The “Inflation Reduction Act of 2022” includes a provision to lower prescription drug costs for Medicare Beneficiaries as well as reduce the Federal Government’s spending on certain drugs. The CBO (Congressional Budget Office) has estimated that the negotiations will reduce the federal deficit by $237 Billion over 10 years.
The legislation passed with bi-partisan and public support, no small task these days. It includes multiple incremental changes. First, it is targeting the 10 highest costs drugs covered under Medicare Parts B and D for price negotiation. This provision will be effective in 2026.
The $25 monthly cap on insulin cost sharing went into effect this year. In addition drug companies are required to pay rebates if the drug prices rise faster than inflation. Next year (2024) will eliminate the 5% coinsurance for catastrophic coverage in Part D plans. In 2025 the out of pocket cap for Part D plans is set to be reduced to $2000.
These changes are in addition to the changes in the “Build Back Better Act of 2021” which essentially established permissions to do some of the things referenced above by eliminating the non-interference clause. While this is all rather complicated, it has some important real world effects that folks will hopefully be experiencing.
The final list of 10 drugs is due to be published on 9/1/2023. As of this writing there, is some concern that this will be held up by special interests. Currently the Chamber of Commerce has requested an injunction to block the Medicare drug pricing negotiation. The Chamber has stated it would inflict “irreparable harm” on US businesses and patients. The Dept of Justice is pushing back and stating it would be a grave disservice to taxpayers and patients to stop this program.
It’s important to understand that participation in the program is voluntary. If these vendors do not wish to deal with Medicare after the list of drugs is published, they will have 30 days to opt out and withdraw from Medicare and Medicaid or divest their interest in the drug. They are not compelled to participate.
The Chamber of Commerce is joined by PhRMA, Merck & Co. and Bristol Meyers in suing the Health and Human Services Department. This may end up as simply a stall tactic, but is very important nonetheless. With drugs like Eliquis and Ozempic costing $600-900 monthly in the US, billions of dollars are at stake.
I have said before that it is difficult to get control of the actual costs of our health care system because too many special interests have their hand in the cookie jar. This is a perfect example. The last time I priced Eliquis at Canadian Pharmacy World, the monthly price was $151 vs. about $600 in the US.
Bristol Myers Squibb, the manufacturer of Eliquis, had gross profit for the 12 months ending 6/30/2023 at $34.799 Billion. That is a 6.75% decline over the year before. However, as recently as 2019 gross profit was $18 Billion and 2013 at $11.7 Billion, according to reporting by MacroTrends LLC. Perhaps with that tripling in profit in 10 years, there is some room for price negotiation? Prices for prescription drugs have consistently increased at more than double the rate of inflation.
The 2011 annual report for Bristol Myers Squibb reflected marketing and advertising expenses of $5.16 Billion, while research and development was $3.89 Billion. This certainly challenges the argument that pharmaceutical companies need to spend so much on R&D.
Now is the time that insurance agents are testing to be eligible to sell Medicare Part D drug plans for 2024. Medicare eligible patients should be marking their calendars to contact their agents in late September with their list of prescription drugs to review for 2024.
Another option is to check directly at the Medicare website Medicare.gov. You can input your current drugs and see all the plans that are available as well as your cost including premium, deductible and copays. This will be based on the drugs that are input, so if a prescription changes during the year, costs could be different. Information for 2024 should be available in early October.
BTW, this is not new: CMS prohibits the use of the Medicare name, logo or products in a misleading way. It must be clear that the entity being represented in the material is not Medicare or representing Medicare or the Federal Governement. Feel free to ask any solicitor that implies they are representing Medicare for the license number and report them to CMS.
