Out-of-Pocket Caps on Insulin for Medicare Part D Beneficiaries Have Reduced Insulin Prices

A recent analysis led by researchers at the Johns Hopkins Bloomberg School of Public Health indicates that out-of-pocket caps on insulin for Medicare Part D beneficiaries have reduced insulin prices.

The Inflation Reduction Act of 2022 established an out-of-pocket cap of $35 for a 30-day insulin supply for Medicare Part D beneficiaries, effective January 1, 2023. This marks the first instance of a federal cap on insulin prices for all Medicare beneficiaries.

Key Study Findings

Researchers analyzed Medicare claims data from nearly 3.8 million patients who had at least one insulin claim between 2019 and 2023. The findings were published in a peer-reviewed research letter on March 19 in JAMA.

The analysis revealed substantial reductions in out-of-pocket insulin costs for Medicare beneficiaries:

• The percentage of patients paying $35 or less out-of-pocket for a 30-day equivalent supply increased from 48% in 2019 to 75% in 2023.
• The mean out-of-pocket cost for the same quantity of insulin decreased from $50.87 in 2019 to $21.98 in 2023.
• Cost reductions were observed across all U.S. states during the 2019–2023 period.

Michael Fang, assistant professor in the Bloomberg School's Department of Epidemiology and lead author, stated that Medicare policies have improved insulin access and affordability, contributing to historically low costs for Medicare beneficiaries.

Understanding Prorating Challenges

Despite these significant improvements, the study identified that approximately one-quarter of Medicare beneficiaries continued to pay more than $35 for a 30-day supply of insulin in 2023. These beneficiaries had at least one prescription that was not prorated to the Inflation Reduction Act limit.

CMS guidance indicates that the $35 rule applies to full multiples of 30 days. If a prescription falls between these multiples, patients may be charged up to the next full multiple. For example, a 45-day supply could be treated as a 60-day supply, potentially costing up to $70.

Variations in average 30-day insulin costs by state (ranging from $10.36 in Washington, D.C., to $31.09 in Minnesota in 2023) may reflect state-level differences in how Medicare insurance plans handle prorating.

Future Research Directions

Researchers are currently investigating the issue of prorating prescriptions outside the typical 60- and 90-day supply windows. This ongoing work aims to understand cost variations across plans and assess potential policy adjustments.

Approximately 3.8 million Medicare beneficiaries utilize insulin for type 1 or type 2 diabetes. The research was supported by the National Institute of Diabetes and Digestive and Kidney Diseases.