Eli Lilly & Co. announced on March 1 that it would cap the out-of-pocket costs for its insulin products at $35 per month and reduce the list price of its most commonly prescribed insulins by 70%. President Joe Biden released a statement calling the move “a big deal” and has called on Congress to mandate a $35 out-of-pocket insulin cost cap for all commercial health plan members. Yet health policy insiders tell AIS Health the company’s decision may be tied in part to an upcoming change in Medicaid rebates. Plus, it’s unclear whether it will lower the net cost of the widely used therapies.
The American Rescue Plan Act that passed in 2021 includes a provision that eliminates the Medicaid drug rebate cap in 2024. Since 2010, there has been a rebate cap for Medicaid at 100% of a drug’s average manufacturer price (AMP), meaning drug companies that exceed the cap do not have to pay Medicaid additional money for increasing prices, as the Kaiser Family Foundation noted in a brief last year.