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

Abstract

Importance: Insulin 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.

Objective: To decompose the overall gross-to-net bubble of leading insulin products into discount types.

Design, setting, and participants: This 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 measures: The 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.

Results: Total 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 relevance: Results 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.

Figure 1.. Decomposition of the Gross-to-Net Bubble Into Discount Types for 4 Insulin Products Combined

Gross sales represent annual sales at list price before discounts are applied; net sales, annual revenue after discounts are applied; and gross-to-net bubble, sum of all discount types. Commercial discounts represent voluntary discounts that were negotiated between manufacturers and pharmacy benefit managers in the commercial and Medicare Part D markets. Numerical estimates are provided in eTable in Supplement 1.

Figure 2.. Decomposition of the Gross-to-Net Bubble Into Discount Types by Insulin Product

Gross sales represent annual sales at list price before discounts are applied; net sales, annual revenue after discounts are applied; and gross-to-net bubble, sum of all discount types. Commercial discounts represent voluntary discounts that were negotiated between manufacturers and pharmacy benefit managers in the commercial and Medicare Part D markets. Numerical estimates are provided in eTable in Supplement 1.

Figure 3.. Proportion of the Gross-to-Net Bubble Accounted for by Each Discount Type for 4 Insulin Products Combined

Commercial discounts represent voluntary discounts that were negotiated between manufacturers and pharmacy benefit managers in the commercial and Medicare Part D markets.