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Eli Lilly cuts some older insulin prices and caps out-of-pocket costs

AILSA CHANG, HOST:

All right. NPR pharmaceuticals correspondent Sydney Lupkin is here with us now to help unpack this news on insulin prices. Hi, Sydney.

SYDNEY LUPKIN, BYLINE: Hello.

CHANG: So I asked David Ricks, the CEO of Eli Lilly, why his company did not take this step before. And he focused on problems with the health care market. Can you just shed some light on that?

LUPKIN: Sure. It's a really good question. The company says the reasons were ingrained in the overall health care system - so think high-deductible health plans, also insurance middlemen called pharmacy benefit managers who exert a huge influence on the drugs the company offers its workers. Lilly says these PBMs have limited the company's options, but those factors have been in place a while now. If you ask patients who've been fighting for lower insulin prices for years, it's a different story. I talked to Laura Marston, a person with Type 1 diabetes who co-founded The Insulin Initiative.

LAURA MARSTON: I think this is a stunning admission by Lilly. You know, this is a company that has blamed the PBMs, that has literally sat there and watched people die who couldn't afford insulin and claimed their hands were tied. And then, you know, one Wednesday morning in March, by the stroke of a pen, they make this change.

LUPKIN: So the timing is interesting...

CHANG: Yeah.

LUPKIN: ...With the insulin co-pay caps for Medicare that are part of the Inflation Reduction Act. The Biden administration is now pushing to expand that to people with commercial insurance as well.

CHANG: Well, companies don't often make decisions that they know will hurt their bottom lines, right? So I have to wonder, does it seem like this decision could cost Eli Lilly money?

LUPKIN: Well, Lilly's shares rose modestly on the news, so investors don't appear to be worried. I called Richard Evans, a pharmaceutical industry veteran who runs SSR Health - kind of a Kelley Blue Book for drug prices. He says, ultimately, what Eli Lilly takes home might not change much. The company was already making cents on the dollar on these insulin products, he says, because of the middleman between the patient and the drugmaker - those PBMs. Drugmakers pay PBM rebates so that their medicines get favorable treatment in the menu of drug options insured patients can choose from. That money isn't usually passed along to the person at the pharmacy counter. Here's Evans.

RICHARD EVANS: Rather than putting the product in there, you know, for a dollar and then having it knock around and at the end of the day, after rebates and concessions and all that, you're making 15 to 30 cents, depending on the product, why not just sell it for that 15 or 30 and not bother with the rebates at all?

LUPKIN: So by lowering the list price to about what Eli Lilly would take home anyway, Eli Lilly is kind of cutting the middleman out.

CHANG: Interesting. Well, how much relief do you think this announcement will offer people with diabetes?

LUPKIN: Oh, for people without insurance, this is huge. So Marston lost insurance in her 20s and had to move, give away her dog. Her insulin cost her more than a thousand dollars a month. So for people with insurance, what they pay out of pocket at the pharmacy counter - a co-pay - can be affected by the list price. So there could also be some lower co-pays.

But there's a catch. The PBM doesn't treat all drugs the same. It might favor drugs from companies that pay a higher rebate and make them more attractive to patients by keeping the co-pay lower. It can also tilt the field against some drugs by making people jump through hoops for them, raising the co-pays, not covering them at all. So without...

CHANG: Right.

LUPKIN: ...The rebates, there is a risk to Lilly that the PBMs will prefer other insulin products by competing drugmakers, and that's a, you know, possibility this company's CEO acknowledges.

CHANG: That was NPR's Sydney Lupkin. Thank you, Sydney.

LUPKIN: You bet. Transcript provided by NPR, Copyright NPR.

Sydney Lupkin is the pharmaceuticals correspondent for NPR.