Assessment of Commercial and Mandatory Discounts in the Gross-to-Net Bubble for the Top Insulin Products From 2012 to 2019

Abstract

ImportanceInsulin list prices have grown substantially since 2010, but net prices have declined since 2015 because of manufacturer discounts, leading to an increasingly large difference between list and net prices of drugs often called the gross-to-net bubble. It remains unclear to what extent the gross-to-net bubble represents voluntary manufacturer discounts negotiated in commercial and Medicare Part D markets (hereafter called commercial discounts) vs mandatory discounts under the Medicare Part D coverage gap, Medicaid, and the 340B program.ObjectiveTo decompose the overall gross-to-net bubble of leading insulin products into discount types.Design, Setting, and ParticipantsThis economic evaluation obtained data from Medicare and Medicaid claims and spending dashboards, Medicare Part D Prescriber Public Use File, and SSR Health for the top 4 commonly used insulin products: Lantus, Levemir, Humalog, and Novolog. The gross-to-net bubble, which represents total discounts, was estimated for each insulin product and year (from 2012 to 2019). Analyses were conducted in June to December 2022.Main Outcomes and MeasuresThe gross-to-net bubble was decomposed into 4 discount types: (1) Medicare Part D coverage gap discounts, (2) Medicaid discounts, (3) 340B discounts, and (4) commercial discounts. Coverage gap discounts were estimated using Medicare Part D claims data. Medicaid and 340B discounts were estimated using a novel algorithm that accounted for best prices set by commercial discounts.ResultsTotal discounts for the 4 insulin products increased from $4.9 billion to $22.0 billion. Commercial discounts represented a majority of all discounts, increasing from 71.7% of the gross-to-net bubble in 2012 ($3.5 billion) to 74.3% ($16.4 billion) in 2019. Among mandatory discounts, coverage gap discounts remained relatively consistent as a proportion of discounts (5.4% in 2012 vs 5.3% in 2019). Medicaid rebates decreased as a proportion of total discounts, from 19.7% in 2012 to 10.6% in 2019. The 340B discounts increased as a proportion of total discounts from 3.3% in 2012 to 9.8% in 2019. Results for the contribution of discount types to the gross-to-net bubble were consistent across insulin products.Conclusions and RelevanceResults of a decomposition of the gross-to-net bubble for leading insulin products suggest that commercial discounts play a growing role in lowering net sales compared with mandatory discounts.

Net prices of new antiobesity medications

“…Discounts represent a mix of rebates to payers and patient assistance programs, which our methodology is not capable of isolating. For antiobesity GLP1s, discounts to payers likely represent a lower share of commercial discounts than for other therapeutic classes [8]. This is because, to‐date, patients have largely relied on cash or patient assistance programs to access antiobesity GLP1s as insurance coverage has been limited; industry reports estimate that as many as two‐thirds of claims for antiobesity GLP1s have been rejected by payers [15].…”

“…Briefly, we estimated manufacturer discounts for each drug as the difference between the gross sales estimated at list price and manufacturer‐reported revenue in 2022 [12, 13]. From this difference, we subtracted discounts to government programs, including 340B, Medicaid, and the Medicare Part D coverage gap as described in the online Supporting Information and previous literature [7–9]. We attributed the remaining amount to manufacturer discounts provided in the commercial market as rebates to payers or patient assistance programs.…”

“…The failure to incorporate accurate estimates of manufacturer discounts in studies quantifying cost‐effectiveness and budget impact of GLP1s is an important limitation [5, 6]. Manufacturer discounts have grown exponentially over time, fueled by increasingly larger rebates negotiated between manufacturers and pharmacy benefit managers [7, 8]. Pharmacy benefit managers administer the pharmacy insurance benefits on behalf of health plans.…”

“…For drugs in competitive therapeutic classes, of which GLP1s are an example, pharmacy benefit managers negotiate rebates in exchange for formulary placement or coverage with minimal or no restrictions [9, 10]. Rebates negotiated by pharmacy benefit managers are the leading reason behind the increasing disconnect between list prices of medications and net prices [7, 8].…”

“…The objective of the present study was to estimate average net discounted prices for GLP1s. To this end, we used a peer‐reviewed method that backs out discounts to 340B, Medicaid, and the Medicare Part D coverage programs from the difference in gross and net spending for each drug product, thus isolating commercial discounts [7–9]. Our methodology estimates average net discounts of prices in the commercial market as opposed to the approach taken by Ippolito and Levy, which reports manufacturer net revenue [11].…”