In 2017, the government spent $13.3 billion before rebates and $7.8 billion after rebates on insulin.
A previous study found that Medicare Part D could have saved $14.4 billion on prescription drugs overall in 2016 by using VA-negotiated prices.
Medicare Part D and formularies
Medicare Part D is the segment of Medicare that covers prescription drugs. But U.S. laws state that Medicare cannot negotiate drug prices with pharmaceutical companies like other countries do. The U.S. Department of Veterans Affairs (VA) is the one branch that is allowed to negotiate prices and establish a formulary, giving researchers a glimpse of what the savings would be.
A formulary is a list of drugs that are covered by a plan for treating certain conditions. If only a few drugs are approved to treat each condition, that incites competition and more wiggle room in lowering the prices of the drugs.
Other countries, such as Canada, Germany, and the UK, negotiate prices with drug companies, cutting drug prices down considerably. But it’s against the law in the U.S.
Negotiation would be effective for all types of drugs, but especially for insulin, the prices of which have skyrocketed over the past several years.
What is being done?
Drug companies, state legislatures, and the WHO are working to get insulin prices down. Hopefully their efforts will pay off soon to keep people out of dangerous life or death situations with their insulin.
With Medicare composing one-third of all drug spending, the study authors argue that it’s time for Congress to make a change and allow Medicare to save money by negotiating drug prices.