Program to Reduce Insulin Costs for Medicare Beneficiaries Has Cut Spending, Improved Diabetes Care
For Release
Monday
September 22, 2025
A three-year effort to reduce the cost of insulin for Medicare beneficiaries has achieved its primary goals, lowering out-of-pocket costs for the medication and increasing enrollees' regular use of insulin, according to a new RAND report (PDF).
The program also decreased costs for the federal government, with drug manufacturers increasing rebate and coverage gap payments.
But the program also had some unanticipated results, including increased drug insurance costs for Medicare beneficiaries who do not use insulin.
Researchers say that the report may aid policymakers as they consider further efforts to reduce prescription drug costs for people enrolled in Medicare.
“As policymakers look at cost-saving approaches for other drugs, these findings may provide important lessons for such efforts,” said Erin Taylor, the report's lead author and a senior economist at RAND, a nonprofit research organization. “We found that such efforts can have positive results that are appreciated by Medicare beneficiaries, especially those who take multiple expensive medications.”
The Medicare Prescription Drug Benefit Program, commonly known as Medicare Part D, offers outpatient prescription drug coverage to people enrolled in Medicare, the federal health insurance program for older Americans and those who are disabled.
In response to escalating drug costs and variation in cost-sharing as beneficiaries move through the different Part D benefit phases, the federal Center for Medicare and Medicaid Innovation implemented the Part D Senior Savings Model test in 2021, 2022, and 2023. The effort tested the effects of lower, predictable drug cost-sharing, focusing specifically on insulin—a crucial medication for diabetes treatment.
The model allowed both standalone Prescription Drug Plans, which operate alongside Original Medicare, and Medicare Advantage Prescription Drug plans to provide insulin at a fixed copayment of no more than $35 for a one-month supply during the deductible, initial coverage, and coverage gap phases of the Part D benefit.
RAND researchers evaluated the three years of the model on a wide range of outcomes, including enrollee access to insulins, health outcomes, and beneficiary costs, as well as financial outcomes for plans, manufacturers, and the federal government.
They analyzed claims data and interviewed a wide assortment of stakeholders, including insulin users, drug manufacturers, insurance agents that help beneficiaries choose plans, and counselors from state health insurance assistance programs.
Researchers found that many of the expected changes occurred, including increased insulin use, lower overall Part D insulin user out-of-pocket drug costs, increased enrollment by insulin users in participating drug plans, increased payments made by manufacturers to participating drug plans, and reduced costs to the federal government.
“We found that as the out-of-pocket costs for insulins declined, insulin users were more likely to take the medication as prescribed,” Taylor said. “Patients reported that having a consistent out-of-pocket cost for insulin allowed them to better manage their expenses.”
However, researchers also found some results that were mixed or even counter to what was expected.
In addition to finding increased drug plan costs for beneficiaries who do not use insulin, researchers found that the model was associated with increased overall medical spending in 2021 and 2022 by insulin users enrolled in standalone Part D plans that capped insulin copayments.
The analysis also found that the lower insulin copayments were associated with increased risk scores for both types of Medicare drug plans—a key measure that affects federal government payments to plans for coverage. However, researchers did not find that the increased risk scores resulted in increased government costs.
The report notes that some of the findings were muted in 2023, when the cost-lowering mandates for insulin became permanent and extended to all Part D plans under the Inflation Reduction Act.
“Future drug models might extend the application of lower cost-sharing to other drugs and drug types to determine whether similar impacts on costs and quality might occur,” said report coauthor Dmitry Khodyakov, a RAND senior social scientist. “Our results suggest this approach could have value for both patients and payers.”
The evaluation was performed as part of a contract with the Center for Medicare and Medicaid Innovation within the Centers for Medicare & Medicaid Services.
Other authors of the report are Christine Buttorff, Preethi Rao, Zachary Predmore, Lane F. Burgette, Stacie B. Dusetzina, Asa Wilks, Shiyuan Zhang, Sarah Dalton, Alice Kim, Catherine E. Cooke, and Monique Martineau.
RAND Health Care promotes healthier societies by improving health care systems in the United States and other countries.
