By Caroline Humer

NEW YORK (Reuters) – The Trump administration on Wednesday turned back to its pledge to fight high U.S. drug prices with a plan to limit the out-of-pocket cost for insulin, a life-saving medicine, to $35 per month for many people with diabetes who are enrolled in Medicare.

The Center for Medicare and Medicaid Services, part of the U.S. Department of Health and Human Services, is lining up drug makers and the private insurers who manage Medicare drug benefits to volunteer to test out the new pricing in 2021. Medicare drug plans cover about 46 million people aged 65 and older and with disabilities.

Insulin is made largely by three companies: Eli Lilly and Co, Novo Nordisk A/S and Sanofi SA. Both they and health insurers have begun offering discounted insulin. Eli Lilly and Sanofi said in statements that they planned to take part in the program. Novo Nordisk said in a statement that it was looking at the details of the program.

“While Medicare plans can offer a low copay on insulin now, the CMS program will remove a financial disincentive for them to do so,” Evercore ISI analyst Michael Newshel said in a research note.

The program would create a flat monthly copayment rate of $35 for most types of insulin. Currently, beneficiaries typically shoulder all or a percentage of the cost of their medicines until they pass a maximum spending amount and become fully covered.

President Donald Trump promised early in his presidency to cut prices of drugs but has been unable to implement his proposals, such as lowering U.S. drug prices to the levels foreign countries pay.

Members of Congress who had been working on bipartisan drug pricing legislation last fall ahead of presidential impeachment hearings have also taken up the issue again and on Tuesday, Trump sent members a list of drug pricing requests.

CMS Administrator Seema Verma said in an interview that the Trump administration hopes to expand the initiative to other drugs if it is successful for insulin. It started with insulin because of price increases and complaints from beneficiaries about the cost, she said.

About 1.2 million Medicare beneficiaries could benefit if they enroll in plans offering these copays, she said.

On average, people enrolled in the federal healthcare program pay about $675 per year for insulin, while this program could lower that to $229 per year, CMS said. The model would apply to a portion of Medicare plans that fall into the category of “enhanced” plans, which represents the majority of plans.

The administration said it would provide a list of which insulin makers are participating within 10 days to the private insurers who decide to participate.

The government program would increase the amount of money that the drug industry puts into the Medicare program during a coverage gap period, often called the “doughnut hole.” As beneficiaries spend less money out-of-pocket, it will delay them reaching the catastrophic coverage point when the government picks up all drug costs, CMS said.

CMS said that could save the federal government $250 million over 5 years as drug companies pay more. Premiums for the Medicare Advantage and Medicare Part D prescription plans that offer the set price for insulin could rise about $1 per month, Verma said.

(Reporting by Caroline Humer; Editing by Chizu Nomiyama)