UnitedHealthcare to eliminate out-of-pocket costs on insulin and other critical drugs

UnitedHealthcare will eliminate out-of-pocket costs for insulin and certain other critical medicines for nearly 8 million health plan enrollees.

Patient advocates say the move, announced Friday, is a significant step forward in addressing persistent affordability problems with insulin, a crucial medicine for people living with diabetes.

They hope the move by Minnetonka-based UnitedHealthcare, the nation's largest health insurer, could prompt the rest of the insurance market to follow suit.

UnitedHealthcare's new standard benefit will become part of fully-insured coverage as early as Jan. 1.

Insulin and the other drugs are already covered by the company's health plans, but cost-sharing rules can still leave patients with significant out-of-pocket costs.

The pledge for zero out-of-pocket costs also applies to four emergency use medications: epinephrine for severe allergic reactions; albuterol for acute asthma attacks; glucagon for hypoglycemia; and naloxone for opioid overdoses.

The goal with the new benefit is to reduce financial barriers to the medications, particularly as inflation puts more pressure on household budgets, said chief executive Andrew Witty on Friday during a conference call with analysts and investors.

"We know that we need those folks to make sure they fill their prescriptions properly and if there's anything caused by the inflationary environment that might hold that back, there's going to be a really bad downside to that — and we don't want that to happen," Witty said.

High insulin costs have emerged in recent years as a prime target for reform by both lawmakers and health care providers, including an effort backed in part by Mayo Clinic to manufacture lower-cost versions.

In 2020, Minnesota legislators created a safety net program that provided nearly $6.9 million worth of insulin to patients needing emergency and continuing access last year.

The underlying problem, critics say, is that even though insulin has been around as a medical product for decades, it still commands high list prices that can saddle patients with significant costs while enriching corporate actors along the pharmaceutical supply chain.

Several health insurers in recent years, including Minnetonka-based Medica, have voluntarily capped out-of-pocket costs at relatively low levels, like $25 or $30 per month. A few insurers — including Eagan-based Blue Cross and Blue Shield of Minnesota — have gone further, eliminating out-of-pocket costs for insulin, said Aaron Turner-Phifer, director for health policy at JDRF, a nonprofit that funds research into diabetes treatments while advocating for patients.

UnitedHealthcare's move should add significant momentum to the trend, Turner-Phifer said, and could be particularly influential with large employers that self-insure.

"I think that's an important signal that we will now be taking when we're talking to employer groups and saying: 'United is making this investment. If it makes sense for their fully-insured market [customers], it certainly makes sense for your insured group of employees,'" he said. "That's where United, being United, can have a signal effect."

Not every manufacturer's product in these medication categories will be available without cost-sharing. Fees will be waived only for "preferred" medicines, meaning those on the first or second tier of formularies.

Currently, there are 11 different preferred insulin products with UnitedHealthcare coverage. The company says about 95% of enrollees in fully-insured plans who are prescribed insulin currently choose one of the preferred options.

"While this is an important step for vulnerable people's health, the larger and longer-term cost containment of drugs depends upon manufacturers restraining and lowering the list prices of their products — which is the fundamental driver of costs," said Witty, the UnitedHealthcare chief executive.

The benefit will be part of "fully-insured" health plans, where employer groups and individuals pay UnitedHealthcare to take the risk of cost overruns. It will be an option for self-insured plans, where employers take the financial risk themselves.

Large multistate employers often run self-insured plans. Until those companies, as well as other health insurers, eliminate cost-sharing for insulin, some affordability problems will endure, Turner-Phifer said.

The Mayo-based manufacturing initiative, called Civica Rx, remains important as one way to address the underlying cost of insulin, he said. Pending legislation in Congress would also help by addressing both list prices and patient costs in health plans.

"It's a step along the path to getting to affordable insulin — it's certainly not the end," Turner-Phifer said. "We're going to require multiple shots on goal to get this solved."