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Sanofi's Challenge: Unrestricted Insurance Coverage For MannKind's Afrezza

MannKind Corporation (NASDAQ:MNKD), the creator of Afrezza inhaled insulin, and Sanofi (NYSE:SNY), MannKind's pharmaceutical marketing partner, have a major hurdle to overcome. In order for Afrezza to compete effectively with injection insulin, it may be essential that Sanofi price Afrezza close to the cost of insulin injection pens, but also important, Afrezza will need to be placed in health insurance coverage tiers where patients are free from certain restrictions which health insurance companies may require.

Private health insurance providers usually have four tier levels in which their patients find coverage and costs for the drugs that patients use. Readers can get more information about why certain drugs are classified in any one of the particular tiers, here. These tiers, also called a formulary, are an important aspect of the health care system and the patient will pay more or less of his or her own money depending upon in what tier their drug of choice will be found.

Also, certain tiers may require restrictions in coverage of a particular drug, especially new drugs, depending upon factors which may include what are the perceived benefits of other drugs, as options for the patients. It would be an important accomplishment if Afrezza becomes available to diabetes patients through private health insurance providers in tier 2 status, the tier where most preferred brand name drugs will be found.

In Medicare, the federal government has five tiers, creating two tiers for generic drugs, tier one for preferred generic and tier two for generics that cost a little more. In Medicare, tier 3 is where brand name drugs that do not have a generic equivalent are listed and this is where Sanofi will want to have Afrezza be available for Medicare patients. Today, Afrezza can be found in tier 4 in state medicare coverage formularies, the tier where higher priced brand name drugs reside. Also, Afrezza can be found in tier 5 in state Medicare formularies, the most expensive tier which is usually where specialty medications used in battling cancer and other life threatening diseases can be found.

Currently, Afrezza is in tier 3 status on most private health insurance formularies, the tier where patients may sometimes encounter restrictions set out by private health insurance providers. The requirement for prior authorization or a requirement that a patient first try another type of therapy which could among a number of possibilities, be orals, an injectable insulin, or a DPP-4 inhibitor, are the most common restrictions, if a patient does run into restrictions. These restrictions can be burdensome for both physicians and patients.

MannKind's C.E.O, Hakan S. Edstrom, recently stated at the MannKind Q2 earnings report several weeks ago,

"Sanofi has made excellent moves to address the spirometry requirements and our research shows that it's no longer a critical gating item. But insurance coverage continues to slow the process. At this point, permanent formulary placement decisions have not yet been made by most plans. These decisions are typically made 6 to 12 months following the launch. The good news is that, we are now in that period, and Sanofi's discussions with managed care organizations are ongoing, and we expect the insurance...