If Medicare negotiated insulin prices like the VA, it could have saved billions

As insulin becomes a poster child for the growing outcry over the cost of medicines, a new analysis suggests that Medicare could have saved $4.4 billion in 2017 for the diabetes treatment if the program negotiated the same prices as the Department of Veterans Affairs, which already bargains for discounts.

For more than two dozen different insulin products covered by Medicare Part D that year, spending was $7.8 billion, based on estimated rebates of 41% received from drug makers. However, if the federal health care program had negotiated as the VA does — and used the same formulary, or list, of covered medicines — spending would have dropped to nearly $3.4 billion.

For instance, savings on rapid-acting insulin would have amounted to almost $270 million, while Medicare Part D could have saved approximately $3 billion on long-acting insulin, according to the analysis published in JAMA Internal Medicine. The researchers estimated 41% rebates based on a Government Accountability Office study from last July. Even with a more conservative assumption about rebates, the savings would have been about $1.1 billion.

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