How Changing Insulin Regulation Could Mean More Competition, Lower Costs

Top 3 Things You’ll Learn

  • The increasing price of insulin medications over the last several years
  • Key changes with how the FDA will regulate and approve insulin products
  • Benefits for payers and consumers of insulin medications

Diabetes is the most expensive chronic condition in the United States, with one in four healthcare dollars spent on care for people with diabetes. Over the last decade, the increasing cost of insulin has made it more difficult for consumers to pay their out-of-pocket expenses for treatment. Between 2012 and 2018, the price of insulin increased an average of 14% annually. By 2016, insulin accounted for 31% of overall healthcare costs for a person with Type 1 diabetes.

Numerous efforts to cap insulin prices and lower healthcare costs are underway in states across the country. While the Federal government considers similar insulin legislation, one important step in the effort to increase insulin competition in the market went into effect on March 23, 2020, when the U.S. Food and Drug Administration (FDA) transitioned insulin from being regulated as a “drug” to being regulated as a “biologic.”

The FDA now regulates insulin as a biologic. See how this will impact the market and your pharmacy benefits plan. #drugcosts #diabetes

Changes to the Insulin Approval Pathway

Biologic and biosimilar drugs are used to treat some of the most serious diseases and conditions including respiratory distress syndrome, Crohn’s Disease, rheumatoid arthritis, fertility conditions, Cushing syndrome, deep vein thrombosis, Gaucher disease, and now diabetes. Biologics are created from living organisms and are far more complex to manufacture than typical brand and generic drug products. In fact, it’s impossible to create an exact replica of a biologic, and the process can be costly for manufacturers trying to replicate approved biologics. That’s why the Biologics Price Competition and Innovation Act of 2009 created an abbreviated approval pathway for biological products that are demonstrated to be biosimilar to (or interchangeable with) an FDA-approved biological product.

Through the abbreviated pathway, drug manufacturers have access to lower-cost biosimilar and interchangeable protein products. Switching insulin to the biologic pathway will facilitate the development and approval of more biosimilar insulin products, creating increased competition in the market. The FDA also believes that the change could help stimulate manufacturing innovation and lead to greater manufacturing efficiencies in the future. It should not affect how insulin medications appear, how insulin is prescribed, or how pharmacies dispense insulin prescriptions.

What This Means for Payers and Consumers

Soon after the insulin transition completed, longtime generic drugmaker Lannett announced plans to meet with the FDA in early June regarding its insulin glargine biosimilar. Additional manufacturers entering the insulin market is good news for pharmacy benefits payers and plan members. With more approved products on the market, the increased competition could help lower insulin prices. According to an FDA analysis, U.S. biosimilars typically launched with 15% to 35% lower list prices than the reference product list prices. Additionally, with just one biosimilar on the market, the FDA reports that reference product list prices can drop by 31% to 39%. Consumers soon could have greater access to the lifesaving treatments they need – at a lower out-of-pocket cost.


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