Inflation Reduction Act Fails to Meet Promises for Seniors
TL/DR –
Changes to Medicare due to the Biden administration’s Inflation Reduction Act could undermine benefits for seniors by giving Medicare the power to set drug prices, leading to a rise in medication costs for enrollees. There are concerns that the Act will also inhibit innovation in the pharmaceutical sector due to government price controls, potentially reducing R&D spending in the biopharmaceutical industry by as much as 60% over the next two decades. Additionally, the Act redirects savings from Medicare to finance $670 billion in green energy tax credits and other environmental spending, rather than benefitting seniors.
Changes to Medicare Under Inflation Reduction Act Negatively Impact Seniors
Medicare, a highly popular government program, faces potential detriment due to changes introduced by the Inflation Reduction Act (IRA). Historically, Medicare has enjoyed broad public support, with 80 percent of Americans and 91 percent of program enrollees expressing satisfaction.
However, the IRA brings worrying changes to Medicare. It alters key components, including granting Medicare the power to set drug prices, a task previously undertaken by private sector insurance experts. Presented as price negotiation, this government price-fixing scheme gives the government ultimate control over certain medication prices.
Despite the new drug policy not yet in effect, rising medication costs for Medicare enrollees are already evident. A survey found 42 percent of seniors had seen their prescription drug prices increase, compared to just 10 percent experiencing savings.
Furthermore, premium increases and restricted drug access are anticipated as repercussions of the IRA’s changes. Even with a decrease in maximum out-of-pocket expenditure, there’s no guarantee that the lost revenue won’t impact seniors.
Experts predict IRA-induced government price controls will severely hinder innovation in the pharmaceutical sector. With drug development coming in at over $2 billion, companies are likely to be reluctant to invest in new drugs that could be subject to price fixing.
A study from the University of Chicago supports these concerns, estimating that price controls could reduce R&D spending in the biopharmaceutical sector by 60 percent over 20 years, potentially preventing the innovation of over 340 new drugs.
Impact of IRA on Connecticut’s Biopharmaceutical Industry
Connecticut, home to a flourishing biopharmaceutical industry, is particularly vulnerable to these changes. The industry, which contributes $17.2 billion to the state’s economy and employs over 12,000 people, could see reduced investment in new therapies.
The IRA’s impact extends beyond Medicare spending, with savings being channeled towards green technologies and other priorities instead of benefiting seniors. The IRA’s $670 billion allocation for clean energy tax credits and environmental spending further highlights its disappointing outcome for American seniors.
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