Medicare Drug Price Negotiation Unleashed by Inflation Reduction Act
Major Changes for Medicare Recipients: Inflation Reduction Act Takes Effect
Earlier this week, a crucial provision of the Inflation Reduction Act of 2022 came into effect, bringing changes to Medicare prescription drug pricing. This legislation could make prescriptions significantly more affordable for Montanans who rely on Medicare, as well as millions of other Americans.
Effective from Tuesday, August 29th, Medicare now has the authority to negotiate directly with drug manufacturers to lower the prices of some of the most expensive Medicare Part B and Part D drugs.
The list of prescription drugs subjected to these Medicare negotiations includes Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and insulin from Novo Nordisk. These drugs are among the most frequently used by the elderly in Montana.
An initial round of price capping is expected to be complete by September 2024. Further, the new legislation will implement a yearly cap of $2,000 on out-of-pocket prescription drug costs in Medicare by 2025.
By 2026, the negotiated price reductions will take effect for the prescription drugs mentioned above. At that point, the cost of insulin, a vital drug for many Medicare beneficiaries, will be available at an affordable rate of $35 per month per covered prescription.
Another important feature of the Inflation Reduction Act is the inclusion of inflation rebates in Medicare. This provision mandates that drug companies must pay Medicare a rebate if they raise drug prices faster than the rate of inflation.
Discussing the importance of understanding drug pricing, Shelbi Witt, the owner of Montana Apothecary & Compounding in Great Falls, said: “Patients should educate themselves about drug prices. In our pharmacy, we get calls every day asking about the costs. It’s a constant discussion, especially for pharmacists.”
However, in response to Medicare’s newfound power to negotiate prices, several pharmaceutical companies have filed lawsuits, deeming this interference unconstitutional.
The Pharmaceutical Research & Manufacturers of America commented on the matter, stating: “Today’s announcement is the result of a rushed process focused on short-term political gain rather than what is best for patients… Giving a single government agency the power to arbitrarily set the price of medicines will have significant negative consequences long after this administration is gone.”
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