• The Senate's Inflation Reduction Act comes with a big change to insulin costs for Medicare beneficiaries.
• The bill, which also needs to be passed by the House, seeks to limit insulin costs to $35 per month for those on Medicare.
• But efforts to extend that change to patients covered by private insurers is no longer in the legislation.

The Inflation Reduction Act just passed by the Senate will cap insulin at $35 per month for Medicare beneficiaries.

But that dashed hopes to curb insulin prices for a broader set of the diabetes patient population, about 7.9 million of whom rely on insulin, according to new research from Yale University.

The cost of insulin can break diabetes patients financially.

Yale's research found 14% of people in the U.S. who use insulin experience "catastrophic" levels of spending on the treatment. When normal housing and food expenditures are subtracted from their incomes, at least 40% of the remaining money is dedicated to paying for insulin.

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Of Medicare beneficiaries who use insulin, 1 in 5 reach catastrophic spending, according to Baylee Bakkila, a lead researcher on the Yale School of Medicine's team focused on this issue. Moreover, those Medicare patients comprise more than half of individuals who fall in the catastrophic spending category identified in the study.

One in 3 Medicare beneficiaries have diabetes, according to the Centers for Medicare and Medicaid Services, and more than 3.3 million beneficiaries use insulin.

The legislation will affect a big portion of that patient population, Bakkila said.

The Senate bill has been lauded by senior advocacy groups, including AARP.

"This is a real tangible immediate impact for people who have been paying a lot of money for insulin, and it is a lifesaving drug," said Leigh Purvis, director of health-care costs and access at AARP.

"Adding this co-pay cap is really important for people who need those drugs to stay alive," she added.

Why more patients using insulin weren't included

Yet the legislation excludes certain patient populations who may also bear outsized insulin costs, including people with private insurance. Though they represent a smaller share of those who experience catastrophic insulin spending compared with Medicare beneficiaries, they tend to spend much more on insulin compared to other insured groups, according to Bakkila.

Those who pay out-of-pocket for insulin — either because they are uninsured or are covered by high-deductible health plans — pay the most and tend to have high levels of catastrophic spending.

The Senate bill sought to also cap the price of insulin at $35 per month for those covered by private insurance. However, that part of the proposal fell out in last-minute negotiations.

Democrats are pursuing the bill through a simple majority known as reconciliation. In the process, the Senate Parliamentarian ruled the insulin proposal for non-Medicare recipients violated the Byrd rule, meaning it is a policy issue with no impact on the federal budget and therefore ineligible for inclusion.

Democratic leaders sought to waive that point of order but needed 60 votes to succeed. While seven Republicans voted in favor of the measure, it fell short of the necessary tally with 57 votes.

"It provided an opportunity for some who are in tight campaign races out there to be able to point to the vote and say, 'I voted to provide an insulin cap for everybody, not just Medicare recipients,'" said Bill Hoagland, senior vice president at the Bipartisan Policy Center.

How much money Medicare beneficiaries stand to save

The Senate legislation includes notable changes that will also help Medicare beneficiaries save money on prescription drugs in other ways.

Medicare would now be able to negotiate prices on prescription drugs. Out-of-pocket spending for Medicare Part D would also be limited to $2,000 annually.

"Of all the provisions, I think that is by far the most important," said Andrew Mulcahy, senior health economist at The RAND Corporation, of the $2,000 annual cap for Medicare beneficiaries.

"Basically anyone on any expensive drug is going to hit that $2,000 limit at some point during the year," he said.

Experts say those changes have been years in the making. Medicare Part D, which was established by legislation that was passed in 2003, has never had a cap on out-of-pocket spending.

"The Senate bill was the culmination of many, many years of public support to do something about drug prices and concern about unaffordable drug costs," said Tricia Neuman, executive director for the program on Medicare policy at the Kaiser Family Foundation (KFF).

For diabetes patients, there is more work to be done to curb costs, experts say, particularly those under the Medicare eligibility age of 65.

Capping insulin costs at $35 per month for patients covered by private insurance could help save at least $42 per month for a quarter of those who currently pay more than $35, while half would save at least $19 per month, according to an analysis from KFF.

Bringing down the price of insulin may also help bring those costs in line with the rest of the world.

Insulin manufacturer prices were higher in the U.S. than those in each of 32 other high-income countries, according to 2020 research from RAND. Consequently, Americans are likely paying four times what the average patients in other high-income nations pay, the research found.