Biden administration unveils new plan to cap insulin out-of-pocket costs at $35 for all insured Americans, expanding earlier Medicare-only protections

The Biden administration on Wednesday unveiled a plan to cap out-of-pocket insulin costs at $35 per month for all insured Americans, expanding protections that previously applied only to Medicare beneficiaries. Officials said the move aims to reduce financial burdens for people with diabetes by extending the cost limit beyond Medicare to those with commercial insurance.

The new plan builds on the Inflation Reduction Act signed by President Joe Biden in 2022, which set a $35 monthly cap on out-of-pocket insulin costs for Medicare Part D beneficiaries and limited insulin cost-sharing under Medicare Part B to the same amount. That policy took effect on Jan. 1, 2023, for Part D and July 1, 2023, for Part B, according to the Centers for Medicare & Medicaid Services (CMS). The Medicare insulin cap applies to all insulin products covered under Medicare Part D plans, not just a preferred brand, and eliminates deductibles for insulin under both Part D and Part B when the cap applies, according to the Kaiser Family Foundation (KFF).

KFF estimates that about 3.3 million people enrolled in Medicare Part D plans have benefited from the insulin cost cap framework.

CMS described the Medicare insulin cap as part of the Biden-Harris administration’s “lower cost prescription drug law” and said the policy created the first-ever annual cap on out-of-pocket drug costs for Medicare beneficiaries. The cap covers insulin delivered through pumps under Part B, expanding protections to more insulin users than earlier voluntary programs.

The Biden administration’s announcement on Wednesday extends the $35 monthly insulin cap to people with commercial insurance, aiming to reduce the financial burden for the broader population with diabetes. According to KFF, this expansion follows earlier legislative efforts such as the Affordable Insulin Now Act (S.3700), which proposed capping insulin cost-sharing at $35 or 25% of the negotiated price for private health insurance starting in 2023. That bill also included provisions to cap insulin costs under Medicare during a transition period before applying a permanent $35-or-25%-of-negotiated-price standard beginning in 2024.

The White House noted that pharmaceutical company Eli Lilly announced a $35 insulin price following President Biden’s public calls for drugmakers to lower insulin prices and cap out-of-pocket expenses for all Americans. The administration framed the insulin cap as a signature achievement under the Inflation Reduction Act, designed to improve affordability and access to essential diabetes treatment.

Before the Inflation Reduction Act, CMS tested a voluntary Part D Senior Savings Model that allowed participating plans to cap monthly insulin copays at $35. The Affordable Insulin Now Act referenced this voluntary program, which was scheduled to expire on Dec. 31, 2025. The transition from voluntary pilot programs to a mandatory statutory cap under Biden’s law marked a significant change in federal insulin policy.

Reports indicate that by April 1, 2024, more than 1.7 million Medicare beneficiaries had reached the $2,000 annual out-of-pocket cap on prescription drugs, which includes insulin. KFF Health News found that people with diabetes covered by Medicare or private insurance paid an average of $452 annually in out-of-pocket insulin costs, contradicting earlier claims that Medicare beneficiaries paid around $400 per month prior to the cap. KFF noted that while the insulin cap is a real policy change, the historical cost claims were overstated.

Some sources credit the Trump administration with proposing an earlier Medicare insulin cap pilot, but the Biden administration’s Inflation Reduction Act made the policy permanent and expanded its scope. STAT reported that the original $35 Medicare insulin concept was first proposed in a 2019 pilot context before being codified into law. The most authoritative sources on current Medicare insulin policy remain the Inflation Reduction Act, CMS, and KFF’s Medicare policy analysis.

While the $35 insulin cap is now a mandatory limit under Medicare, the broader extension to all insured Americans through commercial insurance remains a newly announced plan by the Biden administration. Legislative efforts to codify such a cap for private insurance have been introduced but not enacted. The administration’s announcement signals a policy direction aimed at expanding insulin affordability protections beyond Medicare beneficiaries to the wider population with diabetes.