Amid concern over rising insulin costs, the Minnetonka-based health plan Medica announced a new program Monday that will limit the monthly out-of-pocket bill for an insulin prescription to $25 for thousands of Minnesotans next year.

Starting Jan. 1, people who buy Medica insurance coverage through the MNsure exchange, and those who have fully insured Medica coverage through an employer, will see their out-of-pocket cost for a 30-day prescription for insulin on the plan formulary capped at $25. Medica said it will be absorbing the undisclosed cost of the spending caps for a many as 6,500 members. Premiums for 2020 will not rise as a result of the plan.

"For some individuals, this could be savings of several hundred dollars a month from what they would have been paying," Medica CEO John Naylor said Monday. "We are just stepping up to the plate and making an investment in our members."

The spending caps do not apply to Medicare and Medicaid offerings, though some Medicaid members' prices are already capped lower than $25.

Also, companies that contract with Medica to administer self-funded insurance plans will have the option of adding the spending-cap benefit to their plans for 2020, but it won't apply automatically. Although Medica operates in nine states, the $25 spending cap is only available in employer-sponsored plans if the employer is headquartered in Minnesota, though it applies to all of their employees regardless of where they reside.

The move comes amid increasing alarm about the rising costs of insulin, a lifesaving drug patented nearly a century ago.

Insulin is a hormone that enables the body to use the energy stored in blood sugar. It's also manufactured for injection by people whose bodies don't make enough insulin naturally (type 1 diabetes) or whose bodies don't use insulin correctly (type 2). More than 440,000 Minnesotans have one of those conditions, and 19,000 new cases are added each year.

The prices of four popular types of insulin made by Eli Lilly, Novo Nordisk and Sanofi increased more than 300% between 2008 and 2018, according to data published by Kaiser Health News, though Naylor said the price hikes don't appear to be tied to product improvements. Minnesotan Alec Smith became the subject of national news stories in 2018 after his family said the 26-year-old died when he couldn't afford his $1,300 insulin refill cost after aging off his family's insurance plan.

State lawmakers last year failed to pass a law dubbed the Alec Smith Emergency Insulin Act, which would have made emergency insulin available to people who could not afford it through a new fee on the three largest insulin companies. The bill reportedly failed over disagreements about who should bear its estimated $10 million cost.

Separately, Minnesota is accusing Lilly, Novo Nordisk and Sanofi of participating in a racketeering scheme to fix the price of insulin at exorbitantly high levels through a secretive system in which prices are negotiated with middlemen called pharmacy benefit managers.

In April, Minnesota Attorney General Keith Ellison filed an amended version of the state's racketeering lawsuit against the three drug companies, which is pending in federal court in New Jersey. The companies have denied wrongdoing, and are contesting the allegations.

Medica isn't the first insurer to arrive at $25 as the preferred price for a 30-month supply of insulin.

Last April, Cigna and its pharmacy benefit manager Express Scripts announced a plan to offer a $25 price cap on a 30-day supply of covered insulin through a program it called the Patient Assurance Program. The spending cap, which applies to certain non-government-funded pharmacy plans managed by Express Scripts, will cut out-of-pocket monthly costs from an average of about $41.50 today. People with high-deductible plans are expected to benefit most.

Joe Carlson • 612-673-4779