As the federal government makes progress in lowering insulin costs, the Michigan Pharmacists Association (MPA) is working to support cost reduction efforts there as well.
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In March, all three of America’s leading insulin producers agreed to substantially reduce their prices, following the federal government’s request to institute a $35 cap on insulin copays. In February, Gov. Gretchen Whitmer proposed subsidizing the manufacturing of low-cost insulin in the 2024 state budget.
MPA Director of Government Affairs Eric Roath, PhD, told State of Reform that the association is broadly supportive of efforts to improve patient access to medications.
“For many individuals, this includes lowering the cost of their life-saving medications,” Roath said. “However, MPA also recognizes that this means addressing pricing concerns all across the supply chain, from the manufacturers to the insurers. And, in most cases, the pharmacy benefit managers (PBMs) they contract with.”
The concerted effort to lower insulin costs in particular, as opposed to other drugs, in Michigan is likely related to the significant spread of Type 2 Diabetes in the state, Roath said. There are more than 965,000 total cases of diabetes in the state, according to the CDC, with an estimated $7 billion in direct medical costs, he noted.
“Focusing on insulin cost is a target that can have a direct and immediate impact on these costs,” Roath said. “I think it is not a question of pursuing insulin cost reduction as opposed to other drugs, but rather identifying a very specific and impactful area to start [with]. The greater issue of rising pharmaceutical costs remains of interest for all healthcare stakeholders.”
Many pharmacies across the country have expressed concerns over the business practices of PBMs, and several states have introduced or passed legislation to further regulate them. Roath said PBM business practices are a concern for Michigan pharmacies as well.
“There has been a lot of attention recently on the practices PBMs engage in that directly contribute to rising pharmaceutical costs,” he said. “It’s a matter of misaligned incentives. PBMs commonly garner their earnings as a percentage of drug spend, a practice known as spread pricing, and negotiate rebates with the manufacturer for placement of drugs on their formulate.”
Data that is currently under consideration by federal lawmakers indicate that these rebates, rather than serving as a cost-saving tool, encourage manufacturers to raise list prices, Roath said.
“Additionally, most of these so-called savings are not passed along to the patient,” he said. “MPA is supportive of federal efforts to curb the abusive practices of PBMs, specifically the Pharmacy Benefit Manager Transparency Act. Last year in Michigan, MPA supported the passage of legislation that requires PBMs to register with the Department of Insurance and Financial Services, and continues to advocate for higher accountability at the state level.”
MPA is also advocating for federal legislation that would help address concerns voiced by Michigan pharmacies, Roath said. The Drug Price Transparency in Medicaid Act aims to eliminate spread pricing in all Medicaid managed care programs by:
- Requiring that pharmacy reimbursements in all state Medicaid managed care programs have a rate that encompasses a pharmacy’s average acquisition costs and the state’s Medicaid fee-for-service dispensing fee.
- Limiting payments to PBMs to solely administrative fees.
- Prohibiting spread pricing by requiring a full pass-through in all Medicaid managed care programs.
- Mandating National Average Drug Acquisition Costs reporting to CMS by all pharmacies participating in state Medicaid programs, which would provide transparency in drug pricing, and allow reimbursements to reflect true acquisition costs of Medicaid prescription drugs.