Biden’s inflation bill aims to cut Medicare drug costs for seniors

Seniors and patient groups have long pursued a seemingly improbable goal of granting Medicare the power to negotiate prescription drug prices.

Legislation passed by the US Senate on Sunday and introduced in the House would finally allow the federal health care program for older Americans to seek lower prices for prescription drugs at the bargaining table. The legislation also limits out-of-pocket expenses for Medicare beneficiaries to $2,000 per year.

Patient advocates hailed the legislation as a victory for seniors struggling to afford rising prescription drug prices. If passed, the bill would be the most ambitious health legislation since the Affordable Care Act of 2010, President Barack Obama’s signature health law.

While the ACA extended coverage to millions of people through subsidized private insurance and extended Medicaid to low-income Americans, it failed to address the rising cost of prescription drugs.

David Mitchell, founder of Patients For Affordable Drugs Now, said Democrats’ sweeping climate and health care bill, called the Inflation Reduction Act, is a hard-won victory for patients like him.

“It’s a monumental change – a really big win,” Mitchell told USA TODAY.

Mitchell pays more than $16,000 each year for a prescription drug he takes to treat multiple myeloma, a type of blood cancer he has battled for more than a decade. He said the $2,000 annual cap on prescription drug spending “is going to make a big difference.”

“These are all features that will help millions of Americans better afford the medications they need now,” Mitchell said.

What’s in the bill?

For the first time, Medicare would be allowed to negotiate prescription drug prices.

Under the bill, Medicare would negotiate the cost of up to 10 retail drugs starting in 2026. By 2029, Medicare’s bargaining power would extend to 20 retail drugs and 20 physician-administered drugs. . The bill would save the federal government about $288 billion over the next decade.

These savings would help offset the cost of implementing a $2,000 cap for seniors. Medicare beneficiaries would also see the price of insulin capped at $35 per dose. This cap will not extend to Americans covered by private insurance plans after Republicans removed this provision from the final bill.

The bill benefits people who have to take expensive prescriptions for conditions such as cancer or multiple sclerosis. According to an analysis by the Kaiser Family Foundation, about 1.4 million Medicare beneficiaries spent at least $2,000 on prescriptions in 2020, the most recent year for which data is available.

The bill would also reduce the ability of drugmakers to significantly raise prices. From next year, drugmakers who raise prices above inflation levels would be required to pay rebates.

The bill would also provide free vaccines for the elderly. For young Americans, it extends Affordable Care Act grants by three years to 2025. This will make insurance coverage cheaper for low- and middle-income people who buy coverage directly on scholarships. federal and state insurance.

AARP CEO Jo Ann Jenkins said her organization has been fighting for two decades to allow Medicare to negotiate drug prices for older Americans.

“This bill will save Medicare hundreds of billions of dollars and give seniors peace of mind knowing there is an annual limit on what they have to pay out of pocket for medications. “Jenkins said.

Backlash from the pharmaceutical industry

Drug companies have long enjoyed the ability to set prices for the millions of elderly people on Medicare.

Stephen J. Ubl, president and CEO of Pharmaceutical Research and Manufacturers of America, a pharmaceutical industry group, said the legislation is a “tragic loss for patients.”

He said proponents are “misleading the American people when they say this bill solves the affordability issues facing patients.

Additionally, industry groups warn that the legislation will limit innovation. The nonpartisan Congressional Budget Office has estimated that 15 fewer drugs will hit the market over the next 30 years.

Michelle McMurry-Heath, president and CEO of the Biotechnology Innovation Organization, which represents biotech companies and drug developers, said small businesses drive innovation and rely on private investment to boost research. and development. She added that “every credible analysis of the Cut Inflation Act comes to the same conclusion: less medicine for patients.”

Young Americans are not covered

While seniors would get financial relief under the legislation, those protections won’t extend to younger Americans who buy their own coverage or are insured through an employer plan.

Employers who cover more than 150 million Americans are concerned that prescription drug provisions will apply only to Medicare beneficiaries, said James Gelfand, chairman of the ERISA industry committee, which represents large employers who directly provide health insurance and other benefits to employees.

Gelfand said the prescription drug provisions apply only to Medicare beneficiaries, which relates to employers who cover more than 150 million Americans.

“Many are deeply concerned that private insurance prices will rise to offset the losses there would be in Medicare,” Gelfand said.

Ken Alltucker is on Twitter at @kalltucker, or can be emailed at

USA Today

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