Washington, D.C. – MR. CANTRELL: Thank you, Operator. Good morning everyone, and thank you for joining today’s briefing by senior administration officials on the President Donald Trump’s latest action to reduce healthcare costs.
Today’s briefing will be conducted by Administrator for the Centers for Medicare and Medicaid Services Seema Verma and Assistant to the President and Senior Counselor Kellyanne Conway.
Both opening remarks and the question-and-answer portion to follow will be on the record. All information on this call is embargoed until the conclusion of the call.
And with that, I’m happy to introduce Counselor Kellyanne Conway.
MS. CONWAY: Thank you very much, Austin. And good morning to everyone on the call. Thank you for your interest in this important topic. Today is a very exciting next step in the President and the administration’s continued efforts to aid American seniors.
In the Rose Garden, at about 4:00pm, we’re announcing a new deal between insulin manufacturers and health plans to benefit older Americans who take insulin to treat diabetes across this country.
To give you a sense of the scope of what that means: Roughly one in three Medicare beneficiaries has diabetes, and millions use one or more of the common forms of insulin. For seniors with insulin-dependent diabetes, consistent, uninterrupted access to the medication is essential to avoid even more serious health complications. So having more predictable out-of-pocket costs of insulin will help seniors adhere to their doctor’s orders and take the insulin more regularly.
Seniors who sign up for these new plans will have no more than a 35-dollar co-pay for a month’s supply of all types of insulin. That results in approximately a 66 percent, or two-thirds, reduction in out-of-pocket costs.
This is the latest step in smart deregulation in the health system, where the Trump administration continues to ensure highest-quality care at affordable cost for our vulnerable population, including our seniors.
A quick reminder that, in 2018, under the President’s leadership and Administrator Verma’s actions, Medicare Part D also started covering newer insulin delivery devices, including both mechanical and electronic insulin pumps that are not covered under Part B. And the fact is that, last year, the President signed an executive order to improve older Americans’ healthcare and improve the fiscal sustainability of Medicare.
This order empowers older Americans with choice and access; streamlines approval processes for innovative technology; reduces regulatory burdens; and combats waste, fraud, and abuse in the system.
We continue to deliver creative solutions that result in historic agreements.
Today, in the Rose Garden, we will be welcoming the heads of the insulin manufacturers, including Eli Lilly, PhRMA, the Novo Nordisk. Also, the health insurers, like UnitedHealthcare, Humana, Express Scripts, and Sigma Services, Blue Cross Blue Shield Association, AHIP, ACHP, the head of the American Diabetes Association, the President of AMAC, and patient advocacy groups will be standing there, shoulder to shoulder, with President Trump and the administration to announce this very important and consequential initiative.
During the COVID-19 Coronavirus pandemic, the President has increasingly prioritized reducing healthcare costs and care, and improving care for our most vulnerable populations, including seniors. He signed historic legislation that provides funding and flexibility for emergency nutritional aid for senior citizens and other vulnerable Americans; expanded Medicare telehealth coverage, which has really exploded as very popular and very commonplace now practice for many seniors to access a normal visit, and also consultations with respect to their prescription drug — insulin and others — through the comfort and privacy and safety of their own homes during the pandemic.
We’ve gone from roughly 12,000 or so telehealth visits a week to well into the six figures. And I know that the President has stated, publicly and privately, he would like that to continue long after the virus is completely vanquished.
The President also directed CMS to prioritize enforcement of the infectious disease standards at nursing homes across America. That happened several years ago; that did not start during the pandemic. And if you look at the facts, many of these nursing homes had been cited for infectious disease violations along the way.
Nearly $1 billion in grants to assist seniors and people with disabilities, providing services such as home-delivered meals and in-home care services, has also occurred.
Today’s announcement with the insulin manufacturers and with healthcare professionals and patient advocates — and certainly those who administer the healthcare plans themselves — is yet another step toward President Donald Trump and his administration bringing insulin manufacturers and health plans together to offer reasonably priced insulin.
We recognize that about $50 is the price point at which many seniors stop taking their insulin or skip or lower the dosages. So we wanted to make sure that we were hitting that by having this maximum 35-dollar co-pay for a month’s supply of each type of insulin.
Thank you very much for your time and attention. And now I turn it over to Austin and Administrator Verma.
MR. CANTRELL: Yep, we’re going to go with Administrator Verma here.
ADMINISTRATOR VERMA: Thank you. And thank you for joining the call.
Today, we are announcing a significant development in the Trump administration’s effort to lower insulin costs for Medicare beneficiaries.
In 2017, the President challenged the administration to strengthen and modernize the Medicare program, to lower costs for our nation’s seniors by bringing free-market principles to Medicare. And so, at the President’s direction, we set a new course: We corrected government-caused distortions, we empowered patients with choice and control, and slashed burdensome regulations that thwart innovation and drive up costs.
Our approach has already borne considerable fruit for America’s seniors. Premiums in the privately administered Medicare Advantage program and Part D, Medicare’s prescription drug benefit, are at their lowest levels in 13 and 7 years, respectively. As a result, seniors have saved about $2.65 billion, and taxpayers have saved nearly $6 billion since 2017.
All over the country, seniors are paying less than they did the year before. In Florida, 95 percent of beneficiaries with a Part D plan had access to a lower premium plan, and in Michigan, it’s 96 percent.
Today, there are over 3 million Medicare beneficiaries that rely on insulin to control their diabetes. And today, we are announcing the results of President Trump’s Part D Senior Savings Model, designed to help these beneficiaries lower their costs. Eighty-eight health insurers offering about 1,750 plans have applied to lower insulin costs in 2021.
Just a couple of months ago, we announced this creative and new opportunity for manufacturers and health plans to develop a partnership and participate in this demonstration model to make the common forms of insulin — a notoriously expensive lifesaving drug — available to seniors at no more than $35 for a month’s supply. The model is predicted to save seniors an average of 66 percent on their insulin costs, or an average savings of $446 a year.
Others have long talked about lowering the cost of insulin, but President Trump it getting done and putting dollars back in the pockets of our nation’s seniors.
CMS intends to monitor this model closely, and if it fulfills this enormous potential, we will expand it to other high-cost drugs.
Before I go into detail on the model, let me provide some background on how the Part D program works. The Part D benefit has four phases. And beneficiary cost sharing, as well as the level of support on the plan, manufacture, and government varies by phase.
After a beneficiary’s drug costs total $4,020 for the year, the beneficiary moves into the coverage gap, also known as the “donut hole.” In the coverage gap, manufacturers are required to contribute 70 percent of the cost of their drug, leading the beneficiary to pay 25 percent and to cover 5 percent. As you can imagine, moving from a fixed co-pay in the initial phases to paying 25 percent is confusing and expensive.
It’s important to note that some beneficiaries with limited income and resources qualify for extra help with their premiums, deductibles, and co-insurance. If beneficiaries qualify for this low-income subsidy, or LIS, they usually pay around $4.00 for generics and $9.00 for brands per monthly prescription. Because of this existing benefit, we focused the model on addressing insulin costs for the over 1.3 million non-LIS beneficiaries who are using insulin and are currently paying 25 percent of the cost of their prescription in the coverage gap on top of their cost in the deductible.
As the cost of a vial of common insulin has gone up 200 percent since 2010, many of our diabetic Medicare beneficiaries who don’t qualify for LIS struggle to pay these unpredictable and skyrocketing co-pays. In fact, a January 2019 study at Yale, published in JAMA, found that 25 percent of insulin users, and 18 percent of insulin users who reported having Part D, reported cost-related insulin underuse, leading to poor blood sugar control. Heart attack, stroke, vision loss, kidney failure, nerve damage, and amputations are just a few of the devastating complications that can result.
At a time when seniors with underlying health conditions, like diabetes, are particularly vulnerable to the coronavirus, the situation is deeply concerning.
Currently, Part D plans can reduce out-of-pocket costs in the coverage gap.
However, if they do so, rules imposed by Obamacare reduce the manufacturers’ contribution, leading the plan to make up the loss. If they try to reduce the beneficiaries’ co-pays, the plans pay more and the manufacturers pay less. This creates a clear disincentive for plans to reduce seniors’ cost in the coverage gap. And because of this disincentive, we generally don’t see plans reduce out-of-pocket costs in the coverage gap.
The Part D Senior Saving Model waives the Obamacare provision and allows plans to lower out-of-pocket costs for insulin while maintaining the manufacturers’ 70 percent discount. And this is what results in a reduced beneficiary co-pay to $35.00 per month through all phases of the Medicare beneficiary.
It’s important to note that this is just the maximum. We fully anticipate that many plans will go further in lowering or even eliminating co-pays for insulin. And plans will fund these lower co-pays either through slightly increased premiums or other discounts they negotiate from the manufacturers. Medicare Advantage plans can also offset the costs through reduced medical expenditures, as patients are more adherent to their medication, reducing complications. The Enhanced plan premium is expected to be minimal, likely about one to two dollars per month.
And it’s important to note that the manufacturers are contributing significantly as well.
First, when participating plans reduce out-of-pocket costs, it means the beneficiary remains in the coverage gap longer and manufacturers will provide more discounts and delay progression to the catastrophic phase. This phase saves the federal government over $250 million over five years because of the decrease in catastrophic claims.
The model clearly requires manufacturers to increase their coverage gap discount payments. And, fortunately, the world’s three major manufacturers of insulin — Eli Lilly, Sanofi, and Novo Nordisk — all understood the importance of the model and joined, agreeing to increase their discounts.
The model is only open to enhance standalone prescription drug plans and Medicare Advantage plans that offer prescription drug coverage. While Enhanced plans premiums cost an average of $49.00 per month, approximately $17.00 higher than the $32.00 in a basic plan premium, nearly 25 million beneficiaries, or 54 percent, have already chosen to be in an Enhanced plan.
In other words, in exchange for a minimal premium increase, beneficiaries get a maximum fixed 35-dollar co-pay for a month’s supply of insulin. That’s 66 percent in average out-of-pocket costs for insulin.
For those whose health and even lives depend on insulin, these savings are nothing short of a godsend. These plans will begin starting in January 2021 in all 50 states, D.C., and Puerto Rico. And seniors can find a participating plan on our Medicare Plan Finder during the annual open enrollment period, which begins on October 15th.
I want to thank the plans, both the plans and the manufacturers who have chosen to participate in this model. This is a remarkable effort on their end, and I appreciate their willingness to work together to help patients.
Under the President’s leadership, our Part D Senior Savings Model will help ensure that out-of-pocket costs do not keep insulin out of the reach for vulnerable seniors who depend on it for their quality of life and their very survival. A medicine is not truly accessible if it’s also not affordable, and that’s why the Trump administration will continue to work to lower the cost of insulin and other prescription drugs for America’s seniors.
MR. CANTRELL: Thank you very much, both of you.
Operator, we’ll now take some questions.
Q Hi, this is Gina (inaudible) from AARP. Administrator Verma, two quick questions. First, thanks for doing this call. You said this applies to Enhanced Medicare standalone plans. So if you’re in a Part D plan that provides prescription drugs, will you have an additional part to pay on your premium in order to make up what the difference would be if you were in a Part D standalone plan?
And secondly, you talked about common insulin. Many seniors over 65 take drugs to control their diabetes that’s not necessarily insulin. I’m talking about like the Victoza pen and other similar kinds of drugs. Will this apply to those as well, or just strictly to insulin? Thank you.
ADMINISTRATOR VERMA: Thank you. So the model is particular to just insulin and all common forms of insulin. Depending on the progress, we will monitor and evaluate the model. And if it goes well, we’ll extend that to other drugs. In terms of its offering, it’s available for standalone Part D Enhanced plans, as well as Medicare Advantage plans that offer drug coverage as well.
Q Yes. Hi. This is Carrie Sheffield. I’m with JustTheNews.com. We are John Solomon’s new outlet from three months. I have a question for Kellyanne and for Administrator Verma.
Kellyanne, in terms of the timing of this, we’ve seen quite a few stories in the media from Democrats who are saying that support among seniors has been slipping for the President due to the coronavirus. Can you address the timing of this announcement on insulin and whether it might be related to this, and then just address those concerns on possible slippage among seniors, in particular women?
And then, for Administrator Verma, you had mentioned that there are some other drugs — if this is a successful model of private-public partnership — that this could extend to (inaudible) which type of drugs those might be, as well?
MS. CONWAY: Thank you for your question. So the timing really is keyed toward open enrollment and it also is just the latest step in what’s been a three-plus year effort to reduce prescription drug costs, including among vulnerable populations like seniors.
As I mentioned earlier, it was two years ago that the Trump administration began allowing Medicare Part D to start covering newer insulin delivery devices, recognizing that people take their insulin in many different ways. So, at that time, it included both mechanical and electronic insulin pumps that were previously not covered under Medicare Part B.
The other thing I would just mention is: On March 3rd — it didn’t get a ton of attention because other things happened since — but on March 3rd, I was in Tampa, Florida, with Attorney General Bill Barr, as we announced — as the Department of Justice announced a new elder fraud — Elder Justice Initiative to combat many of the financial crimes and physical abuses of our senior population. That was on March 3rd. We probably will pull that forward here shortly again.
And in addition, about three or three and a half weeks ago, Administrator Verma and Secretary Azar, obviously — I believe it was Administrator Gaynor, Governor Lee of Tennessee, and a gentleman from the National Guard, they were all there — and Secretary Wilkie, the VA — in the East Room for an open press event when they spoke directly to the nation’s seniors about the many different measures that we have taken to help America’s seniors.
I was really struck to hear, at that time, Administrator Verma comment on everything that had been done over that last several years with respect to nursing homes, sanitation, infectious disease control, treatment of patients, et cetera. And really, I was very struck by Secretary Wilkie saying that the VA-run nursing homes at that point had tested everyone within those nursing homes for COVID-19 Coronavirus. You can go back and pull those remarks. As I say, it was open press.
So we just continue to fight for seniors. This is a President who promised as a candidate that he would, quote, “not touch Medicare or Social Security.” He’s touched it in the right way. He has gone in there and made sure that Medicare Part D, prescription drug coverage, is one that makes it easier for seniors to remain adherent to doctors’ orders and the prescriptions that they receive and to not allow cost to be a barrier.
So as I said previously, I think that the experts estimated about $50 to be the price point at which a fair number of seniors stop taking insulin or stop taking enough of their insulin doses as prescribed. And so this 35-dollar co-pay as a maximum nearly goes way beneath that pressure point for that reason.
So we’re talking prescription drugs today, not politics, here at the White House. Thank you.
ADMINISTRATOR VERMA: Thank you. So in terms of how this may extend to other drugs — I mean, we’re starting with insulin, but depending on the progress of this, we will consider offering this flexibility to manufacturers and plans with other drugs, depending on the results. We think that this creates a foundation and a platform to fix things, some of the problems that we have in the Part D plans. It’s time for that program to be updated. A lot of the provisions just don’t work anymore and it’s standing in the way of free-market completion and negotiation that can lower prices for seniors.
Q Hi this is Rich Daly, Healthcare Financial Management. I just wanted to check if — Administrator Verma, if there’s any way you could confirm which temporary COVID rules are under consideration for being made permanent, specifically if telehealth — the telehealth rules have been — are among those to be continued, and if that’s the correct understanding of, I guess, the May 19th executive order.
ADMINISTRATOR VERMA: Sure. And that’s exactly what Kellyanne said, that the President has made clear that he wants to explore extending telehealth benefits more widely. Even before the coronavirus, we had already made efforts to extend telehealth benefits to seniors. We had increased the amount of services that qualify for telehealth, and even provided small, kind of, short visits over the phone or through Skype, even before the coronavirus.
So we’re looking at all of the waivers that we provided. We’re evaluating them to determine whether they should be extended past the coronavirus. So we’re going through that process now.
We are also in the process of rulemaking, and you’ll see that some of the provisions that we have extended on a temporary basis will be made permanent.
Q Hi, thank you. This is Sarah Owermohle from Politico. Chief Administrator Verma, you said in response to an earlier question that this is just one step in fixing Part D to increase negotiation for lowering prices. Could you go into what else you’d like to see on negotiation?
And then also, the FDA right now is trying to promote the biosimilar pathway for competitive insulin to come to market, for there to be more insulin made potentially outside of those three manufacturers that you have made this deal with. How would those insulin makers join this program? And if there is generic insulin in the future, do you see the need for a program like this?
ADMINISTRATOR VERMA: Okay. Sarah, the first question — let me just go to the second question on the FDA issue. This model is open to all manufacturers and plans. And so, if additional manufacturers are out there producing insulin, they can participate in the model. It’s completely open to them.
I’m sorry, and the first question again?
Q An earlier question — sorry, the first question was in response to an earlier question from someone. You said that you see this as part of a foundation to fix some of the problems in Part D plans that are standing in the way of free-market competition and negotiation to lower prices. What else would you like to see on a negotiation front to lower prices?
ADMINISTRATOR VERMA: Sure. So, a lot of the work that we’ve already done in 2017 — if you look back at all of the regulations that we’ve slashed over the last three years — that’s actually what’s allowed for plans to negotiate and increase their — increase competition. We’ve provided some more flexibility so that they can provide different types of plans. And that’s why you’re already seeing prices go down in the program. Just last week, we put out our Part D rule for next year, and it gave plans more flexibility in terms of how they develop their networks.
And so what we’re trying to do is give them more flexibility. That actually increases competition. And when there is increased competition, we see lower prices. For seven years, the prices have gone down. And with the new changes that we’ve made even for next year with the networks, we intend to see even more (inaudible) in prices for our seniors.
MR. CANTRELL: Great. Thank you, everyone. This will conclude our call. Again, both opening remarks and the question-and-answer portion were on the record. As always, please direct all further questions to the White House Press Office.
Thank you, everyone, for joining us this morning.