A rescue plan for Medicare patients
Xavier Becerra
Americans pay too much for prescription drugs. Many, including the nearly 66 million Americans and 2.9 million Pennsylvanians who are enrolled in Medicare, struggle to make ends meet as a result.
There are families who pay so much for their prescriptions that they sacrifice putting food on the table. Not long ago, I spoke with a couple who had to choose between paying for their medications or fixing a leaky roof. The cost of prescription drugs should not force anyone to make a tough choice like that. Now, maybe they won’t have to.
Capped prices
The Inflation Reduction Act, which was passed by Congress and signed into law by President Joe Biden in 2022, is bringing much needed relief. The landmark law caps insulin prices at $35 per month for each Medicarecovered insulin product and makes many vaccines, including those for Shingles and RSV, available at no cost to individuals with Medicare Part D.
Starting this year, people with Medicare prescription drug plans will no longer pay out-of-pocket costs for covered drugs once they reach the catastrophic coverage level — the sickest people with Medicare, who often have the highest drug costs, will save hundreds if not thousands of dollars. And next year, those savings increase when a flat $2,000 cap on Part D out-of-pocket costs goes into effect — reducing how much each enrollee spends out- ofpocket by a projected $400 per year.
The biggest provision in the law gives Medicare — the largest single purchaser of health care in the country — the authority to directly negotiate drug prices with manufacturers for the first time in the program’s history. Negotiating drug prices directly with manufacturers is not a new concept. Other health care programs across the U.S. government, such as the Department of Veterans Affairs, have done this for decades.
Medicare being able to negotiate directly with drug companies will mean lower drug costs and improved access to innovative, lifesaving treatments for seniors and people with disabilities with Medicare that need them. It will also help strengthen Medicare for generations to come. It is a gamechanger.
A new era in Medicare
Last August, the Biden-Harris Administration announced the first ten drugs whose prices will be negotiated with participating pharmaceutical companies. The process of selecting the drugs was dictated by Congress and the work done by the Administration to establish this program has been comprehensive and rigorous.
The drugs are all approved by the Food and Drug Administration to treat serious health issues and chronic conditions that are prevalent among the Medicare population, including diabetes, prevention of stroke, cardiovascular disease, chronic kidney disease, and cancer. In 2022, these ten drugs cost the federal government $46 billion, with Medicare enrollees paying $3.4 billion in out-of-pocket costs.
Earlier this year, a historic new era in Medicare began with the Centers for Medicare & Medicaid Services (CMS) kicking off negotiations by submitting the federal government’s initial pricing proposal for each of the selected drugs to the participating drug manufacturers.
This week, CMS received counteroffers in response from each of the participating drug companies.
We are encouraged by their willingness to engage in this negotiation process, and the two sides will continue to go back and forth to try to come to agreement on new pricing. By statute, any agreement must be reached by July 31, 2024, and any prices that are negotiated for these first ten drugs wills take effect in 2026, with more medications added in coming years.
$100 billion saved
The Congressional Budget Office estimates that the drug price negotiations will save the federal government about $100 billion over 10 years and money will stay in the pockets of millions of Americans instead of Big Pharma. This is all part of President Biden’s ongoing efforts to lower drug prices, strengthen the Medicare program for future generations, and ensure access to quality, affordable health care for all Americans.
This week, President Biden will address the nation in his State of the Union speech. Lowering health care costs will be one of the top priorities he addresses. For every American, but especially those who struggle to put food on the table or repair an aging roof, the president has a good story to tell.