After decades of unsuccessful attempts, Democrats have passed legislation aimed at curbing the rising prices of some drugs in the United States.
It will take years for people to realize some of the most significant savings promised in the climate and health bill President Joe Biden signed into law this month.
The bill will primarily help about 49 million people sign up for Medicare drug coverage. But after lawmakers removed the majority of cost-cutting measures covered by private health insurance, many will be left out of direct savings.
See how you might benefit from drug-thrifting provisions in the Suppress Inflation Act, and how pharmaceutical companies will push back against those efforts.
drug deal
For the first time, Medicare can negotiate the price of the most expensive drugs.
In the United States, “no group has ever negotiated on behalf of so many people,” said Leigh Purvis, AARP’s director of health care costs and access.
This new bargaining power won’t come into effect until 2025, when Medicare will be able to negotiate prices for the 10 drugs covered by the regimen. By 2029, Medicare will be able to negotiate the cost of up to 60 drugs.
It will take some time as the Department of Health and Human Services needs to develop a plan for selecting drugs to be negotiated. It will take years to devise a complex rule-making process and will face intense lobbying and scrutiny from the pharmaceutical industry trying to find loopholes in the new rule.
“Secretaries are establishing a whole new program and they do a lot of hiring, so the biggest lift will definitely be negotiations,” Purvis added.
You can expect significant savings. The bipartisan Congressional Budget Office estimates that costs could be cut by up to $100 billion over the next decade.
But which drugs Medicare and patients can save remains a bit of a mystery.
In the first year, Medicare will be allowed to negotiate the cost of the 10 drugs we spend the most money on. provided the drugs have been approved by the Food and Drug Administration for at least nine years and have no competing generic drugs. at the market.
For example, the blood thinner Eliquis, currently used by 2.6 million Medicare beneficiaries at a cost of about $10 billion a year, may be at the top of that list.
Arthur Wong, an analyst at financial research firm S&P Global, said it could encourage drug companies to launch new drugs at higher prices, knowing that prices of their products will be negotiated lower for Medicare. I warn you that there is.
PhRMA, a trade organization representing pharmaceutical companies, has admitted that it intends to oppose the law.
In an emailed statement to Associated, PhRMA spokesperson Brian Newell said, “We are committed to providing patients with access to the medicines they need and helping the industry develop life-saving treatments and treatments. We are exploring all opportunities, including legislative, regulatory and legislative, to ensure that we can continue to develop,” said Press.
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Out-of-pocket drug price cap
The bill limits the amount of money Medicare recipients must spend on medication, but again, it will take some time for these rules to take hold.
In 2024, Medicare will eliminate the 5% co-insurance required for patients who reach the catastrophic threshold. This threshold is currently set at $7,050 for drug out-of-pocket costs. Nearly 3 million Medicare patients hit that threshold at some point between 2015 and 2019, according to a Kaiser Family Foundation study.
Next year, for Medicare Part D, your out-of-pocket drug costs will be limited to $2,000. This usually covers home prescription medications.
The Inflation Reduction Act addresses climate change, health care, and taxes, among others. While the final bill is a scaled-down version of what was originally proposed, Democrats will still have some issues with this season’s campaign, says Insider Deputy Editor-in-Chief Dave Levinthal. “If it’s not all they want, it’s definitely something they’re willing to do,” Levinthal said.
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How will drug prices be controlled until then?
The Reducing Inflation Act has a series of regulations designed to quickly curb Medicare drug price increases. The bill caps insulin copays at $35 a month starting in January, but only for Medicare beneficiaries. The $35 monthly limit on out-of-pocket costs for people with private health insurance has been lowered.
Starting next year, drug companies will have to pay rebates to Medicare if they price their drugs above inflation. The industry raises drug prices above inflation on a regular basis every year.
Similar regulations exist for Medicaid, so Medicare and Medicaid centers have experience running the program, said Rachel Sachs, a law professor at Washington University in St. Louis.
“They’ve helped keep the rate of growth down,” she said of the rebate.
Only Medicare patients directly benefit from this. A move to include private insurers, who are sold expensive drugs, was left out of the bill.
Some health policy experts say the clause, along with other clauses in the package, will help insurers negotiate drug prices for their customers, resulting in cost savings for millions of people. I hope there is a possibility.
But some are waiting to see if the bill will have the opposite effect. Medicare accounts for about a third of the pharmaceutical industry’s market, and companies may look to extract more profits elsewhere.
“This could pose a threat that non-Medicare payers may eventually be forced to pay more, or at least face tougher negotiations with the pharmaceutical industry,” analyst Wong said. I have.
The House of Representatives on Friday passed legislation to fight climate change, expand health insurance and raise corporate taxes.
