EXPLANATION: Lower prescription prices to take time in the new law

WASHINGTON — After decades of failed attempts, Democrats have passed legislation that aims to curb the rising cost of drugs for some in the United States.

It will be years before people realize some of the major savings promised in the climate and health care bill that President Joe Biden signed this month.

The bill primarily helps the approximately 49 million people who sign up for Medicare’s drug coverage. But many will be barred from direct savings after lawmakers strip out cost-cutting measures for a majority of those covered by private health insurance.

A look at how some can take advantage of the drug austerity provisions in the “Inflation Reduction Act” and how drug manufacturers can curb these efforts.


For the first time, Medicare can negotiate the price of its most expensive drugs.

In the US, “we’ve never had an entity negotiate on behalf of such a large group of people,” said Leigh Purvis, director of AARP’s health care costs and access.

That new bargaining power won’t kick in until 2025, when Medicare can negotiate the price of 10 drugs covered by the prescription plan. Medicare will be able to negotiate the cost of as many as 60 drugs by 2029.

It will take some time as the Health and Human Services department needs to develop a plan for selecting which drugs will be negotiated. The complicated process of making rules will take years and will have to cope with intense lobbying and scrutiny from the pharmaceutical industry, which is eager to close loopholes in the new rules.

“The biggest lift will definitely be the negotiations as the secretary is setting up a whole new program and they are going to hire a lot of people,” Purvis added.

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The savings are expected to be huge. The impartial Congressional Budget Office estimates that costs could fall by as much as $100 billion over the next decade.

Which drugs will save Medicare and patients, however, remains a bit of a mystery.

In the first year, Medicare gets to negotiate the cost of 10 drugs it spends the most money on, as long as those drugs have been approved by the Food and Drug Administration for at least nine years and have no competing generics. on the market.

Right now, for example, the blood thinner Eliquis, which is used by 2.6 million Medicare recipients at an annual cost of nearly $10 billion, would likely top that list.

That could prompt drug companies to launch new drugs at a higher price, knowing the cost of the product for Medicare will be negotiated down, warned Arthur Wong, an analyst for S.&P Global, a financial research firm.

PhRMA, the trade organization that represents pharmaceutical companies, acknowledged that it plans to push back the law.

“We are exploring every avenue — including legislative, regulatory and legal — to ensure patients have access to the drugs they need and that our industry can continue to develop life-saving treatments and treatments,” PhRMA spokesperson Brian Newell said in a statement. by email to The Associated Press.



The bill limits how much money Medicare recipients must use for medications, but again, it will be some time before those rules take effect.

In 2024, Medicare will abolish a 5% coinsurance required for patients who have reached the catastrophic threshold, which is currently set at $7,050 for out-of-pocket drug costs. Nearly 3 million Medicare patients met that threshold sometime between 2015 and 2019, according to a survey by the Kaiser Family Foundation.

The following year, out-of-pocket drug costs are capped at $2,000 for Medicare Part D, which usually covers prescription drugs at home.

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The Inflation Reduction Act has a series of controls aimed at immediately dampening the rising cost of Medicare drugs. The bill limits copayments for insulin to $35 per month from January, but only for Medicare beneficiaries. A $35 per month limit on out-of-pocket costs for those with private health insurance was lowered.

Starting next year, drug companies will also have to pay a discount to Medicare if they make a drug’s cost higher than inflation. The industry regularly raises the price of medicines above inflation every year.

A similar rule exists in Medicaid, so the Centers for Medicare and Medicaid have experience running this program, said Rachel Sachs, a law professor at Washington University in St. Louis.

“They’ve been instrumental in controlling the rate of increase,” she said of the discounts.

Only Medicare patients benefit directly from this. A step to include people with private insurance who are sold overpriced medicines in the calculation was removed from the legislation.

Some health policy experts hope this provision, along with the others in the package, will help insurance companies negotiate the price of drugs for their customers, potentially saving costs for millions of people.

But others are waiting to see if the bill has the opposite effect. Medicare accounts for about a third of the pharmaceutical industry’s market, meaning companies could try to get more profits from elsewhere.

“That could threaten that non-Medicare payers end up having to pay more or at least negotiate harder with the pharmaceutical industry,” analyst Wong said.

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