Column-U.S. health care bill paves way for lower Medicare prescription drug costs

By Mark Miller

(Reuters) – Climate and health care legislation that Congress is expected to approve later this week includes the most significant improvements to the Medicare program in nearly two decades. The changes aim to address one of seniors’ biggest concerns: the rapidly rising cost of prescription drugs.

The US Senate passed the $430 billion bill on Sunday. The US House of Representatives will likely vote on it on Friday and it will then head to US President Joe Biden for his signature.

The Cut Inflation Act of 2022 empowers Medicare to negotiate the price of a small number of expensive drugs with pharmaceutical companies for the first time, starting in 2026. It’s a step toward fixing the one of the most glaring flaws in the legislation that created the Part D prescription drug program in 2003 — a provision that specifically prohibits Medicare from negotiating prices.

While negotiating drug prices may prove important in the long run, the bill makes other important changes to prescription drug coverage that will impact the pocketbooks of seniors starting in the year next.

Reducing health care costs is particularly critical for middle- and low-income seniors. According to the Kaiser Family Foundation (KFF), traditional health insurance enrollees spent an average of $6,639 in 2019 on premiums and health services.

The bill includes reforms that should begin to reduce Medicare drug costs, starting next year, and phases in other major changes in subsequent years. Here’s a breakdown of the changes to come in Medicare — and when they’ll roll out.


The legislation addresses the skyrocketing price of insulin by capping monthly costs for those enrolled in Medicare at $35 per month, starting next year (a cap for those enrolled in private health insurance doesn’t was not included in the final invoice). For Medicare Part D enrollees who do not receive low-income subsidies to offset costs, average annual spending on insulin jumped 76% between 2007 and 2020, from $324 to $572, according to KFF.

Also from next year, drug manufacturers will be penalized in the form of “rebates” that they would be forced to pay to the government if they impose price increases above general inflation.

“That might be a hard thing for consumers to notice because they won’t know how big the increases would have been otherwise,” said Tricia Neuman, senior vice president of KFF. “But it will be a strong deterrent for pharmaceutical companies to raise prices faster than inflation.”

Starting next year, cost sharing will be eliminated for adult vaccines covered by Medicare Part D. This will help more than 4 million Medicare beneficiaries each year, according to KFF, who received a vaccine covered by Part D. D in 2020.


The legislation caps the total annual disbursements for enrollees in two stages. In 2024, Medicare’s requirement that enrollees pay a 5% coinsurance above the Part D “catastrophic threshold” will be removed. This will provide essential help to beneficiaries who now pay 5% of the cost of very expensive drugs, especially for conditions such as cancer or multiple sclerosis.

A recent study found that a worrying proportion of Part D enrollees are not filling expensive prescriptions due to cost-sharing features – for example, 30% of cancer drugs were not filled.

Also in 2024, eligibility for Part D Low Income Subsidy (LIS) will be expanded. This program helps people with very low income Medicare pay premiums and deductibles. This is an essential reform for very low-income seniors. KFF reports that half of enrollees had an income of less than $29,650 in 2019 – and one in four lived on less than $17,000.


The second disbursement control takes effect in 2025 – and it’s a really big deal: starting this year, no registrant will be required to disburse more than $2,000 per year. This reform tackles one of the main problems related to the cost of drugs.

KFF estimates that this change would have helped 1.4 million Medicare Part D enrollees in 2020 who incurred costs over $2,000 – and the actual number that will be helped by the cap in 2025 will be higher due to the increase in Part D program costs since 2020.

“Drug companies, even Medicare officials like to focus on stability in Part D premiums, but we haven’t had stability in out-of-pocket spending,” said Philip Moeller, author of the book “Get What’s Yours for Medicare: Maximize Your Coverage”. , Minimize your costs. “It will create stability in drug spending,” he said.


When the Part D program was enacted in 2003, language specifically prohibiting Medicare from negotiating drug prices was one of the most controversial provisions.

Under the Inflation Act of 2022, Medicare is empowered to begin negotiating drug prices, beginning in 2026 with a list of ten of the most expensive drugs covered by Part D. expand to 15 Part D drugs in 2027, and drugs covered by Part D are added in 2028 and beyond.

The long-term effects of this provision remain to be seen — but the negotiation worked well for years in the Medicaid program. A government study found that Part D pays 32% more for high-use drugs than the Medicaid program.

The opinions expressed here are those of the author, columnist for Reuters.

(Writing by Mark Miller in Chicago; Editing by Matthew Lewis)

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