Insulin costs and PBM scrutiny intensify pressure on drug affordability
Insulin list prices rose more than 300% over two decades as PBMs face growing scrutiny over rebates, spread pricing, and transparency. Reform efforts and pharmacist involvement are central to drug affordability and access.
Insulin affordability remains under pressure in the US as list prices rose by more than 300% over the past 2 decades despite insulin being a century-old therapy, while PBMs face increasing scrutiny over pricing, reimbursement, and access. Rising prescription drug costs and complex pricing practices have placed PBMs under increasing scrutiny at both the federal and state levels, with current reform efforts aimed at improving transparency, enhancing oversight, and ensuring that PBM incentives prioritize patient access and value-based care rather than being driven solely by list prices or hidden rebates.
Over the past 2 decades, insulin prices have increased dramatically, driven by a mix of systemic inefficiencies, limited competition, and a convoluted reimbursement landscape. The delayed introduction of interchangeable biosimilar insulins has limited generic competition. Only recently have products such as insulin glargine-yfgn (Semglee) and insulin glargine-aglr (Rezvoglar) received an FDA interchangeability designation, and even these are met with challenges due to brand loyalty and lack of insurer adoption.
The steep rise in insulin list prices—despite net prices often declining due to growing rebates—illustrates the gross-to-net bubble. From 2012 to 2019, commercial discounts for top insulin products such as insulin glargine (Lantus), insulin lispro (Humalog), and insulin aspart (Novolog) rose sharply, increasing from $4.9 billion to $22 billion, with commercial discounts making up over 70% of these rebates. These discounts, while helpful to PBMs, often increased out-of-pocket costs for uninsured patients and affected formulary decisions.
PBMs were established to manage prescription drug benefits by negotiating prices with manufacturers, establishing formularies, and processing pharmacy claims for health plans. Increased consolidation among PBMs, insurers, and pharmacies, along with the rapid growth of specialty drugs, has added new complexities to benefit management. PBM reimbursement structures can create variability in net drug costs, making overall spending more difficult to predict and manage. A common example is spread pricing, in which a PBM charges a health plan more for a medication than it reimburses the dispensing pharmacy, retaining the difference.
Rebate-driven formulary design has also raised concerns about alignment with clinical and economic value. Manufacturer rebates tied to higher list prices may influence formulary placement even when lower-cost therapeutic alternatives exist. While rebates can lower net costs for payers, they do not consistently reduce patient out-of-pocket expenses at the point of sale.
Public frustration mounted, and in 2023, the 3 dominant insulin manufacturers—Eli Lilly, Novo Nordisk, and Sanofi—announced price cuts of up to 80%, in part to avoid expanded Medicaid rebate penalties under new 2024 rules. The complexity of the gross-to-net bubble often makes it unclear whether a discount has been applied to a prescription, often leading to duplicate discounting. This practice is especially common within the 340B Drug Pricing Program, with an estimated $11 billion in lost revenue due to duplicate discounting.
At the state level, legislation has addressed practices such as spread pricing, audit procedures, and PBM ownership of pharmacies to improve transparency and promote fair competition. Professional organizations and pharmacy advocacy groups have called for more transparent disclosure of PBM contracts, rebates, and administrative fees so providers and plan sponsors can understand actual medication costs, anticipate coverage limitations, and make informed decisions that support optimal patient care.
Pharmacists play a key role in improving access and affordability by connecting patients with manufacturer savings cards and patient assistance programs, communicating formulary changes, and advocating for fair pricing through professional organizations and community outreach. Health-system pharmacists also bring clinical expertise and an understanding of operational and financial workflows to PBM reform efforts so that efforts to manage drug costs do not compromise patient care.