There are many components to the recently passed Inflation Reduction Act. At Beck & Lenox Estate Planning and Elder Law, many of our elderly clients want to know how the Inflation Reduction Act will impact Seniors with prescription medications. There is a huge difference in prescription prices paid by people who receive medication through the Veterans Administration compared to those who receive their medications through Medicare Part D. This difference is a direct result of how the U.S. Department of Veterans Affairs and the Department of Health and Human Services are allowed to do business with pharmaceutical companies.
While Medicare reimburses the Part D plan sponsors to pay pharmacies, the VA buys drugs directly from manufacturers. The VA negotiates as a single, enormous health care system with a unified list of covered drugs and is able to attain discounts defined by law that Medicaid simply did not have.
As a result of the Inflation Reduction Act (IRA) just passed, seniors will benefit from a new law that won’t immediately reduce drug prices by stronger bargaining power, but it will lead to a long-desired change, as reported in a recent article titled “Planning Ahead: How the Inflation Reduction Act affects senior drug prices” from The Mercury.
The IRA will allow Health and Human Services to negotiate prices for some of the most expensive drugs under Medicare Part B and Medicare Part D. Medicare Part B concerns specialized drugs administered through healthcare providers, and Medicare Part D refers to prescriptions filled at retail pharmacies.
This begins in 2026 and progresses through phases to add additional drugs over time. It’s not perfect, but it’s far better than anything we’ve had to date.
Starting in Phase 1, Medicare may negotiate ten of the most expensive Part D drugs. The discussion on which drugs this includes is still being debated, but so far suggestions included Eliquis, Xarelto, anticoagulants, Januvia for Type 2 diabetes, Keytruda and Opdivo for certain cancers, and Rituxan for certain cancers and inflammatory disorders, among others.
In Phase 2, 15 more high-cost and high-use drugs would be added in 2027 and every year to add more to 2029.
This is only one way the IRA addresses prescription drug pricing. Others include a cap on out-of-pocket prescription drug costs at $2,000 per year for Medicare Part D drug plans. This important provision starts in 2025. Another welcome victory—a $35 cap on insulin for Medicare recipients starting in 2023. A proposal to set a same $35 cap for others did not pass.
The IRA will also enhance and extend subsidies to private health insurance coverage purchased through the public marketplace introduced in 2020. While most seniors receive their health insurance coverage through Medicare, this provision will help younger Americans who depend upon the public marketplace health insurance plans by preventing dramatic increases in premiums.
Beck & Lenox is pleased to see that, for prescription medications, the Inflation Reduction Act will impact Seniors in a positive way. It is wonderful to see something happen that we can all celebrate.
Reference: The Mercury (Aug. 16, 2022) “Planning Ahead: How the Inflation Reduction Act affects senior drug prices”