How it will affect your health

The Inflation Reduction Act signed by President Joe Biden should lower the cost of prescription drugs — including cancer drugs, blood thinners and insulin — for millions of Americans, experts say.

Excessively high drug prices in the United States are a major reason why many people in the US are forced to skip or delay filling the prescriptions they need. A Kaiser Family Foundation survey released last month found that nearly 1 in 2 adults report having difficulty covering their health care costs, including their prescription drugs.

Under the new law, the US government can now negotiate the prices of the most expensive prescription drugs, cap costs at $2,000 a year for people on Medicare, cap monthly insulin costs at $35 for seniors, and expand subsidies for people who buy their own health coverage through the Affordable Care Act, also known as Obamacare. The law also provides for free vaccines for the elderly.

The changes are “significant,” especially for anyone who needs expensive drugs, said Stacy Duzecina, a professor of health policy at Vanderbilt University Medical Center.

People on Medicare are expected to benefit the most from the new law, although health experts say some of the changes could eventually find their way into the commercial insurance market.

However, the changes will not be immediate; many regulations are not scheduled to enter into force for several years.

Here’s what you need to know:

Medicare will negotiate prices

The Inflation Reduction Act allows the federal government to negotiate prices for some of the drugs on which Medicare spends the most money, a goal long sought by Democrats and some Republicans.

Previously, the US government was specifically prohibited from engaging in price negotiations with drug manufacturers on behalf of the Medicare population.

The new law essentially establishes a process by which the Secretary of Health and Human Services proposes the government’s bid price for certain drugs, said Tricia Neumann, senior vice president at the Kaiser Family Foundation.

Beginning in 2026, Medicare will begin price negotiations for 10 drugs, followed by an additional 15 drugs in 2027 and possibly an additional 20 drugs in 2029 and beyond. The negotiation process applies to drugs covered by Medicare Part D that do not have a generic or comparable alternative, although Medicare Part B drugs will eventually be included.

A list of the top 10 drugs selected for negotiations is expected to be published in 2023, Neumann said.

Any drugmaker that refuses to negotiate could face a tax penalty, although that tax could be waived if the drugmaker chooses to withdraw its drug from the Medicare program.

Pharmaceutical Research and Manufacturers of America, the lobbying group for the drug industry, criticized the bill on Tuesday after Biden signed it into law, saying it would lead to fewer life-saving treatments.

$35 monthly insulin cap

The cost of insulin would be capped at $35 a month for Medicare patients under the new law.

However, the law does not cap the cost of insulin for the millions of people with private health insurance because Republicans successfully blocked its inclusion in the bill.

The insulin cap for people on Medicare goes into effect next year.

The monthly cap is important, experts say, because patients typically have to buy several vials of insulin a month to maintain their health, which can sometimes lead to a spike in costs.

A study published last month in the journal Health Affairs found that 14 percent of people who use insulin in the U.S. face what it describes as a “catastrophic” level of costs for the drug, meaning that after paying for other essentials such as food and housing, they spend at least 40% of their remaining income on insulin.

Medicare will still have flexibility about what types of insulin it covers, Neumann said, adding that it won’t have to cover every insulin product on the market.

$2000 out of pocket cap

The law includes a $2,000 cap on prescription drugs for Medicare beneficiaries. Enters into force in 2025.

Previously, people on Medicare had to spend about $7,000 out of pocket on their prescriptions before qualifying for “catastrophic coverage,” according to the Medicare website. With catastrophic coverage, patients are charged only a copayment — which is a set amount, usually $10 or $20 per prescription — or a percentage of the coinsurance, which is set at 5% of the price of the drug.

Under the new law, in 2024, that 5% coinsurance will be reduced to zero, eliminating it.

The new benefit is not tied to income, said Juliette Kubanski, a Medicare expert at the Kaiser Family Foundation, meaning the out-of-pocket limit would apply to everyone on Medicare.

A dozen at Vanderbilt University Medical Center said the benefit is perhaps the most important part of the law. She noted that patients with cancer or multiple sclerosis can spend tens of thousands of dollars a year on their drugs, even after Medicare covers its portion of the bill.

The Medicare program already offers subsidies for low-income people that limit costs to a certain threshold, although most people do not qualify.

About 1.4 million people in Medicare had annual out-of-pocket costs of more than $2,000 in 2020, according to the Kaiser Family Foundation.

Other notable benefits

The law immediately extends subsidies through 2025 for about 13 million people who buy individual coverage through the ACA. The subsidies ran out this year.

Next year, seniors on Medicare will no longer have copayments for adult vaccinations, such as the shingles and pneumonia vaccines.

Starting in 2024, drugmakers will have to pay a rebate to Medicare if they raise the price of their drugs faster than inflation, reducing drugmakers’ ability to raise prices.

Still, there is concern among some experts that drugmakers will be less hesitant to set higher list prices for new drugs, Duzecina said. That’s because, she said, drugmakers are less likely to face a backlash from the public because people on Medicare will only have to spend $2,000 before the government covers the rest. And with the inflation penalty, drugmakers will have to set the highest possible list price to get the most revenue.

I follow NBC HELLO On Twitter and Facebook.

Leave a Comment