The Prescription Drug Provisions In The Inflation Reduction Act

Inflation Reduction Act

We all know the rising costs of prescription drugs have been a dangerous thorn in our collective sides for years. The recent passage of the Inflation Reduction Act has brought a glimmer of hope to those struggling to afford essential medications as it aims to tackle skyrocketing prices.

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They really do. Hereโ€™s how the Prescription Drug Provisions of the Inflation Reduction Act will work. ๐Ÿ’Š

๐ŸŽ‰ Big News! Medicare is getting a makeover when it comes to negotiating drug prices. Starting in 2026, Medicare has the green light to go directly to the source โ€“ the drug manufacturers โ€“ to snag better deals on certain high-priced prescription drugs.

Here’s the lowdown: Every year, the government will negotiate lower prices for select drugs that don’t have any cheaper generic or biosimilar options. 

The negotiated price will be available to ALL Medicare beneficiaries. ๐Ÿ™Œ

Before you get too carried away, let’s remember that while this change is a big deal, it’s not like every drug will be up for negotiation every year. The number is limited, so it might take some time to see the full effect. It’s worth mentioning that earlier proposals for even broader negotiation authority got shot down in the face of opposition. So, thereโ€™s progress, but it’s not all unicorns and rainbows just yet. ๐ŸŒˆ๐Ÿฆ„

In 2026, they’ll start with a maximum of 10 drugs on the negotiation table. That number will increase to 20 by 2029. These drugs will be selected from the top 50 that Medicare spends the most on but don’t have affordable generics. 

The Inflation Reduction Act requires Medicare Part D to cover adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) for free. That means essential vaccines like the shingles vaccine are covered under Medicare Part D, just like Medicare Part B covers flu and COVID-19. ๐Ÿ’‰

And it’s not just Medicare! The law also requires state Medicaid and CHIP programs to cover all approved adult vaccines recommended by ACIP and vaccine administration without any cost sharing.

The Inflation Reduction Act introduces an out-of-pocket maximum for Medicare Part D enrollees. This means that once patients reach a certain threshold of out-of-pocket prescription expenses, they will no longer have to pay for prescription drugs for the remainder of the year. 

Under the new provisions, the out-of-pocket maximum will gradually be reduced to $2,000, payable throughout the year.

There’s a new monthly insulin copay cap of just $35 for all Medicare beneficiaries! ๐Ÿ™Œ

Before this change, some Medicare beneficiaries were shelling out over $100 per prescription for insulin. That’s a hefty price tag. 

But starting on January 1, 2023, the new $35 copay cap kicked in for all types of insulin covered under Part D, including branded and biosimilar ones.

Here’s the best part: patients don’t have to do anything to get this benefit. Medicare beneficiaries are automatically enrolled in the $35 copay for a month’s supply of insulin, regardless of whether they’ve met their deductible or not. 

This provision of the Inflation Reduction Act is a game-changer, making insulin more affordable and accessible for millions of older Americans with diabetes. It’s definitely a step in the right direction.

To curb the excessive price increases of prescription drugs, the Act imposes a cap on the rate at which drug prices can rise. 

So, up until now, Medicare hasn’t had the power to limit how much drug prices can increase each year for meds covered under Part B or Part D. ๐Ÿ˜ฑ 

In comparison, Medicaid has a system where if drug prices grow faster than inflation, manufacturers have to cough up refunds. This is a big issue because these price hikes affect both people with Medicare and private insurance.

Hereโ€™s how it works: if a drug’s price rises faster than inflation, drug companies must pay rebates to Medicare. The idea behind this provision is a deterrent to unreasonable price hikes and encourages more reasonable pricing practices.

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The Inflation Reduction Act represents a departure from current prescription drug policies, which do not have an out-of-pocket maximum or hold manufacturers accountable for price increases. While limited, the proposed provisions represent a positive step towards more affordable and predictable out-of-pocket costs for Medicare beneficiaries.

Read more about the Inflation Reduction Act: Explaining the Prescription Drug Provisions in the Inflation Reduction Act | KFF