I think they have created a perfect storm of healthcare inefficiency that costs patients access to medications and increases the overall cost of healthcare. Why?  I could list a bunch of reasons, but what do you think?

Co-Pays and Policy

An recent editorial in New England Journal of Medicine (N Engl J Med 2016; 375:2013-2015) from Dr. Leemore Dafny and others spoke of the U.S. DHHS announced goal of linking at least 50% of Medicare spending to value-based payment models. They noted that “health care providers are now scrambling to reorganize in a way that delivers value while preserving or enhancing ‘commercial success’ […of their health care businesses]…For years, insurers and pharmacy benefits managers have steered consumers toward generic and other ‘high-value’ drugs by categorizing drugs into ‘tiers’ and requiring lower copayments for ‘preferred’ drugs.” High value and preferred decisions are being made by the insurer/PBM based perhaps on criteria other than what a clinical pharmacist might consider high value… The authors note that “under tiering, insurers offer manufacturers favorable tier placement in exchange for better discounts” a clear benefit to the insurer or PBM. “Placement on a preferred-brand tier, with a [low] co-pay, will [arguably] yield higher sales than placement on a non-preferred-brand tier with a typical copayment of more than $50. Insurers can also negotiate lower prices for drugs that have therapeutic substitutes or questionable benefits by threatening to exclude them from their formularies entirely.”  The philosophy espoused by the authors of the article is that this is all good!  However, they note that the pharmaceutical industry “counterattacked” (…interesting choice of emotional vocabulary) “by offering ‘copayment coupons’. These coupons or discount cards — distributed by physicians’ offices, through the mail, and online — enable the manufacturer to pay some or all of a consumer’s copayment for a prescription. By severing the link between cost sharing and the ‘value’ generated by a drug, copayment coupons can undo the perceived beneficial effects of tiering.”  They estimate that “coupons increase the percentage of prescriptions filled with brand-name formulations by more than 60%” (!)

OK, I get it! The tiering process is one way to control costs, and healthcare policymakers like that!  I wanted to present a flip side view from the patient care perspective. It is well known that medication adherence is related in part to the size of co-pay assessments in an attempt at ‘cost sharing’ (1-2) both generally and for those entering the Medicare ‘donut hole’.(3)  The use of ‘high value’ [my definition is not necessarily based on medication cost…] drugs such as those that are still branded, may offer improved outcomes, but they are often made second or third tier by insurers to limit their own costs.   Adherence with a number of new medications, especially those with minimal co-pays suggests that there are adherence benefits to be gleaned from the discount cards or coupons.  Add to that the evidence that some of the older diabetes medications, available with little or no co-pays may have a higher rate of adverse effects. (4-7)

So ask yourself, if your mother or father were diagnosed with type 2 diabetes, would you want early aggressive therapy with agents that may have significantly more benefits (8-9), not to mention the benefit of early glucose control, or would you want them to start older agents (some with potential CV risk) and then stay with them for years in the clinical inertia that plagues diabetes care. I know what the policy makers prefer, and I know what my preference is for making new and better drugs more available regardless of ability to handle the co-pay…How about you?

  1. Effect of prescription copayments on adherence and treatment failure with oral antidiabetic medications. Barron J, Wahl P, Fisher M, Plauschinat C. P.T. 2008 Sep;33(9):532-53
  2. How patient cost-sharing trends affect adherence and outcomes: a literature review.Eaddy MT, Cook CL, O’Day K, Burch SP, Cantrell CR. P T. 2012 Jan;37(1):45-55
  3. Part D coverage gap and adherence to diabetes medications. Gu Q1, Zeng F, Patel BV, Tripoli LC. Am J Manag Care. 2010;16(12):911-8
  4. Sulphonylureas and risk of cardiovascular disease: systematic review and meta-analysis. Phung OJ1, Schwartzman E, Allen RW, Engel SS, Rajpathak SN. Diabet Med. 2013 Oct;30(10):1160-71
  5. Hyperinsulinemia and sulfonylurea use are independently associated with left ventricular diastolic dysfunction in patients with type 2 diabetes mellitus with suboptimal blood glucose control. Inoue T, Maeda Y, Sonoda N, Sasaki S, Kabemura T, Kobayashi K, Inoguchi T. BMJ Open Diabetes Res Care. 2016 Aug 18;4(1):e000223
  6. Cardiovascular risk associated with the use of glitazones, metformin and sufonylureas: meta-analysis of published observational studies.Pladevall M, Riera-Guardia N, Margulis AV, Varas-Lorenzo C, Calingaert B, Perez-Gutthann S. BMC Cardiovasc Disord. 2016 Jan 15;16:14
  7. Mortality risk among sulfonylureas: a systematic review and network meta-analysis.Simpson SH, Lee J, Choi S, Vandermeer B, Abdelmoneim AS, Featherstone TR. Lancet Diabetes Endocrinol. 2015 Jan;3(1):43-51
  8. Empagliflozin, Cardiovascular Outcomes, and Mortality in Type 2 Diabetes. Zinman B, Wanner C, Lachin JM, Fitchett D, Bluhmki E, Hantel S, Mattheus M, Devins T, Johansen OE, Woerle HJ, Broedl UC, Inzucchi SE; EMPA-REG OUTCOME Investigators. N Engl J Med. 2015 Nov 26;373(22):2117-28
  9. Empagliflozin and Progression of Kidney Disease in Type 2 Diabetes. Wanner C, Inzucchi SE, Lachin JM, Fitchett D, von Eynatten M1, Mattheus M, Johansen OE, Woerle HJ, Broedl UC, Zinman B; EMPA-REG OUTCOME Investigators. N Engl J Med. 2016 Jul 28;375(4):323-34

Insulin Costs – Why are they Rising?

Insulin is a mainstay of therapy for both type 1 and type 2 diabetes. It has been around since 1921 when Banting and Best discovered it. Over the years we have gotten away from animal sources, modified organisms to produce it in large quantities, and increased the capacity to do so … a classic scenario for lowering the price! If that’s the case, why is it still so expensive … and increasing faster in recent years than in the past? Yes, we know that making a biological agent is not cheap, and there are concerns for stability, and other factors that could be invoked to explain the price increase but if patients need it and can’t afford it, what’s the point of this sudden rise in insulin(s) cost?

Working in the diabetes world when insulin cost has increased in some cases by 200% and in others by 600% between 2002 and 2013 seems inconceivable.1 Compare this to other countries where the cost of insulin seems more reasonable with Lantus® costing approximately $6 per vial and Humulin® NPH costing $3 per vial in India.2,3 Newer insulins have been added in the past year elevating the price game as well, but it is easier to explain at least some component of higher price with more ‘benefit’… although those additional benefits seem smaller with each new product. There is a little hope with generic alternatives such as Basaglar® (insulin glargine) becoming available along with Wal-mart’s cheaper Novolin Relion® 70/30 being approximately $25 a vial compared to Novolin® 70/30 prices at other facilities costing approximately $145.4 If that wasn’t enough, add into the picture PBMs where the preferred insulins change in some cases on a yearly basis and it’s understandable as to why the use of insulins can be an even more subject for both providers and patients heaped onto the striking increases in cost!

Now let’s think about our Medicare patient. They usually have a fixed budget and those patients with diabetes are often on at least 3-4 other medications for prevention of complications, which does not even take into account other medical conditions. Just looking at a patient prescribed a long-acting insulin, rapid-acting meal time coverage, an ACE inhibitor or angiotensin-receptor blocker (ARB) for hypertension or nephropathy, and a statin for dyslipidemia, they will hit the Medicare gap in approximately July when utilizing Lantus® and Novolog® compared to not entering it when utilizing the Novolin ReliOn® products. However, what is the quality of glycemic control?

Should patients on fixed incomes and at a lower income level be subjected to different care than those without income issues? Let’s also not forget that most Medicare patients don’t qualify for patient assistance programs that could help with more expensive standard of care insulin products.

This rising cost of insulins has caught the attention of the American Diabetes Association (ADA) who published a press release in February 2016 advocating for 3 changes: 5

  • Wanting to see all off-patent diabetes medications, including insulin, in the lowest cost-sharing tier on all formularies;
  • Supporting the authorization of the Centers for Medicare and Medicaid Services (CMS) to negotiate prices for prescription drugs under Medicare Part D; and
  • Supporting the move toward value-based benefit design from the current fee-for-service system to incentivize better outcomes, in addition to promoting adherence to recommended therapy to reduce emergency department visits and hospitalizations.

In addition, one of the leading experts in the field of diabetes, Dr. Hirsch presented a talk at the 2015 ADA national meeting discussing the issue of rising costs of insulins. He advocates a call for change and action by not only by the national organizations, lobbyists, insurance companies, hospitals, patients, and providers, but also for a need to educate students, residents and fellows in the treatment of diabetes utilizing human insulins.6

Why are insulins still so expensive in the United States? Why are the prices of insulins allowed to increase like this when for some patients it is a matter of life or death? Overall, it is appalling that insulin costs overall are rising rather than decreasing and it seems like something needs to be done. So what are we going to do about it? Any thoughts?


  1. Hua X, Carvalho N, Tew M, Huang ES, Herman WH, Clarke P. Expenditures and prices of antihyperglycemic Medications in the United States: 2002-2013. JAMA. 2016;315:1400-1402.
  2. Medindia Network for Health. Lantus (insulin glargine) price list. Available at: http://www.medindia.net/drug-price/insulin-glargine/lantus.htm. Accessed 7/25/16.
  3. Medindia Network for Health. Huminsulin-N (insulin) price list. Available at: http://www.medindia.net/drug-price/insulin/huminsulin-n.htm. Accessed 7/25/16.
  4. Novolin 70/30. Good Rx. http://www.goodrx.com/novolin-70-30. Accessed 7/25/16.
  5. American Diabetes Association. Statement on Accessibility and Affordability of Diabetes Medications. http://www.diabetes.org/newsroom/press-releases/2016/statement-on-accessibility-and-affordability-of-diabetes-medications.html. Accessed 7/25/16.
  6. Hirsch IB. Changing costs of insulin therapy in the U.S. Available at: http://webcasts.diabetes.org/html5Player/default.aspx?webcastXmlInfo=http://webcasts.diabetes.org/netadmin/Content/ADA2015/sync/CT-SY06/38134.xml&videoBaseUrl=https://s3.amazonaws.com/ada-stream01/ADA2015/CT-SY06/. Accessed 7/26/16.

Paying for diabetes medicines–it’s not just frustrating for patients

Treating diabetes these days is exciting, considering there are many more options for us to choose from, and it seems like new drugs are coming on the market every other day.  While some of these drugs are novel, focusing on a new mechanism of action to combat a complex disease process, other medications seem to provide little advantage over medicines that have been available for some time.

When these new drugs come to market, the pharmaceutical companies tend to offer great rebate programs and/or co-pay savings cards where the patient can get the new medication for as little as zero dollars per month for a period of time, sometimes for 1 to 2 years. However, these programs can’t be used if the patient receives insurance through a government agency, like Medicare or Medicaid. Generally the patient who has Medicaid will have reduced co-pays anyway so this is not really a problem. It’s very problematic or frustrating  when treating patients who have a Medicare part D plan, and are on a fixed income but do not qualify for additional help or low income subsidy. It’s often difficult to use new, novel medications with these patients because of the increased co-pay for them. Even trying to use basal bolus therapy with synthetic rapid-acting insulins plus the longer-acting basals can be quite expensive for patients. Often, it seems the practitioner is faced with trying to use cheaper medications (if they are not already using them) that may not work as well given duration of disease, or may have more side effects, simply because they are more affordable. If Medicare Part D patients may be able to obtain some of these medications throughout the year, it may be a different story once they fall into the gap.  Although the amount the individual patient is responsible for during this period is improving due to reforms, it often is still too expensive. In addition, several articles suggest that increased copays lead to lower adherence. (Cole JA, et al. Pharmacotherapy 2006;26:1157–1164; Schultz JS, et al, Am J Manag Care. 2005;11:306–312; Goldman DP, et al, JAMA 2007;298:61–69)

It’s also frustrating to have to change medicines throughout the year because of the formulary change.  Many practices try to be proactive when prescribing by searching formularies ahead of time.  However, the formulary available may not be the most current, or the formulary may only be available to the individual patient covered by the plan.  Many of my patients don’t quite understand the ins and outs of insurance, let alone understand that I need them to bring in their updated formulary booklet each time they receive one.

I fully support research and development of new entities, the approval and use of new medications when they are beneficial (i.e. empagliflozin and cardiovascular outcomes [N Engl J Med 2015; 373:2117-2128])  as well as the opportunity or availability of insurance.  I understand the need for restrictions regarding insurance coverage, the need for formularies, and the need to improve medication use across the board.  However, I wish the costs of these newer medications were not as high, and that more programs were available for those that need it most—the patients who fall in the gaps.  I also wish the process related to obtaining medications through insurance was less cumbersome and time-consuming.  But for now, I’ll keep working with patients to optimize the medications they do obtain, tolerate, and take as well as helping to improve other non-drug measures such as meal planning and physical activity.  I’ll keep researching formularies online with the hope that coverage is still the same as well as completing prior authorizations when needed, while holding in my frustrations and remaining hopeful for continued progress in our health care system.  Can I just use the best medicine, even if somewhat expensive, in all patients to get the best outcome??