Price Hike for One Diabetes Drug Costs CalPERS Millions

Soaring prices for new diabetes medications and other lifesaving prescription drugs aren’t just straining consumers’ pocketbooks. They’re putting a dent in government budgets, too — including California’s public worker pension system, the nation’s largest.

The price for just one brand-name insulin drug called Lantus has risen by 50 percent over three years, according to a California Healthline review of data provided by the California Public Employees’ Retirement System (CalPERS).

CalPERS spent nearly $4.7 million more on the injectable vials of insulin in 2014 than it did in 2012, even though the overall number of prescriptions declined. The pension system paid about $564 per prescription in 2014. State retirees pay a small portion of those costs in copayments.

CalPERS may receive rebates from the drug’s maker through discounts negotiated with CalPERS’ pharmacy benefit manager, CVS Caremark. Those discounts are not reflected in the spending figures.

CVS recently told insurers that it would drop Lantus from its formulary in favor of a cheaper substitute — although another company is taking over CalPERS pharmacy benefits next year.

Lantus is made by Sanofi, a French pharmaceutical company, which was unable to make someone immediately available to comment.

Paying a few million dollars more for a single diabetes drug may not seem like a lot compared with the $8 billion the pension system spends on health care each year. But CalPERS says the price of other medications it covers has also increased, and they add up.

“It is concerning,” said Dr. Richard Sun, one of CalPERS’ health plan administrators, speaking generally about drug price increases and not specifically about Lantus.

CalPERS manages health benefits for 1.4 million members, care that’s paid for through a mix of taxpayer dollars and member premium contributions.

Dr. Kasia Lipska, an endocrinologist and assistant professor of medicine at Yale University, says she’s not surprised by CalPERS’ spending increase on Lantus. It’s an issue for a whole class of insulin drugs.

“There’s a problem with very few manufacturers that control the market,” Lipska said.

Lipska said some of her diabetes patients have had trouble paying for these new insulin drugs and the cost has affected their ability to control the chronic disease.

“They might start skimping on insulin, not taking it, or taking less,” said Lipska. “This is an essential drug for a very common chronic condition … that in particular affects people of lower socioeconomic status. It’s crazy that it’s so unaffordable to so many people.”

Lipska said the newer diabetes drugs, several times more expensive than their predecessors, offer some benefits, such as reducing nighttime hypoglycemia or allowing more flexibility in eating schedules. But Lipska said price of diabetes drugs like Lantus is not worth it for some patients.

Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s lobbying group, says insulin products available now act more like human insulin, which help patients adhere to a medication regimen. That can lead to overall cost savings in the health care system, the group said in a statement.

In addition, according to the statement, lower-cost, generic insulin may soon be available.