Out of Pocket Cost for Your Insulin Just Change? It’s Your Insurance Formulary


Editor’s Note: People who take insulin require consistently affordable and predictable sources of insulin at all times. If you or a loved one are struggling to afford or access insulin, you can build custom plans based on your personal circumstances through our tool, GetInsulin.org.

Every July, many pharmacy benefit managers (PBMs)—the negotiator between drug manufacturers and health insurance companies—come out with prescription drug coverage updates. This is known as changing the prescription formulary and can impact the out-of-pocket cost for the medication you are prescribed. 

This can apply to any medication at all, not just insulin. But as an example, you may have been getting three vials of Humalog rapid-acting insulin for a $60 copay since your health insurance plan began in January, but when you showed up to the pharmacy in July, all of a sudden your prescription costs $640. This is because Humalog, which would have been covered by your insurance (i.e., on your insurance plan’s prescription drug formulary) before, is no longer covered. 

Instead your drug formulary may now cover a different brand, like Novolog rapid-acting insulin, that works in the same way. To go back to paying a $60 copay, you would need to switch the type of insulin you’re using, known as non-medical switching, or use another method of lowering the out of pocket cost of your insulin (detailed below). 

Why does this happen?

Insulin pricing in the US is incredibly complicated. Instead of insulin being sold directly from a manufacturer to the patient, there are multiple companies involved in the distribution and negotiation of who has access to which kinds of insulin. The negotiations are not based on what kinds of insulin are better, but on business deals, which increases the overall out of pocket costs for many people who depend on analog (designed to mimic the human hormone) insulin to survive. 

Because there are so many different companies involved in the distribution of insulin, it can sometimes be difficult to clearly show which company is responsible for which price change. But in July of every year, PBMs—responsible for negotiating the pharmacy plans for insurance companies—renegotiate many of their contracts with insulin manufacturers and health insurance companies. 

For their negotiating services, PBMs take a percentage share of the profits from prescriptions. This share is known as rebates. To increase the incentive for their products to be listed by more insurance companies, insulin manufacturers will increase the list price of their product in order to give PBMs a larger rebate for making the deal. 

In theory, this rebate is supposed to go back to the insurance company to get evenly distributed among people paying for the insurance plans, lowering their monthly insurance premiums. But this often does not happen, with PBMs instead pocketing portions of the money. This list price increase is on top of typical manufacturer list price increases. 

The end result is incredibly high list prices, paid fully out of pocket by people who do not have health insurance, have high deductible health plans where they must pay full price out of pocket until they hit their deductible, or by people who require a type of insulin that is not covered by their health insurance prescription drug formulary. 

What do do next

The fastest option: go to GetInsulin.org to find tools to lower the new cost of your insulin

If the price you pay for your insulin just changed to an unmanageable amount (or always has been unmanageable) or if you are paying more than $100 out of pocket and would like to explore options to lower your costs, you can find out which copay cards, patient assistance programs, or other coverage you may qualify for at GetInsulin.org

  • Have insurance? Most people with private/commercial insurance (i.e. coverage through your employer, purchased from an insurance company directly or through Healthcare.gov) qualify for copay cards, which can lower your out-of-pocket cost for insulin to $15-$99
  • Whether you have insurance or not, you most likely qualify for several manufacturers’ cash pay programs, which is usually $99 per month for your insulin.
  • Don’t have insurance and don’t qualify for Medicaid? If you make less than $51,520 per year as an individual or $106,000 per year as a family of four (based on 2021 federal poverty levels), you likely qualify for Patient Assistance Programs (PAPs), which provide free insulin for up to 12 months (then you can reapply). 

The typical option: switch to a similar type of insulin that is covered under your formulary 

PBMs sometimes place only one brand of each type of insulin—i.e. one brand of a rapid-acting insulin, one brand of a long-acting insulin, etc.—on the covered formulary each contract year. This changes year to year based on negotiations and has nothing to do with how well an insulin works; it only has to do with financial deals being made by manufacturers, PBMs and insurance companies

For many people, if you take a rapid-acting insulin like Humalog, you can also take the rapid-acting insulin Novolog with no issue. The primary difference between the two drugs is that they are made by different companies. However, some people do notice a difference in how the insulins work for them, and no one should have to switch for a non-medical reason. Check with your insurance to see what brand of insulin is covered under your formulary and talk to your doctor about what may work best for you. 

The longest option: file an appeal or exception with your health insurance 

Filing an appeal (challenging their decision not to cover the medication) or exception (request to get coverage anyway because of medical need) with your health insurance takes quite a bit of paperwork, time and patience. But if you require the type of insulin that your insurance plan no longer covers and copay cards or patient assistance programs don’t work for you, your doctor may be able to help you with the documentation needed for this process. 

Once you get denied coverage for your medication, start the appeal or exception process quickly. Sometimes there are limits on how much time you have to file. You can find more information on this process in our health insurance guide

Advocating for better 

Non-medical switching prompted by business deals instead of the best care options for people impacted by diabetes is not okay. Everyone impacted by diabetes—type 1, type 2 and beyond—has a right to the best care possible for their unique situation. This means access to the technology, medications, support and clinical care teams that help each individual manage their chronic condition. High quality, modern insulin must be available to people with diabetes regardless of employment or insurance status, across all demographics, without barriers and at an affordable and predictable price point.

Beyond Type 1’s advocacy work is aimed to increase access and remove barriers, giving our community the tools needed to succeed. Our work is grounded in equity: making sure people with diabetes have access to care by tackling issues like systemic racism, financial privilege and discrimination in all its forms.

To learn more about the steps Beyond Type 1 is taking to advocate for the best care possible for every person impacted by diabetes, visit our Advocacy portal.

WRITTEN BY Lala Jackson, POSTED 06/29/21, UPDATED 12/04/22

Lala is a communications strategist who has lived with type 1 diabetes since 1997. She worked across med-tech, business incubation, library tech and wellness before landing in the type 1 diabetes (T1D) non-profit space in 2016. A bit of a nomad, she grew up primarily bouncing between Hawaii and Washington state and graduated from the University of Miami. You can usually find her reading, preferably on a beach.