Mon, 15 March 21

TAHP Opposes Insulin Copay Cap Mandates: A Hidden Tax on Employers

March 15, 2021

By: Jamie Dudensing

Insulin has been around for decades, but no generic alternatives exist. That is because the pharmaceutical companies that control the market make small tweaks to extend the patents—gaming the system, artificially inflating prices, and keeping generics off the market. Even though the original patent for insulin was bought for only $1 a hundred years ago and the average cost to produce insulin is only about $6 a vial, the average price of insulin has grown by more than $300 a vial in the last 20 years.

Some states have turned to insulin copay caps mandates as a quick political win, but it turns out these caps don’t solve the root problem and create huge costs for employers. The price of insulin continues to rise with no major improvements to the drug. Eli Lilly, Novo Nordisk, and Sanofi Aventis — control 90% of the insulin market and have increased prices in lockstep for several years. Copay cap mandates will not stop these unjustified price hikes or lower the cost of Insulin. Instead, TAHP supports legislation like House Bill 18, the “Texas Cares Act,” which targets the real problem—high out-of-pocket costs for the uninsured. Unlike insulin copay cap mandates, the Texas Cares Act lowers the price of insulin without shifting additional costs to Texas employers.

Get the Facts

Insulin copay cap mandates give Big Pharma too much power to set any price they wish for insulin, ultimately driving up the cost of care and increasing the cost of premiums for Texas employers and families, placing a hidden tax on Texas employers.

  1. Copay cap mandates are a blank check for Pharma to charge whatever they want for insulin.
    Copay cap mandates do not help lower the price of insulin, nor do they limit what pharmaceutical companies can charge for insulin. Instead, copay cap mandates give Big Pharma the ability to continue raising insulin prices with no accountability or transparency, driving up premium costs for Texas employers and families.
  2. Copay cap mandates don’t solve the root problem: high prices. 
    Copay cap mandates don’t lower the price or cost of drugs, they don’t lower out-of-pocket costs for uninsured Texas, and individuals with health insurance already have low out-of-pocket costs, with total out-of-pocket monthly spending lower than $50 a month for insulin. A better solution is to help lower the cost of insulin for these Texans through discount programs or coverage expansion. Unlike Insulin copay cap mandates, House Bill 18, the Texas Cares Act lowers the price of insulin for the uninsured without shifting additional unnecessary health care costs on Texas employers.
  3. Insulin copay caps are an unfunded government mandate that increases health insurance costs for Texas employers and families, creating a hidden tax on Texas employers.
    States have estimated copay cap mandates significantly increase the cost of health insurance premiums for employers and families by $20 million to $200 million a year. This new government mandate would similarly increase premiums for Texas employers without solving a single problem. The price pharmaceutical companies set for insulin is too high and rising. We need policies that stop the rising price of insulin, not ones that make the problem worse.

These types of unfunded government mandates drive up the cost of coverage for Texas employers and families. Unfortunately, these types of bills are becoming business-as-usual for the Texas Legislature. Texas is already a leader in the number of costly health insurance mandates, ranking third in the nation for the most mandated benefits. Texas employers shoulder the biggest burden when it comes to government mandates like Insulin copay caps, because most Texans receive health coverage through their employer.

Even before the pandemic, small business owners in Texas ranked the cost of health insurance as the single biggest problem and priority. Employees ultimately pay the high price of mandates through high premiums, co-pays, reduced wages, benefit reductions or job loss. Because of the added costs of state health insurance mandates, small businesses are discouraged from offering health coverage to their employees increasing the number of uninsured Texans. While 99% of large employers offer health benefits, only 56% of small employers offer health benefits. Firms not offering health benefits continue to cite cost as the most important reason. Research shows that one in five small businesses would offer health benefits if there were fewer mandates.

TAHP is concerned about how many new mandates are being considered this session and their potential effect on Texans’ access to affordable, high-quality health care. Legislators should carefully consider the unintended consequences of government mandates like Insulin copay caps and the additional financial burdens they create on Texas employers and the men and women who work for them.

For more information, check out TAHP’s fact sheet on SB 827.

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